Amazon paid a 1.2% tax rate on $13,285,000,000 in profit for 2019

https://finance.yahoo.com/news/amazon-paid-a-12-tax-rate-on-13285000000-in-profit-for-2019-210847927.html

Kristin Myers
Yahoo FinanceFebruary 5, 2020

Last year, Yahoo Finance reported that Amazon (AMZN) paid a shockingly low amount in federal income taxes in 2018 on more than $11 billion in profits: $0.

But this year, while the company says it has paid “billions” in taxes for the year 2019, in reality it only paid $162 million in federal income tax — an effective tax rate of 1.2% on over $13 billion in profits.

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In Amazon’s 10-K filing for 2019 (a detailed financial report required by the Securities and Exchange Commission each year) the company reported paying $162 million in federal income taxes, with more than $914 million in federal income taxes deferred.

Deferred taxes can be used by companies to reduce their taxable income, by “postponing” payment based on accounting practices. And so while the company’s balance sheet reports just over $1 billion in federal income taxes, the number paid last year amounts to less than $200 million.

Amazon’s deferred tax amount has steadily increased throughout the years, rising from $565 million in 2018, the first year of President Trump’s new tax law, the Tax Cuts and Jobs Act, took effect. The TCJA lowered the corporate tax rate from 35% to 21%.

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What’s more, Amazon isn’t alone. Many big companies make use of tax breaks and loopholes to lower, or even eliminate, their tax liability.

According to ITEP, 60 Fortune 500 companies avoided paying all federal income tax in 2018 (with their total average effective tax rate being roughly -5%).

That’s more than three times the number of companies that avoided paying corporate taxes on average from 2008 to 2015. During that period, 18 companies managed to pay 0% or less (with their total average effective tax rate over 8 years being roughly -4%).