Analysis

Amazon pays little in taxes, makes record profits

Feature image: c) 2018 Tony Webster [email protected] Wikimedia Commons.

The union drive of Bessemer, Ala., Amazon workers has shed light on the oppressive, unsafe working conditions and low wages for workers at Amazon’s warehouses, fulfillment centers and Whole Foods markets.

But another aspect of this corporation’s robbery is reflected by the fact that over the past few years Amazon has paid little to no federal taxes. It has also received billions in local tax incentives from every community where it established itself.

In 2017, Amazon paid nothing in federal taxes on its $5.6 billion in U.S. profits. In 2018, Amazon actually got a $129 million tax rebate despite U.S. profits of $11.2 million. In 2019, Amazon paid a miniscule $162 million on $13.3 billion in U.S. profits., for an effective tax rate of 1.2 percent.

In 2020, Amazon benefited from the COVID-19 pandemic with a rise in its U.S. profits to $20.2 billion. While Amazon paid $1.8 billion in federal taxes in 2020, that still amounted to only 9.4 percent of its net pretax income, far below even the reduced rate of 20 percent allowed by the Trump tax cuts.

On top of paying little to no federal taxes, a report by Good Jobs First documents how Amazon has extorted a total of $3.757 billion in tax subsidies from local communities across the United States. These tax subsidies take various forms. They include local property-tax abatements, where the corporation pays a reduced property tax rate.

Another tax subsidy is through tax increment funding, where the corporation keeps or captures any increases in property-tax revenues from the increased value of their property after development. And they encompass Enterprise Zone subsidies, where the area where Amazon builds its center is declared a reduced tax zone; payments for infrastructure repairs to facilitate Amazon’s developments; and a whole range of other giveaways of public tax dollars to this huge corporation.

Among the largest of the subsidies are more than $400 million for the building of a distribution center in Markham, Ill.; $108 million for a distribution center in University Park, Ill., and an additional $110 million for various other centers in Illinois; $78.6 million for locating a distribution center in St. Peters, Mo.; $93 million for a data center in Ohio; $75 million for an airport hub at Cincinnati/Northern Kentucky International Airport in Kentucky; $55 million and another $54 million for expanding its offices in Seattle, Wash.; $45 million for a distribution center in Baltimore, Md.; and $30 million for a distribution center in Fresno, Calif. While these are some examples of Amazon local tax breaks, there is no community where Amazon locates that it doesn’t receive tax relief or incentives.

Amazon is receiving over $51 million in tax subsidies for opening its Bessemer, Ala., fulfillment center which is the subject of the current Retail, Wholesale and Department Store Union drive. This includes $48 million from the State of Alabama in the form of a jobs credit totaling more than $15.5 million over 10 years and an investment credit with an estimated value of $26.25 million over 10 years. The investment credit is a credit against a percentage of taxes owed for up to 10 years, and the jobs credit is actually a cash rebate against the company’s gross payroll. In addition, AIDT, the state workforce development agency, has committed to providing services and support valued at $6.895 million.

The local incentives include $3.3 million from Jefferson County to fund roadway improvements and/or to reimburse Amazon for a portion of its capital investment. The Bessemer City Council approved incentives that include reimbursing Amazon for a portion of its capital investment, making quarterly payments to the company over a 10-year period by returning 50-to 60 percent of the occupational tax collected by the company from its full-time employees. The city will also limit permit and licensing fees charged Amazon and helped construct a special transit stop near the site.

Ironically, Jefferson County, the site of the Bessemer Amazon fulfillment center, just came out of a Chapter 9 bankruptcy in which it was forced to make drastic cuts in services to pay off its debt to the banks.

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