What does that have to do with Amazon? Their financials are public information, show me where they're hiding the massive cash production, because they must be hiding it from shareholders as well.
Amazon is still primarily a retailer, one with historically horrific margins. The segment has notoriously bad margins in general (Costco & Walmart: typical ~2% net income margins, with very high income tax rates). Then there's Amazon, spending like crazy since its inception to fund growth.
It makes perfect sense that they wouldn't be generating much in the way of profit versus their revenue.
Saying that Walmart has "notoriously bad margins" makes it sound like they're working at a disadvantage. Walmart's margins aren't low out of necessity. Their entire business is purposely built around low margins, and refusing to hire full time employees with benefits, etc. It's intentional on their part - there is no sob story about margins there.
Same goes for Amazon et al. The business strategy is to crush every small retailer by operating at slim to no margins, purely to make it impossible for anyone else to compete.
> The business strategy is to crush every small retailer by operating at slim to no margins, purely to make it impossible for anyone else to compete.
Large retailers compete against each other. Small retailers can't do much anyhow. (Especially in heavily car based areas, if you have to go just a few more minutes and you can find more and cheaper products, why would you stop at a small shop?)
You are being subjective here. Maybe you like driving for more and cheaper products, but not everyone is like you: not everyone drives, not everyones wants to drive, some people prefer supporting small shops than big ones, etc, etc.
That varies by jurisdiction. Gross Receipts Taxes [1] (including Washington State [2] where Amazon is headquartered) are levied against revenue and not profit.
I don't like being rude in comments sections but that's a pretty dumb comment to make, to be honest. I don't think the writer needs any help understanding how tax bills are formulated, it's just meant to state a point. (Which you would understand if you read the article before commenting)
What point is the author trying to state? "I don't understand tax bills"? It's meant to be deceptive and garner clicks. The author presents the full and complete story in the body of the text: "pre-tax profit of €59.6m last year" and "a tax of €16.5m". That's "only" a 30% tax rate. And not a story worth reading.
Ya, and something that makes zero sense in the context of revenue. Nobody is taxed on revenue because taxing companies on revenue unfairly penalizes low-margin high-volume businesses (like Amazon). Revenue has nothing to do with tax rate. Nothing. Quoting their revenue in the headline is just meant to shock people that don't understand taxes. It's a bullshit headline and a bullshit story.
The real question is: Why should it be fair? We don't live in an ideal world, we live in the real one. A "fair" tax rate, even if fairness could be quantified and applied, might very well be a rate that causes businesses to flee the country for more favorable rates. If the goal of taxes are to increase the well-being of citizens, I don't see how driving businesses out of the country en masse with them is an the best interests of the public. I'm not saying that's necessarily the reality, but treating "fairness" as the most important consideration is, to be blunt, asinine. What are the odds, really, that a "fair" corporate tax rate is also the one that results in the greatest well-being of the citizenry?
I would sacrifice economic justice for economic prosperity every day of the week. I simply don't care if someone is "exploiting" me if that exploitation actually increases my well-being in the most important ways, and while a lot of people might disagree with that in abstract, I'm willing to be 99% of adults would make the same decision if actually faced with that dichotomy.
There isn't much of a point. Later in the story it says
> Amazon is a hugely successful business but makes slim margins on the products its sells – the company recently warned it may report a loss in the third quarter – and with low profits comes a low tax bill.
Essentially, the title is clickbait. There is a good discussion in there about tax avoidance, but tying it to revenue doesn't illuminate the topic.
I'm all for giving Amazon flack where it's deserved. This tax witch-hunt isn't one of those cases.
2016 pre-tax income: $3.89 billion
2016 income tax: $1.43 billion
2016 income tax rate: 36.7%
That's one of the highest rates on earth.
2015: $1.57b pre-tax income. $950m income taxes. That's a 60% rate.
They don't generate much taxable income. What exactly are they supposed to be paying substantial taxes on other than that?
Should they be paying £30m (£50m?) in taxes on that £19.5 billion in European revenue instead? Ok, let's go with that, they're both meaningless figures. How is that a substantial matter to nail Amazon for (of all things) given the epic scale of tax schemes throughout Europe?
Isn't income tax paid by the employees, and not Amazon? What's the employer's contribution?
What you're missing is that the UK has been going through years of austerity. The UK public know some large companies have weird dodgy tax arrangements, and while there's some acceptance that no-one pays the real tax rate there's growing unrest about the very low rates paid by eg Starbucks or Google or Amazon.
These companies can chose to pay a bit more tax, or face tighter regulation.
The current EU VAT laws are proof the EU is happy to make onerous laws about tax
Also worth pointing out that a significant fraction of Amazon's (and Starbucks'; perhaps less so Google) staff (and especially the thousands that appear in the headlines when Amazon plants a big shed) are paid minimum wage and the taxpayer (via Working Tax Credits etc.) will be boosting that wage.
While $1.43 billion may be the GAAP tax rate they record, in practice they did not pay anywhere near that much.
For the 2016 reporting period, cash taxes paid was recorded at $412 million, not the $1.43 billion you noted above. Given that, their effective cash tax rate was 10.6%, not the 36.7% you quoted.
Relevant if you are talking about clickbait titles.
Capital gains are taxed at 20% at realization.
Tha articles (the site) makes the claim (by linking to an article on the same site) that capital gains are not counted as income. Yes, duh, because it counts as income when you close the position, sell the bond/stock/derivative/instrument/company/asset/capital and so on.
Surprise, surprise, dividends, (bond) coupon payments, interest and other yearly direct monetary (cash) payments do count as income.
The TL;DR of this article is the author dislikes the taxing basis put in place by the legislature and is blaming Amazon for paying taxes legally based on that.
Never mind the 65,000 employees in Europe who presumably do pay income taxes, sales taxes, property taxes, and more based on the fact that they have their income from their employer.
If someone wants to argue for a 1% or 2% revenue tax rather than a much higher rate but only on profits, that's the argument to make. Don't blame the players for playing by broken rules.
"Don't blame the company for exploiting the loopholes in the laws!"
This is a very old argument that gets rather tiresome to see on every article dealing with how much/little corporations pay in taxes. I'd rather see some interesting discussion around whether they should be paying more (or less).
Yes but they're not spending $100 to "dodge taxes". They're spending the money on positive NPV projects. You're mistaking an effect for a cause. Companies invest and expand and they pay less taxes as an effect. But in the future, they'll have to pay taxes on those revenue generating facilities they invested in.
And if those investments go belly up then the company will LOSE more money than it ever gained by "dodging taxes".
> Yes but they're not spending $100 to "dodge taxes". They're spending the money on positive NPV projects. You're mistaking an effect for a cause.
I don't think I am. The NPV projects are more likely to be positive if the alternative is to pay income tax on the profits, right? I don't necessarily mean to say they're doing it to avoid/dodge paying taxes (and I've edited my earlier response with a less loaded term), but taxes surely play a role in how they manage capital.
> Companies invest and expand and they pay less taxes as an effect.
Companies that are not paying income taxes do not pay less income taxes if they invest or expand.
I don't see why Amazon is the only company privileged to grow. The only reason they are capable of operating right now (as in - on their low margins) is the sheer size they had reached by this time - and they are going nowhere but towards becoming the sole monopoly in the sector.
That is - all of the power and a relatively low amount of taxes; given to their investors.
Here's another bummer: why are citizens forced to pay for the social security that is provided by the government to Amazon? For example police, roads and the airports that are the key parts of the infrastructure that are making Amazon work?
You could make a point that they are not making cash for the investors today. But the investors are making a fortune by having enough power to affect our living. I don't see why this should be in private hands and not a part of governmental institution in this case as they do not pay taxes for the same reasons.
On the other hand - it would be interesting to see Amazon becoming that hugely low-margin business that is only allowed to stay afloat by keeping their monopoly on the market but also keeping the prices low because otherwise there would be another competitor soon enough.
> Here's another bummer: why are citizens forced to pay for the social security that is provided by the government to Amazon? For example police, roads and the airports that are the key parts of the infrastructure that are making Amazon work?
There is so much wrong with this statement. Amazon pays usage fees for everything you suggest.
Roads? Amazon pays a tax on gasoline which pays for the roads. As do all citizens and businesses. The tax is a usage tax in that Amazon pays more if it uses more than you and I (which it does).
Police? Amazon pays property taxes which funds local governments.
Airports? Federal and local authorities levy usage taxes for air traffic control, security, and other airport functions. Next time you book a budget flight, look at the line item break down. I've had flights where the taxes were greater than the fare itself (CLT -> ORL).
Amazon (and all businesses) bear the burden of collecting sales taxes. It doesn't magically go to the government. Amazon has to construct systems to collect, manage, and send sales taxes to their respective local governments. The government receives these taxes with no effort on their part.
Bottom line... Citizens and companies pay usage taxes to maintain infrastructure.
> I don't see why Amazon is the only company privileged to grow. The only reason they are capable of operating right now (as in - on their low margins) is the sheer size they had reached by this time - and they are going nowhere but towards becoming the sole monopoly in the sector.
They're not, many companies could and many companies do invest heavily in themselves. You're on HN, you should notice these strategies being used by every startup.
Side note: Amazon is not a monopoly power. They have many competitors across a lot of market segments.
You don't understand how companies manage their tax obligations. It's not like that. For example, look at how Apple manages it's international tax burden.
For example, it's international profits are generated by international subsidiaries, which are different companies that Apple owns the stock of. Their profits are taxed in the country they are based in. They have two choices:
1) What's left can be paid to the parent company, Apple USA, which would require paying about 42% of those remaining profits to the U.S. and California governments.
2) What's left can be invested in an Irish subsidiary, and the bank interest those funds earn will be taxed at a special low rate by Ireland because they'd rather have that money invested in their economy then invested elsewhere. Eventually when the U.S. decides to lower the rate on repatriated profits, Apple will move the Irish deposits back to the U.S., pay about 20% of them in federal and state taxes, and most of the rest out as dividends to Apple Shareholders, who will pay something like 20%+ state income tax rate on the remainder.
So no loopholes, just following the letter of the law and making decisions to not do things that would trigger massive tax penalties.
And if you wonder if Apple should be forced to pay U.S. income taxes it's entire world wide income, like some crazy people have proposed, think of the consequences. Apple's effective corporate tax rate would be roughly 50% a year, and the effective tax on dividend distributions would be around 70%, even if you were a little old lady living on social security that had your meager life savings in Apple stock.
Meanwhile Samsung's rate would whatever South Korea chose to allow it, likely far far less. And it's international profits might be taxed even lower. So Samsung would have more after tax profits to reinvest in it's businesses and over time that would be a huge advantage over Apple, just like every international company would have over U.S. companies.
At that point, why would Apple remain in the U.S? Why not move the HQ to Ireland, and make Apple USA a subsidiary of it? Why would any super profitable US company not move, to literally any other country?
Lastly, the real point is that corporations should never pay income tax. Their profits are either reinvested in the business, which means creating more jobs, increasing productivity (which raises wages) and making more and better stuff. Or they are invested in other investments, bank deposits etc, which are loaned out to do pretty much the exact same thing. Or they are paid out to shareholders, who then have to pay taxes again on the dividends in a flat, non-progressive system.
We want investment into companies. We need investment into companies. Without it, no company can grow or develop.
If 50-70% of the profits from your investment are lost to taxes, you are going to be far less likely to invest in a U.S. company. If 100% of the profits are paid to you so you can pay your own personal tax rate on them, you are going to be much more likely to invest in a U.S. company. So I say dump the corporate income tax, dump the special dividend rate, and let investors pay taxes on dividends at fair rates in our progressive rate tax system.
Companies are greedy, taxes are ultimately paid by consumers - should a tax become higher for amazon or any other company, they will immediately raise the prices of their products to compensate the profit losses.
One difference is that when taxes are fairly paid by companies and they raise prices, then the company that can offer the lower price due to operational efficiency will win. Right now, the burden of taxation falls on other persons in society without such tax avoidance expertise and muddies the waters.
Bezos doesn't have to pay anything on the 10s of billions worth of unrealized gains in AMZN stock either. Income taxes discourage generation of income and sales taxes discourage consumption. Wealth taxes are harder to dodge this way and should make up more of the tax revenues.
What's your point? You are still taking part of the founder's control away, and giving it to some third party.
Bezo's has paid a huge amount of taxes on shares of stock he's actually sold. He shouldn't have to pay taxes on money he hasn't received or is even able to spend yet. What's best for Society is that both he and his capital remains in Amazon as long as possible as investment, not being turned into consumption (which would slow Amazon's growth rate down, slow it's ability to increase productivity and raise our standard of living).
> He shouldn't have to pay taxes on money he hasn't received
No one should have to pay taxes ideally, but the government needs money to provide basic services, keep us safe, etc. I don't think it is better to tax salaried people some of who can barely make ends meet before taxing someone who is sitting on $70 on unrealized capital gains just because he chooses not to sell.
I don't think you understand any part of what "unrealized" means. "unrealized" as it relates to taxation simply means that the asset has not beed sold.
> I value your HN username at $10 billion
What you might personally value my username and what the market values AMZN stock at bear no similarity
Besides 40% percent is a insane amount, most wealth tax systems are well under 2%.
> I don't think you understand any part of what "unrealized" means. "unrealized" as it relates to taxation simply means that the asset has not beed sold.
No shit... At what point did I allude to it being otherwise?
> What you might personally value my username and what the market values AMZN stock at bear no similarity
Most people don't value Amazon at its current price. The majority of people value it lower or higher. A thin margin of people trade within their sliver of acceptable prices setting the current day trading price. To tax someone at the value a small third party ascribes is so insanely stupid it beggars belief.
The "market cap" of a company has NO BASIS in reality. That's why stock prices fluctuate like crazy for all but the biggest and most well known companies.
> Besides 40% percent is a insane amount, most wealth tax systems are well under 2%.
When do you pay this 2% tax? Every year? Say you own a $500,000 home -- not unreasonable in California. They're going to have to pay $10,000 every year for that home, even if they have no income. Even if they're living off their savings or they're retired and on fixed income.
Let's say some couple bought their home in the 50's for $30k. Today the value of the home is $500k. They're on a fixed income and can't afford to pay $10k in taxes. Are you going to evict them for being "wealthy"? Just because the market values their house at $500k as of this moment?
Boy, I can't wait for people to pump and dump stocks on tax day. It's going to be great... Or I can't wait for people to trash their homes to decrease the value and lower their tax burden.
---
Let's take a step back. I just made an offer on your username for $10 billion. Because no one else made an offer the current market value is $10 billion. It will remain $10 billion until someone else makes an offer. At which point, how you calculate the tax burden is up to you. Average? Weighted average? Moving weighted average? Ascending triangle? Support and resistance? Any of the other batshit technical analysis methods? What about the time period? Are you taxing the wealth of the past day, month, year, decade?
"But!", you'll say, "You're just one guy, you don't get to determine the market value of my username". And sadly for you, that's exactly what I get to do. Houses have market values even though a single digit number of people actually bid on them within a 20 year time period. Small cap stocks may only trade a few shares a day.
Your username has had more offers in the past 10 years than my parents house has.
Their house has a market value, and now, so does your username. Pay your taxes.
Amazon has never paid income taxes commensurate with its size to any government, because it has never produced earnings commensurate with its size for shareholders.
Amazon has always operated almost like a non-profit, non-taxable organization.
people and companies behind amazon's desicions to keep growing instead of making income are amazons largest shareholders and made billions from amazons stock price going up. if they cant tax revenue then tax the capital gains from soaring stock prices
Jesus, I just found this place while looking for a reddit alternative, and seeing comments like these are making me soooooooooooo happy.
This is going to sound pretentious as fuck, but I'm gonna say it anyway: I'm so tired of the hoards of people passively accepting whatever headlines reinforce their extremely simple, uniform bias / value set.
Maybe this is just a reflection of the bias / value set of the crowd here, but at least it's a different one. I hope it's an indication of a higher level of general critical thinking, though.
I'm noticing that, which is a little bit of a bummer. One of the other things I disliked about reddit is "science" or "technology" articles about things that are theoretically pretty cool if they exist, but don't, and likely never will. Like the article here about the gears for space - I just can't bring myself to give any fucks about a prototype. Put it in space and then tell me about it.
I wouldn't have thought it was just designed to be inflammatory. It is rather striking they pay so little in relation to turnover. Presumably their reported earnings are low but given they have been increasing in market value at about $40bn/year it might indicate the accounting methods are not accurately reflecting reality. Time to modify the tax / accounting rules I think.
Why would you make such an assumption? Did the headline suggest that the (relatively small) tax was based on revenue? No, it did not. Please stop making such hasty, strong, and destructive comments. As we all already know, we have issues with weak (and disinformative) headlines; at least we can strive to have better comments and discussions.
Because it would be wholly disingenuous to presume the opposite. The article in general and the headline in particular is juxtaposing tax against revenue explicitly in order to elicit the response that there's something fishy. The article even goes so far as to have a quote about tax avoidance whilst carefully avoiding accusing Amazon of tax avoidance.
It would have been a much more informative article if they had said, say, that Amazon expect to make a small loss on 20bn revenue and then go on to explain Amazon's business model. This would, of course, have shed a different light on their share scheme as it's clearly very beneficial for their workforce.
But no, it's a large American corporation that doesn't pay much UK tax so let's bang out a low quality article that insinuates heavily but says not a lot.
Full disclosure: I'm British, have no relationship to Amazon (other than as a customer) and am no relation to Mr Bezos though we do rock similar hairstyles.
> Amazon Europe, which is based in Luxembourg and aggregates the billions of pounds of sales the retailer makes from individual countries across the continent, reported a pre-tax profit of €59.6m last year. As a result the company, which clocked up €21.6bn in sales across Europe last year, had a tax bill of just €16.5m.
> Amazon is a hugely successful business but makes slim margins on the products its sells – the company recently warned it may report a loss in the third quarter – and with low profits comes a low tax bill.
These are about the only lines in the article that really matter.
When it comes to corporate tax avoidance, the only headlines to take seriously are "Company x paid x amount of tax on x profits". If it says "Company x made x amount of revenue" or "Company x had x income last year" its not worth reading, companies are taxed on profit, not revenue.
Honest question from someone who does not understand finance : why are companies taxed on profit while I am taxes on revenue? We have both costs, of different nature but still.
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[ 2.8 ms ] story [ 143 ms ] threadLots of physical shopping chains aren't paying tax because they dont make money either.
The real question is will Amazon ever make money and at that time - will it pay taxes then?
Amazon is still primarily a retailer, one with historically horrific margins. The segment has notoriously bad margins in general (Costco & Walmart: typical ~2% net income margins, with very high income tax rates). Then there's Amazon, spending like crazy since its inception to fund growth.
It makes perfect sense that they wouldn't be generating much in the way of profit versus their revenue.
Same goes for Amazon et al. The business strategy is to crush every small retailer by operating at slim to no margins, purely to make it impossible for anyone else to compete.
Large retailers compete against each other. Small retailers can't do much anyhow. (Especially in heavily car based areas, if you have to go just a few more minutes and you can find more and cheaper products, why would you stop at a small shop?)
[1] https://en.wikipedia.org/wiki/Gross_receipts_tax
[2] http://dor.wa.gov/content/FindTaxesAndRates/BAndOTax/
I would sacrifice economic justice for economic prosperity every day of the week. I simply don't care if someone is "exploiting" me if that exploitation actually increases my well-being in the most important ways, and while a lot of people might disagree with that in abstract, I'm willing to be 99% of adults would make the same decision if actually faced with that dichotomy.
The unbridled greed behind these bloggers really makes me question my faith in journalism. It's like they only worship money.
> Amazon is a hugely successful business but makes slim margins on the products its sells – the company recently warned it may report a loss in the third quarter – and with low profits comes a low tax bill.
Essentially, the title is clickbait. There is a good discussion in there about tax avoidance, but tying it to revenue doesn't illuminate the topic.
2016 pre-tax income: $3.89 billion
2016 income tax: $1.43 billion
2016 income tax rate: 36.7%
That's one of the highest rates on earth.
2015: $1.57b pre-tax income. $950m income taxes. That's a 60% rate.
They don't generate much taxable income. What exactly are they supposed to be paying substantial taxes on other than that?
Should they be paying £30m (£50m?) in taxes on that £19.5 billion in European revenue instead? Ok, let's go with that, they're both meaningless figures. How is that a substantial matter to nail Amazon for (of all things) given the epic scale of tax schemes throughout Europe?
What you're missing is that the UK has been going through years of austerity. The UK public know some large companies have weird dodgy tax arrangements, and while there's some acceptance that no-one pays the real tax rate there's growing unrest about the very low rates paid by eg Starbucks or Google or Amazon.
These companies can chose to pay a bit more tax, or face tighter regulation.
The current EU VAT laws are proof the EU is happy to make onerous laws about tax
For the 2016 reporting period, cash taxes paid was recorded at $412 million, not the $1.43 billion you noted above. Given that, their effective cash tax rate was 10.6%, not the 36.7% you quoted.
Source: Page 22, AMZN 2016 10-K (https://www.sec.gov/Archives/edgar/data/1018724/000101872417...)
Capital gains are taxed at 20% at realization.
Tha articles (the site) makes the claim (by linking to an article on the same site) that capital gains are not counted as income. Yes, duh, because it counts as income when you close the position, sell the bond/stock/derivative/instrument/company/asset/capital and so on.
Surprise, surprise, dividends, (bond) coupon payments, interest and other yearly direct monetary (cash) payments do count as income.
And "some" economists don't ignore it: https://www.cbo.gov/publication/51361 (neither did Piketty as far as I can tell)
Never mind the 65,000 employees in Europe who presumably do pay income taxes, sales taxes, property taxes, and more based on the fact that they have their income from their employer.
If someone wants to argue for a 1% or 2% revenue tax rather than a much higher rate but only on profits, that's the argument to make. Don't blame the players for playing by broken rules.
"Don't blame the company for exploiting the loopholes in the laws!"
This is a very old argument that gets rather tiresome to see on every article dealing with how much/little corporations pay in taxes. I'd rather see some interesting discussion around whether they should be paying more (or less).
People don't want companies to pay tax on revenue. And Amazon makes very little profit!
No company on earth spends $100 so they can save $40 on their tax bill. It is nonsensical.
How is that nonsensical? Seems like lots of companies expend/transfer/invest rather than being taxed on their profits?
Edit: Replaced "to avoid" with "rather than".
And if those investments go belly up then the company will LOSE more money than it ever gained by "dodging taxes".
I don't think I am. The NPV projects are more likely to be positive if the alternative is to pay income tax on the profits, right? I don't necessarily mean to say they're doing it to avoid/dodge paying taxes (and I've edited my earlier response with a less loaded term), but taxes surely play a role in how they manage capital.
> Companies invest and expand and they pay less taxes as an effect.
Companies that are not paying income taxes do not pay less income taxes if they invest or expand.
That is - all of the power and a relatively low amount of taxes; given to their investors.
Here's another bummer: why are citizens forced to pay for the social security that is provided by the government to Amazon? For example police, roads and the airports that are the key parts of the infrastructure that are making Amazon work?
You could make a point that they are not making cash for the investors today. But the investors are making a fortune by having enough power to affect our living. I don't see why this should be in private hands and not a part of governmental institution in this case as they do not pay taxes for the same reasons.
On the other hand - it would be interesting to see Amazon becoming that hugely low-margin business that is only allowed to stay afloat by keeping their monopoly on the market but also keeping the prices low because otherwise there would be another competitor soon enough.
There is so much wrong with this statement. Amazon pays usage fees for everything you suggest.
Roads? Amazon pays a tax on gasoline which pays for the roads. As do all citizens and businesses. The tax is a usage tax in that Amazon pays more if it uses more than you and I (which it does).
Police? Amazon pays property taxes which funds local governments.
Airports? Federal and local authorities levy usage taxes for air traffic control, security, and other airport functions. Next time you book a budget flight, look at the line item break down. I've had flights where the taxes were greater than the fare itself (CLT -> ORL).
Amazon (and all businesses) bear the burden of collecting sales taxes. It doesn't magically go to the government. Amazon has to construct systems to collect, manage, and send sales taxes to their respective local governments. The government receives these taxes with no effort on their part.
Bottom line... Citizens and companies pay usage taxes to maintain infrastructure.
> I don't see why Amazon is the only company privileged to grow. The only reason they are capable of operating right now (as in - on their low margins) is the sheer size they had reached by this time - and they are going nowhere but towards becoming the sole monopoly in the sector.
They're not, many companies could and many companies do invest heavily in themselves. You're on HN, you should notice these strategies being used by every startup.
Side note: Amazon is not a monopoly power. They have many competitors across a lot of market segments.
For example, it's international profits are generated by international subsidiaries, which are different companies that Apple owns the stock of. Their profits are taxed in the country they are based in. They have two choices:
1) What's left can be paid to the parent company, Apple USA, which would require paying about 42% of those remaining profits to the U.S. and California governments.
2) What's left can be invested in an Irish subsidiary, and the bank interest those funds earn will be taxed at a special low rate by Ireland because they'd rather have that money invested in their economy then invested elsewhere. Eventually when the U.S. decides to lower the rate on repatriated profits, Apple will move the Irish deposits back to the U.S., pay about 20% of them in federal and state taxes, and most of the rest out as dividends to Apple Shareholders, who will pay something like 20%+ state income tax rate on the remainder.
So no loopholes, just following the letter of the law and making decisions to not do things that would trigger massive tax penalties.
And if you wonder if Apple should be forced to pay U.S. income taxes it's entire world wide income, like some crazy people have proposed, think of the consequences. Apple's effective corporate tax rate would be roughly 50% a year, and the effective tax on dividend distributions would be around 70%, even if you were a little old lady living on social security that had your meager life savings in Apple stock.
Meanwhile Samsung's rate would whatever South Korea chose to allow it, likely far far less. And it's international profits might be taxed even lower. So Samsung would have more after tax profits to reinvest in it's businesses and over time that would be a huge advantage over Apple, just like every international company would have over U.S. companies.
At that point, why would Apple remain in the U.S? Why not move the HQ to Ireland, and make Apple USA a subsidiary of it? Why would any super profitable US company not move, to literally any other country?
Lastly, the real point is that corporations should never pay income tax. Their profits are either reinvested in the business, which means creating more jobs, increasing productivity (which raises wages) and making more and better stuff. Or they are invested in other investments, bank deposits etc, which are loaned out to do pretty much the exact same thing. Or they are paid out to shareholders, who then have to pay taxes again on the dividends in a flat, non-progressive system.
We want investment into companies. We need investment into companies. Without it, no company can grow or develop.
If 50-70% of the profits from your investment are lost to taxes, you are going to be far less likely to invest in a U.S. company. If 100% of the profits are paid to you so you can pay your own personal tax rate on them, you are going to be much more likely to invest in a U.S. company. So I say dump the corporate income tax, dump the special dividend rate, and let investors pay taxes on dividends at fair rates in our progressive rate tax system.
You mean like this?
"If someone wants to argue for a 1% or 2% revenue tax rather than a much higher rate but only on profits, that's the argument to make."
Have the discussion if that's what you want, instead of whining about loopholes.
Do no misrepresent my post.
Bezo's has paid a huge amount of taxes on shares of stock he's actually sold. He shouldn't have to pay taxes on money he hasn't received or is even able to spend yet. What's best for Society is that both he and his capital remains in Amazon as long as possible as investment, not being turned into consumption (which would slow Amazon's growth rate down, slow it's ability to increase productivity and raise our standard of living).
No one should have to pay taxes ideally, but the government needs money to provide basic services, keep us safe, etc. I don't think it is better to tax salaried people some of who can barely make ends meet before taxing someone who is sitting on $70 on unrealized capital gains just because he chooses not to sell.
It bugs me that you understand the gains are "unrealized" but still use it as an argument to tax him. What part of "unrealized" do you not get?
I value your HN username at $10 billion. Pay a tax of $4 billion you greedy jerk.
I don't think you understand any part of what "unrealized" means. "unrealized" as it relates to taxation simply means that the asset has not beed sold.
> I value your HN username at $10 billion
What you might personally value my username and what the market values AMZN stock at bear no similarity
Besides 40% percent is a insane amount, most wealth tax systems are well under 2%.
No shit... At what point did I allude to it being otherwise?
> What you might personally value my username and what the market values AMZN stock at bear no similarity
Most people don't value Amazon at its current price. The majority of people value it lower or higher. A thin margin of people trade within their sliver of acceptable prices setting the current day trading price. To tax someone at the value a small third party ascribes is so insanely stupid it beggars belief.
The "market cap" of a company has NO BASIS in reality. That's why stock prices fluctuate like crazy for all but the biggest and most well known companies.
> Besides 40% percent is a insane amount, most wealth tax systems are well under 2%.
When do you pay this 2% tax? Every year? Say you own a $500,000 home -- not unreasonable in California. They're going to have to pay $10,000 every year for that home, even if they have no income. Even if they're living off their savings or they're retired and on fixed income.
Let's say some couple bought their home in the 50's for $30k. Today the value of the home is $500k. They're on a fixed income and can't afford to pay $10k in taxes. Are you going to evict them for being "wealthy"? Just because the market values their house at $500k as of this moment?
Boy, I can't wait for people to pump and dump stocks on tax day. It's going to be great... Or I can't wait for people to trash their homes to decrease the value and lower their tax burden.
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Let's take a step back. I just made an offer on your username for $10 billion. Because no one else made an offer the current market value is $10 billion. It will remain $10 billion until someone else makes an offer. At which point, how you calculate the tax burden is up to you. Average? Weighted average? Moving weighted average? Ascending triangle? Support and resistance? Any of the other batshit technical analysis methods? What about the time period? Are you taxing the wealth of the past day, month, year, decade?
"But!", you'll say, "You're just one guy, you don't get to determine the market value of my username". And sadly for you, that's exactly what I get to do. Houses have market values even though a single digit number of people actually bid on them within a 20 year time period. Small cap stocks may only trade a few shares a day.
Your username has had more offers in the past 10 years than my parents house has. Their house has a market value, and now, so does your username. Pay your taxes.
Or estate (inheritance) tax which could be considered a special form of wealth tax.
Amazon has always operated almost like a non-profit, non-taxable organization.
That's old news.
This is going to sound pretentious as fuck, but I'm gonna say it anyway: I'm so tired of the hoards of people passively accepting whatever headlines reinforce their extremely simple, uniform bias / value set.
Maybe this is just a reflection of the bias / value set of the crowd here, but at least it's a different one. I hope it's an indication of a higher level of general critical thinking, though.
Though, depending on your interests, some days there may not be much on HR that tickles your attention.
That's fairly nit-picky, though. I'll take it.
True. Now, perhaps offtopic: why are individuals taxed on revenue (ie salary, benefits ect), but corporations are not?
Because it would be wholly disingenuous to presume the opposite. The article in general and the headline in particular is juxtaposing tax against revenue explicitly in order to elicit the response that there's something fishy. The article even goes so far as to have a quote about tax avoidance whilst carefully avoiding accusing Amazon of tax avoidance.
It would have been a much more informative article if they had said, say, that Amazon expect to make a small loss on 20bn revenue and then go on to explain Amazon's business model. This would, of course, have shed a different light on their share scheme as it's clearly very beneficial for their workforce.
But no, it's a large American corporation that doesn't pay much UK tax so let's bang out a low quality article that insinuates heavily but says not a lot.
Full disclosure: I'm British, have no relationship to Amazon (other than as a customer) and am no relation to Mr Bezos though we do rock similar hairstyles.
> Amazon Europe, which is based in Luxembourg and aggregates the billions of pounds of sales the retailer makes from individual countries across the continent, reported a pre-tax profit of €59.6m last year. As a result the company, which clocked up €21.6bn in sales across Europe last year, had a tax bill of just €16.5m.
> Amazon is a hugely successful business but makes slim margins on the products its sells – the company recently warned it may report a loss in the third quarter – and with low profits comes a low tax bill.
These are about the only lines in the article that really matter.