During the year 2017, Amazon announced that it would be opening a second $5 billion headquarters, bought Whole Foods for $13.7 billion, its stock price grew by 56 percent, and CEO and founder Jeff Bezos became the first person to have a net worth over $100 billion since Bill Gates in 1999, but one thing it didn’t do for the year was pay a single dollar in federal income taxes.
According to a new report from the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP), Amazon says that the e-commerce giant “reported $5.6 billion of U.S. profits and didn’t pay a dime of federal income taxes on it.”
“The company’s financial statement suggests that various tax credits and tax breaks for executive stock options are responsible for zeroing out the company’s tax this year,” the report said.
Being based in the state of Washington, Amazon also does not pay any state income tax, either (though it does pay the state’s B&O tax).
Amazon notoriously hunts out advantages within the tax system, and ITEP says this zero percent rate in 2017 “reflects a longer term trend.”
“During the previous five years, Amazon reported U.S. profits of $8.2 billion and paid an effective federal income tax rate of just 11.4 percent. This means the company was able to shelter more than two-thirds of its profits from tax during that five year period.”
That five-year period could be viewed as a comparatively more challenging tax time for Amazon, as the Trump Administration’s new tax law will give the Seattle-based company a $789 million one-time tax break, the report says.
“While the Trump Administration’s corporate tax cuts generally took effect on January 1st, the law includes a grandfather clause for companies that (like Amazon) have managed to defer or postpone tax liability from prior years,” the report says.
Of course, this also is all happening while the competition for Amazon’s HQ2 continues to build toward a selection, which, in all likelihood, will include a tax break into the billions of dollars, with many of the 20 finalists offering massive tax incentive packages. Newark, New Jersey’s $7 billion offer is the largest that’s been made public.