A hot potato: Big tech companies that earn billions yet pay little or no federal income tax has long been a hot-button issue. Amazon, for example, paid $0 in taxes on more than $11 billion in profits in 2018 and even received a $129 million tax rebate from the government. Now, President Biden has called out the firm, saying, "I don't want to punish them, but that's just wrong."
During an address in Pittsburgh, Pennsylvania, yesterday, Biden mentioned Amazon twice when unveiling his infrastructure spending plan, which increases the corporate tax rate to 28% from 21%. It also closes a popular loophole in the tax code that allows companies to move profits overseas.
Biden cited a 2019 report highlighting 91 Fortune 500 companies that use various loopholes to avoid paying any federal income tax in 2018, "including Amazon."
"A fireman, a teacher paying 22% — Amazon and 90 other major corporations paying zero in federal taxes? I'm going to put an end to that," he said.
Amazon broke with tradition when it revealed details of its tax payments last year. The company's federal income tax expenses for 2019 reached over $1 billion, in addition to $2 billion in other types of federal taxes, but that still represented just 6% of its $14.5 billion operating income. As reported by GeekWire, federal tax laws allowed it to delay the bill, letting Amazon pay $162 million straight away and $900 million over time.
Responding to Biden's comments, Amazon pointed to a tweet by Jay Carney, the company's public policy and communications chief and a former White House press secretary under former President Barack Obama. He was also Biden's communications director.
"If the R&D Tax Credit is a 'loophole,' it's certainly one Congress strongly intended. The R&D Tax credit has existed since 1981, was extended 15 times with bi-partisan support and was made permanent in 2015 in a law signed by President Obama," Carney tweeted.
If the R&D Tax Credit is a “loophole," it's certainly one Congress strongly intended. The R&D Tax credit has existed since 1981, was extended 15 times with bi-partisan support and was made permanent in 2015 in a law signed by President Obama.— Jay Carney (@JayCarney) March 31, 2021
Prior to that tweet, Carney responded to Sen. Elizabeth Warren's criticism of Amazon's tax strategies. "Changing the law is certainly more productive than faulting companies for following it-and far better than threatening to break up American companies so they can't criticize elected leaders," he wrote.
With great respect, Senator @ewarren, this isn’t correct about Amazon’s tax payments. But changing the law is certainly more productive than faulting companies for following it-and far better than threatening to break up American companies so they can't criticize elected leaders. https://t.co/borLvn5GZu— Jay Carney (@JayCarney) March 31, 2021
Amazon is experiencing a PR nightmare right now. A recent report claimed its delivery workers must agree to AI surveillance or risk losing their jobs. It also tried to refute its poor reputation for workplace conditions by saying employees don't urinate in bottles, and Twitter has been swamped with fake workers defending Amazon amid a unionization push at an Alabama factory.