Home > Uncategorized > Amazon Follows the Rules and Pays $0 in Federal Taxes… and Now Seeks Even MORE Tax Breaks from States and Cities

Amazon Follows the Rules and Pays $0 in Federal Taxes… and Now Seeks Even MORE Tax Breaks from States and Cities

March 9, 2018

I was appalled to read the headline of an article by Stephen Cohen from SFGate which read:

Amazon paid no US income taxes for 2017

I was even MORE appalled to read this sentence from the article:

(Matthew) Gardner (senior fellow at the Institute on Taxation and Economic Policy) is quick to point out that there’s no evidence that Amazon engaged in behavior that is unusual, let alone illegal. 

Meanwhile, the SFGate has a link to a recently published by Mr. Cohen article  titled “City Experts: Amazon’s HQ2 Search Set Off Race to the Bottom”. In that article Mr. Cohen describes the incentive packages being offered by cities and States to lure Amazon to locate in their region and led urbanologist Richard Florida to post a Change.org petition protesting the amounts in dollars and tax incentives being offered were counterproductive to the well-being of the citizens in their regions. And Mr. Florida was not alone: 100 academics from places like Harvard, MIT, and the Brookings Institute also protested the unseemly race to the bottom Amazon was engaging in. But, as Mr. Cohen noted later in the article, the incentives for Amazon are already a fait accompli:

Large incentives are nothing new for Amazon, which reported an astonishing $177.9 billion in sales last year. A December 2016 report from economic development watchdog group Good Jobs First claimed that local governments committed at least $241 million in subsidies for Amazon facilities (mostly warehouses) in 2015 and 2016 alone, noting that the number was likely too low, since some incentives were not publicly disclosed at the time of publication.

Urbanists are concerned that ratcheting up tax breaks and other incentives sets a dangerous precedent for cities competing for major businesses, be it Amazon or a company that follows its lead and announces its own public auction for a new home. Incentive packages used to be the norm in economic development strategy: companies typically went to places that offered the best tax or land deals. But over the last few decades, civic leaders have tried to recruit companies to become partners in city-building, and many of the economic development leaders who spoke to Florida about the HQ2 competition are concerned the bidding will move the industry backward.

And the tax drain for Amazon isn’t limited to incentives. In many states on-line merchandisers like Amazon are displacing traditional brick and mortar stores and as a result the sales tax revenues in those states are declining. But when retail giants extract tax breaks it helps keep their costs lower, the prices lower, and their profits higher… especially when they can avoid paying taxes on their profits. Meanwhile, every publicly funded institution like schools, social services, and general safety net services, scramble for revenues because no political wants to raise taxes on anyone to cover the costs for luring a new business or new big box store into town. The vicious circle continues to spin….


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