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Remarkably, Amazon pays no income tax even though it reported $232.087 billion in revenues for 2018. Furthermore, Amazon had $41.25 billion in the bank at the end of last year.
However, Amazon will pay no federal income taxes for 2018, the Institute on Taxation and Economic Policy reports. Amazon will instead receive $129 million in federal tax credits, the Institute claims.
To summarize, Amazon pays no income tax but will get $129 million back from the IRS as a result of business operations last year. All in all, the Institute estimates Amazon’s 2018 taxable income at $5.6 billion.
Amazon Pays No Income Tax Despite Making A Lot Of Money
However, Stockrow reports that Amazon made a net income of $10.073 billion and had an operating income of $12.421 billion in 2018.
To elaborate, the net income figure is what Amazon had left over after paying all its expenses. In addition, the operating income amount consists of the money that Amazon makes off its operations.
Also, the aforementioned $232.087 billion in revenues represents all the money Amazon took in during 2018. Meanwhile, the $41.25 billion number above references the cash that Amazon had in the bank at the end of 2018.
Why Amazon Pays No Income Tax
Amazon pays no income tax because Uncle Sam only taxes certain kinds of corporate income. Consequently, the IRS does not tax most of the money that Amazon takes in.
Amazon, though, still pays many other taxes including sales taxes, property taxes, and state taxes. In other words, Amazon pays a lot of taxes but no federal income tax.
Nevertheless, little of Amazon’s taxes are going to the federal government as the budget deficit continually grows.
Amazon Pays No Income Tax While The Federal Deficit Grows
Ultimately, Amazon’s income tax situation will attract attention because we now have a record federal budget deficit.
In fact, the federal budget deficit for December 2018 was 41.8% higher than for December 2017, the Associated Press states. Meanwhile, federal tax revenues grew by only 0.2% during the same period.
Significantly, the deficit is the difference between government spending and taxes. The deficit exists because federal spending increased by 9.6% between December 2017 and December 2018 while revenues grew by just 0.2%.
Moreover, the budget will grow from $771.9 billion in 2018 to $897 billion in 2019, the Congressional Budget Office (CBO) calculates. Because of this, the deficit could grow by 15.1% in 2019. Furthermore, the CBO projects that the budget deficit will exceed $1 trillion by 2022 with present tax revenues.
While Amazon Pays No Income Taxes, CEO Jeff Bezos Remains The World’s Richest Man
Amazon CEO Jeff Bezos is the world’s richest man with a fortune of $134.8 billion as of St. Valentine’s Day 2019.
In particular, Bezos owns 16% of Amazon which he began in a Seattle garage in 1994, Fortune reveals. Bezos is wealthy because of Amazon’s stock which was trading at $1,631.40 a share on February 14, 2019.
Democrats could potentially use Bezos’ fortune and the fact that Amazon pays no income taxes to demand higher income taxes overall. Tellingly, U.S. Representative Alexandria Ocasio-Cortez (D-New York) is suggesting a federal income tax rate of 70% for the rich. Additionally, U.S. Senator and presidential candidate Elizabeth Warren (D-Massachusetts) wants to create a federal wealth tax.
Get Ready For Higher Taxes Because Amazon Pays No Income Taxes
Americans must get ready for higher income taxes because taxing the rich is quickly becoming a popular notion.
In fact, a Morning Consult survey estimates that 61% of voters like Warren’s wealth tax proposal. Also, 45% of voters like Ocasio-Cortez’s 70% tax on the rich.
In the final analysis, the revelation that Amazon pays no income tax will undoubtedly affect American politics in the near future. On balance, everybody’s taxes could increase simply because Amazon pays no taxes now.
You may also enjoy reading an additional Off The Grid News article: If $117000 Is Low Income In San Francisco, What’s Next For America?
What do you think about Amazon not having to pay federal income tax? Let us know in the comments below.