Amazon reveals new details about its federal tax bill in shot across the bow at critics

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Amazon CEO Jeff Bezos. (GeekWire File Photo)

Amazon disclosed new details about its U.S. taxes for 2019 in public financial documents and a blog post Friday morning, saying its federal income tax expense for the year was more than $1 billion, in addition to more than $2 billion in other types of federal taxes.

The disclosures appear designed to push back against assertions from politicians and researchers that Amazon does not pay any federal income tax. However, the federal income tax is still a small fraction of the company’s profits, representing about 6 percent of the $14.5 billion in operating income that Amazon reported Thursday in its year-end financial report.

“Like most governments that try to encourage economic investment by companies, the U.S. Congress has written a tax code that incentivizes the type of job creation, capital investment, development of technology, and employee ownership that Amazon does because these are critical drivers of a prosperous economy,” the company says in its post. “We follow all applicable federal and state tax laws, and our U.S. taxes are a reflection of our continued investments, compensation of our employees, and the current tax rules.”

Federal tax laws also allow the company to delay payment of the bill. According to regulatory filings, Amazon will pay $162 million in federal income taxes for 2019 now, and an additional $900 million over time due to deferrals for which the company is eligible. That adds up to the $1 billion federal income tax expense Amazon says it’s on the hook for in 2019.

Amazon will pay an additional $2.4 billion in other federal taxes, like payroll and custom duties, the company said, and $1.6 billion to state and local governments for the year. In addition, Amazon paid $9 billion in sales and duty taxes last year, the company said.

It’s the first time Amazon has published this level of detail about its federal tax obligations, after enduring years of criticism for not paying its fair share.  Elected officials, progressive activists, and academics frequently take aim at Amazon for reportedly paying nothing in federal income taxes. Researchers and journalists came to that conclusion by calculating the tax deferrals and credits Amazon is eligible for. CNBC reported Amazon paid $0 in federal income taxes in 2018 and received a $129 million tax rebate from the federal government, for example.

The claim has become a rallying cry of Senators Bernie Sanders and Elizabeth Warren, among others on the left. Amazon was mentioned far more than any other tech company during the 2020 Democratic presidential debates, with candidates frequently citing up the company’s tax bill.

Amazon’s tax obligations have been under a microscope since the company’s high-profile search for a second headquarters in 2017. Amazon sought tax incentives from cities competing for the coveted HQ2 project, which became a key factor in the dispute that led the company to pull out of the New York office it planned. Amazon received nearly $600 million in subsidies for its remaining HQ2 location in Northern Virginia. A coalition of state officials are now considering entering a non-aggression pact to prevent tax incentive bidding wars like the one Amazon’s HQ2 search prompted, Bloomberg reports.

Amazon’s blog post appears to be in response to those criticisms. The company touted other contributions to the economy, including spending more than $270 billion in compensation to employees, corporate offices, fulfillment centers, infrastructure to power its cloud business, solar power farms, equipment, and machinery.

Amazon employs more than 500,000 people across the U.S., which the company says makes it the second-largest private employer in the country. Amazon estimates its investments have contributed to more than 2 million jobs in the U.S., a number derived from total employees, indirect jobs like construction workers, and people who make a living selling through Amazon’s marketplace. The company’s global workforce is approaching 800,000 people.

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