Why Amazon Might Not Pay Taxes Again in 2019

Amazon paid no federal income taxes in 2018 but instead reported a federal income tax rebate of $129 million. However, this wasn’t because the retail titan sustained a loss by running its revenue-earning operations in said period of time. Instead, Amazon came close to doubling its net income, seeing as how it managed to make $11.2 billion in 2018 compared to $5.6 billion in 2017.

Some people might be confused by this outcome because Amazon should have an 18 percent income tax rate. Unfortunately, it seems that Amazon received tax credits while benefiting from tax loopholes such as a tax break for executive stock options, thus enabling it to pay no federal income taxes on its earnings for the second year in a row. Even worse, it is clear that Amazon isn’t alone in this, seeing as how corporations such as Netflix, General Motors, and U.S. Steel are expected to pay no federal income taxes for the same period.

Is Amazon Expected to Pay Any Federal Income Taxes for 2019?

Unsurprisingly, the fact that Amazon paid no federal income taxes has caused a fair amount of irritation. After all, there are a lot of people who are upset by the fact that a corporation bringing in record profits won’t be paying any federal income taxes when they can’t hope for anything similar. As such, it is natural for these individuals to wonder whether Amazon will be able to avoid paying federal income taxes in 2019 as well.

No one can predict the future with perfect accuracy. However, it seems reasonable to say that there is a very good chance that Amazon will be paying either no or next to no federal income taxes in 2019. Furthermore, even if Amazon does end up paying federal income taxes, chances are good that its tax burden isn’t going to be all that great.

Primarily, this is because corporations operating in the U.S. have very favorable tax treatment. For those who are curious, there was a corporate tax rate of 35 percent from 2008 to 2015. However, the numbers for the more than 250 Fortune 500 companies that managed to make a profit in each of those years make it clear that their effective tax rate was a much lower 21.2 percent. Moreover, a total of 48 of those companies had an effective tax rate that was lower than 10 percent, while a total of 18 of those companies paid no federal income taxes whatsoever. As for Amazon, well, suffice to say that it has gotten even better at avoiding federal income taxes in recent times, seeing as how its effective tax rate for said period was 10.8 percent compared to the much more recent nothing at all.

With that said, it should be mentioned that the Trump administration has made a number of changes that have stacked things even more in favor of the corporations. For example, the corporate tax rate is now been cut to 21 percent. Furthermore, there have been some rule changes that will enable interested corporations to lower their profits and thus the taxes on their profits. One excellent example is accelerated depreciation, which lets interested corporations record the full cost of their new equipment and other forms of machinery as immediate expenses rather than distribute that expense over the course of their useful lifespan as in accounting best practices.

Final Thoughts

There is definitely an interesting debate that can be had about what corporations are being taxed in the United States as well as what should be changed about it if anything. Traditionally, the argument for so many tax breaks is that they are believed to incentivize corporations to invest more into their revenue-earning operations, thus creating more jobs in the process. However, there are plenty of studies that cast doubt on this particular argument, whether because the money might not be spent on investments or because the investments might not be job-creating investments. For that matter, it is worth noting that these tax breaks were not introduced all at once but rather in gradual stages over time. As a result, while those who introduced them might have been aware of their individual effects, chances are good that they were much less cognizant of their combined effects, which is one more way that serious issues could have crept into the whole mess.

Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

JB Pritzker
10 Things You Didn’t Know About JB Pritizker
Boot Barn
How Boot Barn Became One Of The Leading Clothing Retailers
10 Things You Didn’t Know about Governor Andrew Cuomo
20 Socrates Quotes That Apply to Business
Is Antero Resources Stock a Solid Long Term Investment?
How to Prequalify For Chase Credit Cards
What OASDI Tax is and Why It Matters
healthcare stocks
Is Guardant Health Stock a Solid Long Term Investment?
Glenbow Museum
20 Things to Do in Calgary for First-Timers
Little Nonna's
The 10 Best Italian Restaurants in Philadelphia
Erie Maritime Museum
The 20 Best Things to Do in Erie, PA, for First Timers
Civil Rights Tours and Landmarks
The 20 Best Things to do in Birmingham for First Timers
Volvo's Polestar
Volvo’s Polestar May Be the Four-Door Electric Car of the Future
2021 Genesis GV80
10 Things You Didn’t Know About the 2021 Genesis GV80
2021 Hyundai Elantra 2
10 Things You Didn’t Know About the 2021 Hyundai Elantra
2020 Audi Q5 Hybrid
The 10 Most Efficient Small Hybrid SUVs
The Iconic No. 1 by TID
The 20 Best Minimalist Watches for Men
Brew Watches
10 Things You Did Not Know About Brew Watches
Phoibos Ocean Master PY005B 1000M Automatic Diver Watch
The 10 Best Phoibos Watches Money Can Buy
Raven Solitude LE
The 10 Best Raven Watches of All-Time
Jake Tapper
How Jake Tapper Achieved a Net Worth of $10 Million
Jared Padalecki
How Jared Padalecki Achieved A Net Worth Of $12 Million
Tati Westbrook
How Tati Westbrook Achieved A Net Worth Of $6 Million
Gwyneth Paltrow
How Gwyneth Paltrow Achieved a Net Worth of $100 Million