As the world waits to see where Amazon decides will be the future home of its new, secondary headquarters, the company has urged cities to throw their hats in the ring for consideration. If you think it is a bit weird for Amazon to ask cities to beg and offer gifts to a large, profitable company led by Jeff Bezos—a man with a net worth of over $125.2 billion, you’re not alone.
While Amazon argues that the large company will bring many benefits to the city that’ll host what is also known as “HQ2,” skeptics have pointed out that the corporation may not be as great for the community as it says. Seattle journalist Knute Berger told Business Insider, for example, said its current HQ in Seattle has been bad news: homelessness has risen, housing costs skyrocketed, it has awful traffic, and communities of color have been largely displaced.
Folks may think that the benefit of Amazon would be the jobs and money that is brought into the local economy. However, many of the proposals to Amazon offer significant tax breaks to the company already largely unhindered by its tax bill (or lack thereof). Without a windfall of new taxes, host cities may actually suffer due to a larger burden that is not supported by a larger amount of local income. That’s part of Amazon’s plan, Institute on Taxation and Economic Policy senior fellow Matthew Gardner writes (emphasis mine):
The online retail giant has built its business model on tax avoidance, and its latest financial filing makes it clear that Amazon continues to be insulated from the nation’s tax system. In 2017, Amazon reported $5.6 billion of U.S. profits and didn’t pay a dime of federal income taxes on it. The company’s financial statement suggests that various tax credits and tax breaks for executive stock options are responsible for zeroing out the company’s tax this year.
The company’s zero percent rate in 2017 reflects a longer term trend. During the previous five years, Amazon reported U.S. profits of $8.2 billion and paid an effective federal income tax rate of just 11.4 percent. This means the company was able to shelter more than two-thirds of its profits from tax during that five year period.
It turns out that the #GOPTaxScam passed late last year also offers Amazon additional benefits:
Incredibly, Amazon’s corporate tax goose egg for 2017 doesn’t include the effect of a second big tax disclosure: the $789 million one-time tax break the company projects it will receive due to the new tax law. While the Trump Administration’s corporate tax cuts generally took effect on January 1st, the law includes a grandfather clause for companies that (like Amazon) have managed to defer or postpone tax liability from prior years.
Yet another reminder that corporations are neither our friends nor are they inherently designed for the advancement of the greater good. Amazon cares about Amazon, period. We would be remiss to think otherwise.