Amazon’s latest annual financial report released last Friday paints a vivid picture of a company that is edging toward monopoly status—and doing so at the expense of U.S. taxpayers.
The company reported a record $35 billion in U.S. pretax income for fiscal year 2021, a haul that is 75 percent more than its 2020 U.S. earnings of $20 billion. Just as notable, the company’s effective federal income tax rate of 6 percent means it avoided about $5.2 billion of federal income tax in 2021. If Amazon had paid the statutory 21 percent tax rate on its 2021 U.S. income without any tax breaks, that would have meant a tax bill of more than $7.3 billion. Instead, the company reports a current federal income tax expense of $2.1 billion.
Amazon’s 2021 federal income tax payment is comparatively significant for a profitable company that paid less than $0 in the first year of the Trump-GOP tax law. But the company’s continuous tax avoidance adds up over time. Over the past four years, Amazon reported a total federal tax rate of just 5.1 percent on over $78 billion of U.S. income.
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The (entirely legal) mechanisms Amazon uses to achieve this are familiar. Tax credits account for $1.1 billion of the company’s tax avoidance, with deductions for excess
— source Institute on Taxation and Economic Policy | Matthew Gardner | Feb 8, 2022