Amazon Only Paid 1.2% Taxes In 2019 Despite $13 Billion Profit

Amazon, whose CEO Jeff Bezos is the world's richest person, is the world's largest Internet company by revenue and the world's largest internet marketplace. It has also avoided paying its fair share of taxes to the federal government by ruthlessly exploiting loopholes in the tax code. Amazon had a market cap of $1.02 trillion as of Wednesday.

In 2018, Amazon reported income of more than $11 billion, but paid $0 in federal taxes. Thanks to tax credits and deductions, Amazon actually received a federal tax refund of $129 million. In 2017, Amazon received a $137 million refund from the federal government.

The year 2019 looks to be different -- on paper. Amazon patted itself on the back for announcing it allegedly paid “billions” in taxes. In reality, it only paid $162 million in federal income tax. This amounts to an effective tax rate of 1.2 percent on over $13 billion in profits.

Amazon's claim to have paid "billions" in taxes in 2019 is an outright falsehood, say financial analysts. In an announcement, Amazon claims to have paid more than $1 billion in “federal income tax expense,” “more than $2.4 billion in other federal taxes, including payroll taxes and customs duties,” and “more than $1.6 billion in state and local taxes, including payroll taxes, property taxes, state income taxes, and gross receipts taxes.” It also said it collected and sent close to “$9 billion in sales and use taxes to states and localities throughout the U.S.”

Yahoo Finance, however, pointed that with the exception of the federal income tax, the listed amounts aren’t actually taxes Amazon paid to the federal government. There’s “no meaningful” connection between Amazon and many of the taxes it listed in its announcement, said Matthew Gardner, senior fellow for the Institute on Taxation and Economic Policy (ITEP) that analyzes corporations and their tax avoidance.

Gardner said Amazon wrongfully listed as taxes it paid, those taxes it collects on behalf of the U.S. government like payroll taxes and sales taxes from third-party vendors. He said “economists agree that payroll taxes are ultimately paid by employees in the form of reduced compensation. Like the sales tax, the payroll tax is one that the company really just collects and sends to the government, as required by law.”

“Congratulating an employer for collecting the payroll tax is like congratulating yourself for breathing,” said Gardner, notes Yahoo.

He said Amazon "should be far more ashamed of their prior behavior on the sales tax front than they should be proud of their current behavior."

For its part, Amazon claims to follow all applicable federal and state tax laws, “and our U.S. taxes are a reflection of our continued investments, compensation of our employees, and the current tax rules.”