Amazon and taxes: a simple primer

The main reason Amazon as a corporate entity does not pay much in taxes is because the company so vigorously reinvests its profit.  The resulting expensing provisions lower their tax liabilities, in some cases down to zero or near-zero.  That is in fact the kind of incentive our tax system is supposed to create, and does so only imperfectly, noting that many economists have suggested moving to full expensing.

(NB: You can’t hate both share buybacks and profit reinvestment!)

Amazon pays plenty in terms of payroll taxes and also state and local taxes.  Nor should you forget the taxes paid by Amazon’s employees on their wages.  Not only is that direct revenue to various levels of government, but the incidence of those taxes falls somewhat on Amazon, which now must pay higher wages to offset the tax burden faced by their employees.  Not everyone wants to live in NYC or Queens!  (Do you agree with Paul Krugman’s charge that the Trump tax cuts are mainly a giveaway to capital?  If so, you probably also should believe that the wage taxes paid by Amazon employees fall largely on capital.)

There is no $3 billion that NYC gets to keep if Amazon does not show up.  That “money” was a pledged reduction in Amazon’s future tax burden at the state and local level.

When it comes to the discussion surrounding Amazon and taxes, I can only sigh…


Yes, I can. One is real investment, which is the engine of growth, the economy's right to breath. The other is a way to reward fat cats for crushing American workers.

All this color; what about the coloring? The chicken scratch of cause and effect couldn’t account for the sun’s breath.

Hey Tyler, Amazon is still hiring in NYC:,-NY-jobs.html

I'm guessing none of those jobs are subsidized with taxpayer money, present and future. I'm not against lower taxes but shouldn't lower taxes apply to everyone and not just one specific company? Also why are corporations allowed to writeoff investments to lower their taxes to zero when I can't do the same? Doesn't make sense that the average person pays more in taxes than the biggest tech co in the world.

"I made a haiku," Beth said. "Let's hear it," he said. "I have shampoo in my hand. The shampoo smells like flowers. I have flowers in my hair."

"Seriously," he said, "why are you up there?"

"shouldn't lower taxes apply to everyone and not just one specific company?"

Thank you. This is where Tyler and the rest of the pro-Amazon crowd miss the boat. Amazon leverages it's tax breaks - not to mention it's stock compensation - to run other retailers who don't have those advantages out of business.

But IMO the Amazon magic is tapped out. As interest rates rise and revenue growth slows, it's stock will stall and it will lose the ability to pay in shares, not to mention the aura of invincibility. Couple that with persistent shipping losses and it's erstwhile discovery that UPS and FedEx are actually solidly ahead of it in the shipping business, and that's a recipe for rising costs.

Can’t you lower your effective tax rate? It’s not Amazon’s fault if you make the choices you make. You choose to allocate capital the way you want and Amazon allocates it the way they want.

Look here's the truth. The real story is not the taxes and subsidies, its not like the taxes were rescinded or anything. It was still on there for them the day Amazon called it all off. It was the union negotiations and as soon as their demands came on the table, Amazon said no way. Amazon has a long history of not working with unions and they weren't going to change for a few micro-Bezos worth of tax breaks.

The pro-immigration lobby deserves all the AOC they can get. I hope she bankrupts Bezos.

As a side note I would be wildly in favor of Amazon HQ2 moving where I am.

Amazon won't move to where you are even with billions of welfare offered to Bezos on a silver platter. Sorry that is the cold heart truth. Also, if you hope Bezos is bankrupt, then he definitely won't be building anything now would he? That is some dopey thinking, no offense.

Amazon moved pretty close to where I am, and an even closer location was on the short list.

Amazon will continue on no matter what happens to bezos

LOL. On one hand Asdf has a point. On the other hand hjkl has a point.

> (NB: You can’t hate both share buybacks and profit reinvestment!)

Oh contraire - you can either hate excessive profits in general, as a chunk of resources extracted from the populist by an uncompetitive market, or you can take the position that private corporations should have some purpose other than purely to maximize shareholder value. I'm more sympathetic to the former than the latter because the latter is so hard to formalize in a resilient way. A perfectly competitive market has no profits for any of the firms involved beyond some base interest its stock must dispense to compete with other investments and inflation.

- Bernie supporter

Come on. Is selling the crap that Amazon sells online an uncompetitive market? Really?

Worth pointing out that Amazon itself is a competitive market place. Often when you buy a thing on Amazon you're buying it directly from a third party who merely lists it on Amazon.

Amazon's business and income is hardly limited to retail: their presence in selling computational resources online is even more impressive.

Anons comment can only be dismissed in light of their fundamental misunderstanding of Amazons business.

> Is even more impressive

Would you say it is 'unmatched'?

Because a definition for that word is a lack of competition. Amazon does things that no one else can. A company that does this enjoys large profits until the competition catches up and eliminates those profits, lowering prices for consumers close to some combination of material cost, marketing cost, and labor cost, ultimately ending up a commodity good or a blue chip company.

Amazon takes a cut out of every product it lists on its marketplace. It makes enormous revenues and it uses these revenues to invest in various ventures, instead of redistributing them to shareholders (up until recently).

Reinvestment of excess profits may be considered meritorious or it may be considered a value neutral but the fact is they are *excess profits*, which market competition is supposed to eventually destroy. A well-run company which spends everything on reinvestment may find itself run as a monopoly in multiple markets. I'm well aware of Amazon's model and I'm well aware of the competition that they're currently destroying in the retail space and elsewhere.

The economy ultimately benefits us on net when innovation and competition meet and the excess profits are removed from the equation. It may be necessary sometimes to provide a company with a monopoly on innovation, like a drug patent, in order to incentivize them, but eventually it does reach generic status and we all benefit, not just those who can afford it. Amazon has been wildly successful in multiple domains and we don't have a real good blueprint for how a company's supposed to behave when it reaches this kind of size. The hq2 competition has taken some of the worst tendencies of national corporate power and open them or write up for us to see. We have no ethical framework to suggest how we can make a corporation behave better than an amoral psychopath / rational actor, but it's clear that when private firms become powerful enough to control governments, that has costs. Among the first priorities of a corporate person is to eliminate competition and to seek rent.

*opened them right up

"Amazon takes a cut out of every product it lists on its marketplace. It makes enormous revenues"... did you mean profit? It seems to me their profit from IT operations is much more interesting, isn't it...? And, btw, anyone can provide cloud services. Amazon just does it really well. So no, they are not doing things no one else can. It's not that hard and many do.

"but the fact is they are *excess profits*, which market competition is supposed to eventually destroy"

What exactly is 'excess' there? I'm a computer programmer. My wage is X. If there were twice as many computer programmers (for whatever reason), my wage would be e.g X/2. Do I earn 'excess profit'?

Could you define rather exactly, what is 'excess profit'?

If I run a paper-products corporation with a monopoly position in a country, and I overcharge, creating a gross margin equal to 1000% of my expenses, and I "reinvest" all of that money into buying up all the lumber companies with a presence in my country, or in R&D towards disrupting the need for lumber products, rather than sending it back to investors...

I am in Tyler's microecon-fixated eyes objectively beneficial. What I am saying is that this pattern does not necessarily produce social/consumer gains... *particularly* if a corporation grows powerful enough that things like paying taxes are just _optional_ for them. HQ2 was a race to the bottom, a large demonstration of how coordination problems in governmental bodies can be exploited for net private gain.

'Excess profit' is Adam Smith's idea, not my own.
In the classical example, a company that returns lots of profits to its shareholders, extracted from its customers, is enjoying some kind of advantage over other firms. Dispensation to shareholders is a loss for the company, and the company could not afford that loss if there were other companies neck and neck in a contest for survival; So dividends, particularly especially large dividends relative to gross income, are prima facie evidence that the market is not very competitive and consumers are getting soaked. The goal of market competition is to attempt to eliminate the advantage that such a company is enjoying, reduce prices on the goods in question, and in so doing increase the number of goods and services that society can enjoy.

Modern capitalism has spun many wildly divergent takes on what you do once the bills are paid. "R&D", "Marketting", "Acquisitions", "Investment" - a lot of it is pitched as a 'red queen's race' type thing - this is how the market advances, or at least this is required for the market to pay for itself. I don't think this is the only interpretation, though.

The world would probably be a better place, for example, if we squashed the competition in pharma marketting, in favor of increased competition in pharma R&D. Amazon, Facebook, Google and Microsoft comprise an oligopoly that together own a great deal of our future; By reinvesting enormous profits into nearly any new tech (the terminus of the VC pipeline), it's no longer clear that these companies are producing positive social/economic progress; Some of their most-loved-by-society qualities, as well as the most-loved-by-society qualities of the companies they acquire, are actually destroyed by the market seeking a return on investment. Facebook popularized social-network-as-interactive-phonebook-frontpage-thing, and very nearly everything else it's done has been profit-seeking baggage laid on top of that matrix of utility. Google's introduced untold new techs, but it cancels even popular ones if it can't find a very large profit, as users of Google Reader will recall. Microsoft has spent a decade and a half not trying to make a better OS, but trying to find places to shove its OS money productively; Windows XP and later Windows 7 are widely considered a superior experience to much of its more recent experimentation.

On the other side we have a company like Craigslist, which pioneered an early format and remained minimalist, largely free, text-only, and *insanely useful*. Craigslist could have tried to play the VC game and get ever-higher funding rounds and maybe eventually start funding others in a grand pyramid scheme, but it chose to just continue to exist. And we are the better for it.

Not only is it unclear that a tech will do better _for society_ under the consolidated Google umbrella than under a random small VC firm, the Google Umbrella becoming ever larger has destabilizing effects on democracy and market capitalism.

"'Excess profit' is Adam Smith's idea, not my own."

Yep, Adam Smith ventured the labour theory of value, which has been considered wrong for the last 150 years.... seems you have missed that.

Btw: thanks for NOT defining what excess profit is...

" Amazon, Facebook, Google and Microsoft.... By reinvesting enormous profits into nearly any new tech (the terminus of the VC pipeline), it's no longer clear that these companies are producing positive social/economic progress"

Go learn something about cloud computing. THEN come back.

Adam Smith also wrote a wonderful defense of laissez faire economics. His picture is on the left hand side of this blog. With almost 3 centuries of hindsight, sure he got some things wrong but on the whole his ideas have given much. You seem to have missed that. Go learn something Adam Smith. THEN come back.

We have no ethical framework to suggest how we can make a corporation behave better than an amoral psychopath / rational actor,

"Don't shop there." Boom. Done.

Amazon takes 15% in referral fees.

It also charges for storage, and shipping. They may mark those up, but they are still lower than any rate I can get from the post office or Fedex.

Accounting profit vs economic profit, concept covered in Econ 101.

"beyond some base interest its stock must dispense to compete with other investments and inflation"

- (Bernie supporter with poor voice-to-text capability)

>There is no $3 billion that NYC gets to keep if Amazon does not show up.

Not as amusing as it used to be to see an economist ignore opportunity costs after Ferguson, Taylor, and the rest of those sold their reputations so cheaply. I did think Cowen would be smarter then to head down that path, though.

No, he is absolutely correct here. NYC wasn't choosing between $5 billion or $2 billion in revenue. It was choosing between $2 billion and $0 billion.

Amazon had its choice of cities, each with advantages and disadvantages. NY was disadvantaged by its high tax rates, its own choice. The tax credits were an inducement that reduced the tax burden temporarily. Absent those inducements, NY presumably loses the competition and gets nothing. The only way NY loses is if Amazon would choose NY without the tax incentives. But this is private information, and NY risked much by assuming that Amazon did not rely on a tax cut. This is Bargaining 101.

You can't spend a tax credit not given.

Even the monetary subsidies that NY offered, while they could be spent elsewhere, were an offset to other disadvantages such as the high cost of building. Those subsidies represent NY's calculation that the rate of return on investing in Amazon were higher than any alternative use.

"Absent those inducements, NY presumably loses the competition and gets nothing." No, they'll get whatever the land is used for otherwise. Perhaps one or many other companies will move into the LIC site. Maybe new housing will be built. Who knows? Whatever it is, the city will find a way to tax on it.

Are we so worried that the market won't figure out a use for valuable land in New York City?

Wouldn't anyone else interested in that area now ask NYC, "Hey, where's MY big tax break?" That is, if they are confident they're somehow woke enough to not enrage the local NIMBY lefties.

BTW I'm pretty NIMBY myself but I live in a small-town backwater. How can people living right on Manhattan's doorstep not expect development to eventually come calling?

Most businesses in NYC already would bargain for lower taxes if they could. But they can't, so they don't.

Far too many analysts skip over the question of what Amazon gets with its site selection.

Such as infrastructure, work force, etc

Its all as if amazon is the only party that brings value to the table

I dont see Bezos in a hurry to move himself and senior execs to Detroit.

@McMike - good point except the competition was between DC and NYC, not NYC and Detroit.

I'm also pleased TC did such a good post on why Amazon pays zero taxes, I've not seen this elsewhere.

Covering why Amazon pays low taxes could have been a good topic, but the treatment here fell short.

Short of what? Compared to what?

Short of an accurate relevant analysis

He skipped the most relevant tax break, blew a lot of smoke about payroll, and failed to adress why amazon should pay no taxes when other companies do


Over 80% of Amazon tax breaks are the normal NYC offer.

We’re quibbling over the remaining 17% tax breaks, which the city would have made up in a year or so.

Regardless, I agree even though your assumptions are not remotely accurate. Amazon will quietly grow its presence in NYC, simply because the talent market is limited to 4 metro areas and NYC is one.

"DC vs NYC"

Exactly, Detroit wasn't even in the running. Despite virtually free land, a desperate workforce, and presumably modest regulations from a region eager for jobs.

The Detroit workforce may be desperate, but it’s not clear that Amazon would have hired any of those folks. Not a lot of desperate web site developers, cloud architects, or warehouse automation experts standing around on corners in Detroit.

Exactly. NY has something to offer that amazon needs

Detroit is not as packed with engineers as NYC is, but there are still quite a few tech workers to be had there.

Also, they would not be hiring everyone right away. A lot of the talent NYC gets is not native to NYC, but has moved there, in some cases recently. They could have been attracted to Detroit instead.

IF Commissar AOC is indeed and in fact the honors graduate of Boston University's undergrad program in international studies and economics, why are her "economic calculations" as poorly informed as they begin to appear to be? (Hasn't she been cited for being keen to "invest" that mythical $3 billion of tax incentives?)

Which intrepid scribe might investigate in depth the academic career of Commissar AOC, from its fashionable contours to its shallow depths?

Politics is performance art.

She is just stringing words together in an order that will appeal to people who are likely to vote for her.

In this case, she's saying she supports govt money going towards some causes (education and old people or whatever) and not towards big bad evil corporations and those rich people

Or: the politics of untethered idealism is performance art.

I do hope Commissar AOC's constituents and all other voters in her district examine closely just how well they are able to feed and clothe and house and warm themselves in NYC's economy on the pure unadulterated strength of her sincere aspirations and moral indignations.

NYC has low unemployment. Wages are highest in the country. Economy is largest in the country. Home to high finance, fashion, media, and largest share of the Fortune 500. I'm sure they'll survive. Good luck to Amazon finding the kind of workforce, infrastructure, and network effects NYC has in other parts of the country. Begging for state subsidies is a losing strategy.

Freshman representative AOC is but one of 535 elected members of the US congress. Why is everyone so blitzed by her when there are hundreds more that have been around longer and are just as crazy?

yeah steve king of iowa is a straight up racist and has sat in his seat for ages but we hear only crickets. aoc has sat in her seat for less than a month minus the shutdown and her opposition is already losing their minds to derangement syndrome.

It's always someone. The red team likes to train all their fire on one kooky lefty so they can claim shooting fish in a barrel means they know everything.

As someone astutely said here, she's the Sarah Palin of the blue team.

Criticisms that may be leveled against Commissar AOC in our current environment implicitly carry criticism of the corrupt and corrupting Media Establishment that is pleased to help amplify her celebrity.

Media Establishment reps may not take Commissar AOC seriously: she takes herself sufficiently seriously, and even if her devotees take her seriously by mistake, they can thank in no small part their representative Media Establishment at least as much as they might thank Commissar AOC herself.

This spectacularly misses the point. No one has a problem with profit reinvestment. The problem is masquerading as “unprofitable” and pretending an $800bn conglomerate is a startup which needs support. Amazon doesn’t generate taxable income simply because tax law arbitrarily doesn’t tax capital gains until a disposal takes place. A bad system doesn’t make Amazon a good company.

The richest man in the world does not need a $3bn subsidy. NY state won’t get that money, no, but that’s no excuse to justify an idiotic system of corporate welfare that encourages states to fight each other for scraps like rabid dogs as their infrastructure crumbles and Bezos takes an ever larger slice of the national economy. No state should be subsiding Amazon because it distorts the market and gives a handicap to a company which already has a colossal monopolistic advantage. How does a libertarian economist keep defending this?

"tax law arbitrarily doesn’t tax capital gains until a disposal takes place."


That's when you have the cash to pay the capital gain...after you to dispose of it. That hardly seems arbitrary to me.

If someone moves from a high tax state like NYC to a low tax state like Texas, do we accuse the low tax state of subsidizing their new resident?

Subsidies are monies paid by the government. Tax breaks are just a reduction in government theft. I have my own priority list of tax reductions I'd like, but its beyond my power to get them. Amazon has more bargaining power.

Once you reveal you are a 'taxes are theft' idiot, you lose all credibility

It's self-evident that they are a form of theft. That doesn't mean they can't be justified.

You are changing the plain meaning of words, not saying anything of substance.


You keep using that word. I do not think it means what you think it means.

I think that it would be in Amazon's interest to publish their corporate tax returns to be clear exactly what they are getting tax credits on.

In an article February 17, 2019 The Washington Post:

"Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax and reporting $3.4 billion in tax expense over the last three years," said an Amazon spokeswoman, Jodi Seth, in a statement. "We have invested more than $160 billion in the U.S. since 2011, building a network of more than 125 fulfillment and sortation centers, air hubs and delivery stations as well as cloud-computing infrastructure and wind and solar farms."

On the other hand...

"For Amazon, the most lucrative of those was a tax break for pay given out in the form of stock options, which allowed the company to shave roughly $1 billion off its 2018 tax bill, Gardner said. That would represent nearly half of the total federal tax bill levied on the company's profit of $11.2 billion"

I'll add that is also looks like Amazon has $565 million in deferred US income taxes, although it didn't actually pay any this year:

The "tax break" for paying people with options or any other equity is the same as paying them cash. It's a compensation deduction to the company and ordinary income taxed at the highest rates to the individual.

Amazon is getting a deduction worth 21% while the executives are likely paying 50% or more at the margin.

Plus public companies now pay a 21% excise tax for compensation above $1 million for anyone who has been a top 5 executive in any year starting with 2017.

A lot of lazy journalism on this topic, especially when a lot of this info is publicly available. So for those who actually care about the facts, from Amazon's 2018 10-K:

"We have tax benefits relating to excess stock-based compensation deductions and accelerated depreciation deductions that are being utilized to reduce our U.S. taxable income. As of December 31, 2018, our federal net operating loss carry forward was approximately $627 million and we had approximately $1.4 billion of federal tax credits potentially available to offset future tax liabilities. Our federal tax credits are primarily related to the U.S. federal research and development credit."

And here are the numbers:
2018 Income taxes computed at federal statutory rate: $2.365B
Net provision for income taxes on income statement (federal, state, intl): $1.197B, which consists of:

Current U.S. Federal: -$129M
Current U.S. State: $322M
Current International: $563M
Deferred U.S. Federal: $565M
Deferred U.S. State: $5M
Deferred International: -$129M

What, may you ask, accounts for the difference in their federal taxes at the statutory rate (without credits or deductions) of $2.365B, and the only $1.197B in taxes shown on their income statement (which is the aggregate of federal, state and international current and deferred tax liability)? Well, the 10-K also has a note on this:

Tax benefits from stock-based compensation: -$1,086
2017 Impact of U.S. Tax Act (i.e.repeal of U.S. tax on repatriated foreign earnings): -$157M
Tax credits (w/r/t R&D expenditures): -$419M
Tax Impact of foreign earnings: $119M
State taxes, net of federal benefits: $263M
Other, net: $112M

NB, Amazon uses RSUs for employee comp, not options. That goes back to at least 2007 - a few years before that, I believe.

"There is no $3 billion"

Does this assume zero growth in the location Amazon has now publicized with potential? Long Island City?

Does Long Island City have a historic growth rate?

This pdf from the State Controller says yes.

An Economic Snapshot of Queens, May 2018 - Office of the State Comptroller

You're assuming that Amazon would crowd out other investment instead of drawing it in. There is no reason to believe crowding out exists here, and no one claiming that Amazon would hurt the budget has specified any.

You could make a model of accelerated growth, but in this case it has to be compared to existing growth (and other alternatives).

I've criticized you many times in the past for what I see as a Libertarian bias even in the face of contrary facts. But here I have to give credit where it is due. I didn't think of this story like this until I read you and you're right. It is a great pity other news outlets don't report the story like this. Now that I know it, it is obvious.

"There is no $3 billion that NYC gets to keep if Amazon does not show up."

Suppose I have an ultra high income. Would it be fair for me to negotiate with states for a lower income tax/property tax if I move my primary residence to their state? Is this not crony capitalism? Is this just not begging to shift taxes onto the less powerful that can't negotiate their tax rate?

I assume tax rates were set with an expectation of the overall tax revenue that would be generated by those rates. If negotiating lower rates by the very powerful becomes the norm, how and where is the shortfall made up?

I don't know the answers to the above. I initially agreed that NYC was cutting off its nose to spite its face and that those arguing against the tax deal were making populist, emotional arguments that had no economic logic. But I've spoken with people and read articles that make me believe a reasonable argument can be made that giving Amazon a tax break was at the very least a bad big picture, long term decision. It seems we are once again in a conversation where people have an intuitive feel that one side of the argument is obviously correct and thus refuse to engage in listening to others and questioning their rationale.

Rich people already change their state of residence in order to get lower taxes. If it were easy for me to move to a lower tax state I would.

Since Amazon won't move to NYC, NYC will have lower revenues than if they had never come. That is a shortfall.

You could claim that if you made taxes in all states universally high, people would have nowhere to go, but then you are living in a world with universally high taxes. The ability to relocate from high to low tax states is one of the safety valves that keeps state governments in check on raising taxes. It provides the opportunity to Exit, which is often far more effective than Voice.

Yes, you can move from one state to another to take advantage of that state's existing lower tax rate that applies equally to all. What you can't do, or what nobody has yet been able to do, is to negotiate a tax rate that is lower than the existing tax rate that applies only to you.

I appreciate the shortfall argument and that it is a strong one. But from a one time transaction, economic only analysis, you come out ahead if you provide $3 billion in tax cuts if a company produces any taxes greater than $3 billion. So, if coming out ahead in tax revenue was the only calculus, then why don't states grant tax cuts to every business or individual that moves to their state in an amount marginally less than the tax revenues they generate?

East Towson, MD gives a property tax break to residents who buy housing that has had over $100,000 a renovations put into it over the last few years. Basically, they pay people to come live there. The tax exclusion is really only worth it to people with larger tax bills and the biggest section taking advantage of it are new townhomes for professionals. In effect, "professionals" won a tax break for themselves because they are who everyone wants to move into the nieghboorhood. They need to subsidize because East Towson is pretty close to the ghetto.

Everything in life is bargaining power. Most individuals don't get a better deal because they have limited bargaining power. I can sort of make a decision to live in Baltimore County rather then Baltimore (something which cuts my property tax in half), but it's really rather hard to decide to live in another state. That means another job, another school for kids, etc. That sort of stuff is a lot easier for the rich.

Move up to York or Shrewsbury, like all the cool kids.

IIRC, Switzerland actually allows this. Rich people are able to negotiate a flat tax fee with the local cantons (regardless of their actual wealth, property holdings, or income)

I do not like tax exemptions, which seek to divide-and-conquer the people who would and should complain about excessively high taxes.

But I really don't get the feeling that the resistance to Amazon was about the unfairness of that system. The right conclusion for the wrong reasons can lead to the idiots trying to apply their reasons to a bunch of other places it doesn't apply.

I thought companies did not pay taxes, only employees...

Absolutely, we should eliminate federal income tax and increase payroll tax commensurately, workers need to be protected from greedy corporations

"I thought companies did not pay taxes, only employees..."

I'm pretty sure no says that. You might have misheard the companies don't pay taxes, but instead pass them along to the customers and shareholders.

Wait, is it really true that Amazon's investment nets it profit down to approximately zero? In accounting terms, I am pretty sure that investment counts as a cost and that the measure TC is talking about is "free cash flow". I know that my company specifically uses FCF as a metric for incentive payouts because it would be dumb to punish employees for the company investing. Anyway, anyone know the deal for sure? I did not see any links in the post and have not closely followed this story.

There are GAAP/SEC profits and tax profits. US Tax code allows for accelerate recognition of depreciation relative to GAAP. SO if you have high investment it is certainly conceivable to pay zero tax.

Presumably, at some point, investors will begin demanding that some of that cash be returned to them in the form of dividends. At that time, as investment is reduced, Amazon will no longer have ANY capital to deduct on their IRS cash taxes, but will still be recognizing it in their GAAP books.

"The main reason Amazon as a corporate entity does not pay much in taxes is because the company so vigorously reinvests its profit." No, the main reason Amazon hasn't paid taxes is because it didn't have any profits to tax (not until the Cloud, which produces all of its profits). Amazon was able to expand because its stock soared, soared to levels that generated a P/E ration of infinity. Why were investors willing to drive up the price of a stock that had no earnings? For most of its history, it's because investors believed Amazon would grow so large as to dominate retail, and then raise prices to generate enormous profits once the competition was put out of business. Cowen's fantasy is a nice story to tell children, but not the sophisticated readers of this blog.

Sophisticated readers? Speak for yourself dude. Also you're claiming Amazon used their inflated stock for acquisitions? Like AOL or MCI/Worldcom? I've not followed Amazon much but I believe their growth was organic rather than acquisition based, but I could be wrong.

I did not claim Amazon used its stock for acquisitions; Amazon used its stock to raise capital for expansion. The market for Amazon stock and debt was almost limitless. If another company with zero profits and no projection of future profits had to rely on bank borrowing to raise capital for expansion, what interest rate would the company pay, if the company could even get conventional loans. Amazon was a pioneer and has achieved great success, notwithstanding no profits in its core business. And Bezos, he could always sell some of his own stock to buy yachts or mansions if that were his priority. It's a great story that is less great by seeking what are essentially bribes. As for the sophisticated readers, are you so dense that you didn't know I was being ironic.

We have a time consistency problem.

Consider this model. Ex-ante, capital is fully mobile; it goes to wherever it can find the highest expected after-tax rate of return. Ex post, capital is fully immobile. That includes one-time transition costs and organizational costs. This is a putty-clay model.

To get the benefits of investment, local governments promise low taxes to mobile capital. There are, after all, spillovers and externalities and network effects and so forth. But when capital is immobile, profit is rent, and local governments find it nice to tax it all away.

Places like New York had a huge base of immobile capital from historic investment, and it taxes it heavily. Then NYC promises firms like Amazon that it won't tax them as heavily on new investment, and tax rates will stay low (wink, wink, nod, nod).

The problem that Amazon or any firm will face is that once it makes the investment, and putty turns to clay, the optimal thing for NYC to do is raise taxes on them. As Amazon was facing ever more holdups, maybe it got wise to the game.

The solution is to have uniform taxes on all capital all the time. Then the time consistency problem is solved. And the low taxes will invite firms to invest and keep investing. What a radical idea!

Maybe we should tax land, which is always immobile, rather than mobile capital.

Re your last line, I think a New York economist named Henry George had exactly that same thought.

This is an argument devoid of opportunity costs, devoid of all opportunities, for better tax schemes or better (standard rate paying) investors.

Your argument is devoid of any evidence that there is any.

Other than the tax complaints, it seems the largest complaint is that more people, more business will drive the prices of existing housing higher. It isn't opportunity costs that are the complaint, it is that there is opportunity at all. It must be stopped.

@derek - you sound like those old NIMBY biddies that complain about development here in northern Virginia. They show up at every developers town hall meeting to voice their concerns for projects that are 10 miles from their home and have no impact on them.

It is amazing how many times "uniform tax rates" are heard here as "no growth."

Guess what, if you really believe in markets, you will believe they work without special advantage.

Interesting comment.

Should the government decide the employees of a firm? Should the feds decide your wage?

Taxes are complex, and tax returns are confidential. Statements like “The reason Amazon pays no income tax is X” are just speculation, unless you are privy to the tax returns.

The subsidy package is likewise complex. For example, the package called for a $505 million capital grant (not a deduction or credit) from the Empire State Development Corp., a state agency. That appears to be half a billion in money (not “money”) that NY really does get to keep now that Amazon’s not coming.

I’m not saying that the subsidies would have exceeded the tax receipts. I’m just saying that one ought to do the hard work of understanding the deal and running the numbers before despairing of the quality of discussion.

True they can spend that money elsewhere. But money isnt fungible between the capital fund and alternative uses such as teacher pay like AOC wants. It is a typical leftist trick to assume that every dollar spent on one priority is available to spend on their own priorities. For example, if citizens vote for more school security, that money cannot be reallocated for higher teacher pay. It was approved ONLY for the purpose of security. This is not just a legal but an economic reality.

Those capital funds provide infrastructure that is a core mission of government: the provision of public goods such as water, electricity, roads, bridges, airports, etc.

These funds also defray expenses that are due in large part from excessive regulation and high market costs. If a city wants to have zero new investment, it should ignore the cost of capital. This is why NY has a development fund.

And more importantly, they won't spend the infrastructure money if they don't have a tax base to support it.

But none of this matters. The radical arm of the Democratic Party got a scalp. They are writing Trump's 2020 election campaign strategy.

If our Lord and Savior returned to earth, "the base" would say "what's all this socialism stuff" and vote for Trump 2020. You don't even need to pretend they are looking for serious reasons.

It's amusing seeing the usual Team Red suspects here suddenly going to the mattresses for Jeff Bezos, WashPo owner and Trump enemy. You'd think you guys would be happy he got a black eye.

What's radically left wing about less government intervention in the economy? Sure AOC and co had a hand in scuttling it but those on the right should be happy with stopping the government from picking winners regardless.

tax returns are confidential

Of a publicly traded company?

Most of the tax credits resulting in zero taxes due were from stock based compensation for employees. Tax rules don't allow companies to deduct expenses for such compensation until the options are exercised. What this means is that Amazon paid MORE in taxes in the past and gets to reduce their taxes now. The zero-tax hawks don't know how (or don't care) to consider timing differences.

The bottom line is that everything Amazon did was legal, just, economically accurate, fair, and prudent. There is simply nothing to be complaining about.

The subsidies and government bj were disturbing to me, but I don't like corporate taxes at all. On the other hand, we do need to revisit the use and rules of corporations.

Wow this OP starts off from a particularly faulty premise. Sure, theres r&d credits, there is also executive pay credits. Undoubtedly they also use transfer pricing if they can.

Amazon is of course notorious for robbing local government and states of sales tax revenue by refusing to withhold.

All the justification about payroll taxes is a red herring. There is nothing special about amazon employment vs other firms.

Besides, amazon is also notorious for using temps

The sales tax point used to be accurate but hasn't been for some time. Amazon collects sales tax in every state on its own sales -

True. Nevertheless, states and locals are short billions (?) of taxes that Amazon never collected. This relevant in the context when the OP brags about what a great tax payer Amazon is.

Also I don't know, are they also collecting local sales taxes?

I can't definitively say that they're collecting local sales tax *everywhere* they collect state sales tax, but simple practicality says the general answer to that question is "yes". The norm is that a state agency (e.g., Department of Revenue) collects both state and local portions of sales tax and then remits the local portion to cities, counties, etc. Sending that state agency only the state portion would almost certainly get a response of "where's the local portion?" (followed by a fight to collect it).

Also, please see ant1900's excellent comment above about what you refer to as "executive pay credits". These aren't "credits", they're deductions. There's been some poor reporting by people who either don't understand the tax code - or want to deliberately misrepresent it - that ignores the very basic treatment of employee compensation, whether paid in the form of wages, options, or restricted stock: if it's a deduction to the corporation, then it's taxable income to the employee. (Exceptions to this would be some fringe benefits that aren't taxable to employees, of which employer paid health insurance is far and away the biggest.)

FWIW, I'm generally not a fan of big local tax incentive deals, and I actually personally sort of dislike Amazon as both a consumer and a stock market investor, so my points are about accuracy and not any love for Amazon.

Australia, New Zealand, and Singapore are leading the way in the appropriate taxation of e-commerce.

Of course eliminating tax exempt status for the educational credentials industry would be helpful as well.

According to our hosts, the only way to use taxes for social engineering is to cut them. Sigh. Here is a link to ideas (including ideas relating to taxes) by Dani Rodrik and others for achieving a more inclusive prosperity: It's interesting reading.

I have a negative view of states and cities using the lure of tax breaks to get firms to relocate. I am from the South, and it was the usual tactic to lure firms to relocate to the South. The problem is that it becomes a race to the bottom: there's always someplace else that will offer more tax breaks. Many of the firms that relocated to the South have since relocated to other countries. My view is that firms should locate in the place that's most economically efficient for them, and that offering what are essentially bribes promotes economic inefficiency. But that's thinking like an economist rather than an ideologue. Sigh.

New York gets to keep $ that it would have to spend on extra public infrastructure public schools public policing health etc due to Amazon moving in

I think a lot of people also don't consider the possible non-economic impacts of this decision. If Amazon moves in, many low income residents will be involuntarily forced out due to increased property taxes, increased rent, and increased price of nearby goods and services. Take for example a 90 year old who has lived in their home for 50 years, owns their home, and is on fixed income. A significant increase in their property tax due to a significant increase in property value could force that person to move. That person cares nothing about the extra money they can get from selling their home. They want to spend their last years in the neighborhood they've lived most of their life surrounded by their friends and the places with which they are familiar. Where does this person move? It is quite possible that Amazon moving to Long Island City would have a negative effect on the quality of life of many of the current residents.

The cost of affordable housing in major cities is becoming an increasingly common problem. If the trend continues of the good jobs only being located in major cities and housing in those cities is only affordable to those with good jobs, the urban-rural divide in this country will grow bigger and cause more problems. Should we be incentivizing major corporations to move to the few remaining affordable areas located near major cities?

That's why reverse mortgages exist.

People whose property's jump in value are made richer as their home equity increases. They should be able to tap that equity to pay their rising property tax bills.

Similarly, many municipalities allow seniors to differ their property tax bills until the property is sold.

And thanks to you too for those points. Can the hypothetical ninety year old get a reverse mortgage? That is, is there an effective upper age limit for such borrowing?

Older borrowers are usually able to borrow more money than younger borrowers.

The assumption is that when the borrower dies the property will be sold and the mortgage will be paid off.

For a reverse mortgage, age is a benefit. You get a better interest rate and more access to your equity.

Among the people I have pity for, "my property is worth 20x more than I paid for it, and now I have to pay taxes on that" are nowhere in the top 100.

NYC property taxes are based on the value of the house the last time it was sold. The taxes in the hypothetical wouldn't change much, if at all, until the 90 year old sold out.

"A significant increase in their property tax due to a significant increase in property value could force that person to move." You are the first writer I've seen who has troubled to explain that mechanism by which someone might feel "forced out". Thank you.

NYC specifically avoids this by not taxing the increased value until the property is sold. I inherited a place in Queens that's taxed on a assessment roughly 1/20th of its current market value.

More Prop-13 insanity.

There profit margin on product transactions is near zero. Their profits come from the on line data business. Would they have been successful in NYC in that business? They would connect with the financial engine? More likely Amazon was looking for a way out, deciding they had better methods to get at the sector. Amazon's primary cherry to pick is advance banking for Amazon prime customers, they do not need NYC to do that. A data center in NYC does not help much. Amazon likely rethought the deal.

"There is no $3 billion that NYC gets to keep if Amazon does not show up. That “money” was a pledged reduction in Amazon’s future tax burden at the state and local level."

Suppose instead of Amazon showing up in a few years with 25,000 jobs 5,000 businesses show up with 25 jobs? Since none of them have the sexy name 'Amazon' there won't be any special tax breaks for them and they will pay $3B+ in taxes that Amazon wouldn't.

Yeah, suppose. These businesses had all the time in the world to show up, and they didn't. But they will now, for sure. Such an improvement: we are not talking about $3 billion mythical dollars, but rather about 5,000 mythical business. Perhaps you were 4th in your class in economics at Boston University too?

It's a pretty safe bet that 5,000 businesses will open in NYC over the next few years. In fact that's a safer bet than 25,000 Amazon jobs even if Amazon had not pulled out.

You know what else is a stupid? That we don't pay 12.4% of our incomes in social security taxes, but rather 6.2%.

A couple of points in response to this post and this earlier one (

- Amazon already employs over 5,000 workers in the city and as about 80% of the deal perks are "as-of-right," Amazon will see those benefits as it expands their sizable local presence (they stated that the potential 25,000 employees will be split among the 17 existing offices);

- Google previously used these benefits to expand their local presence and did not need any additional perks to invest in office space that will see a local presence balloon to nearly 25,000 employees in the near future. Why on Earth should Amazon be given special benefits when Google did not need that? Why on Earth should the benefits from NY be double what NoVA gave for their HQ2? Why is NY selling itself short;

- There was absolutely zero transparency and nobody knows exactly what kind of side deals were made here. The deal itself was dead in the water once Bloomberg questioned it, but I actually think there is a more interesting inflection point in this shitshow. The development site itself was going to be a combination of the Plaxell site and several City-owned DoE buildings that were transferred with zero oversight (why is this not an issue?). To make this happen, the City ULURP process was not going to be applied and instead the more lenient GPP process would be utilized, which would require a vote from the PACB in Albany. It is here in the GPP and then the PILOT (a city program) where lots of perks could have been hidden. Once Gianaris was appointed to the PACB and voiced strong opposition to the deal, Cuomo really lost it and was threatening to move on with even less oversight than the GPP. In my view there are probably lots of perks hidden here that a more thorough oversight would have unearthed;

- As noted since many of these "perks," are "as-of-right," Amazon will realize them as they expand their existing presence in the city (which they will as per their announcement). But the disingenuous argument that the city will lose future revenues is bogus simply because this Plaxell site was already slated for massive re-development (see, so there was going to be a huge boost to property taxes anyway even before Amazon's interest. Maybe there would have been a higher amount of revenues with Amazon? Would Amazon have actually gone from 5,000 employees to 25,000? Seeing how the corporate welfare typically works out, I doubt it and say ultimately it will be a wash, but the short-term optics are bad;

- I also disagree with the statement on New York and tech competing with Silicon Valley (this is in a separate Tyler post from the other day). First of all, with Cornell's Roosevelt Island campus, Columbia's massive Morningside STEM campus, and NYU's Downtown Brooklyn STEM investment, these projects together constitute the largest investment in STEM education on Earth by an order of magnitude. Second, all of the stats and analysis show that tech has been the largest growing sub-sector in the city and an increasingly important driver to the economy. And finally if anything the demand for these type of workers is so high that there are not enough supply to fill the need as per friends who work in the field. This positive trend will only continue and diversify the City economy;

- In the grand scheme of things, it doesn't really matter if Amazon built HQ2 in LIC, but what the deal fallout does show is that both Albany and City Hall need to think long and hard about the operating environment that exists in New York. Why create perks that benefit massive corporations instead of lowering the operating costs for everyone including SMEs? Why create a system where the Governor and Mayor cherrypick the winners? In my opinion the focus on helping out the big global players instead of making it easier for everyone helps drive economic and wealth concentration which led to many people joining political extremes;

- Many on the "left" assumed Amazon would still do this deal even without the perks, because New York is "awesome." The reality is New York is a very difficult place to live and work. It's also true that this could have been a message from Amazon to other Mayors, since Amazon reps were so half-hearted in defending the deal and Bezos didn't even appear at the original signing (e.g. do not mess with us or else). Which brings me to the only two issues that our local elected officials need to discuss;

- The Alpha and Omega of issues facing New York are Housing and Transportation. When AllianceBernstein left for the south, many people immediately pounced on the "tax environment." But seeing how corporate offices and payrolls expanded over the last decade, I really didn't buy that. When AllianceBernstein executives were actually approached, they themselves stated that housing (see this insane statistic: and transportation were the main drivers (see;

- And that is what you are going to increasingly see. The big blue cities are so focused on protecting vested interests and the pensions/benefits of the Labor Aristocracy, that they are choking off all competition and growth potential for millennials and younger generations (not to mention the demented system that is college/grad school loans which overburden younger workers). And many of these people are moving to secondary and tertiary cities as a result (NPR had a podcast on this last week as well);

Honestly I am really not hopeful. BdB is busy thinking about his presidential run because he's given up governing, while Cuomo is screwing up the MTA and trying to solve transit issues with "space age" technology from that huckster at Tesla (if there was ever an argument against Dem governance, it is New York). The policies that the "left" pursues will only aggravate the current situation and promote more wealth concentration and company agglomeration (plus our antitrust laws are broken due to Bork so there will be no Federal effort to stop this concentration). While this is happening, the right is out for a walk and could care less about actual governance. We're definitely at a turning point, but I really don't know which way we are going.

@A X - Yasou, good points, but one small correction: "Why is NY selling itself short;" should replace ";" with "?" as is the convention outside of Greece. BTW, the BBC has a good article on Greece and foreigners buying real estate and fixing it up, to the disapproval of the locals, who think it raises rental prices.

NY's AMZN HQ2 opposition only makes sense to intellectuals and socialists.

Has anyone analyzed years of annual published financial statements. I haven't. I follow share price moves and PE's.

Share repurchases have little to do with profits or the income statements. They reflect excess cash balances in the corporation's accounts and managements'/boards' desires to elevate share prices. When shares are repurchased, cash balances and stockholders equity account balances reduce: shares either cancelled/retired or held in treasury account." In AMZN case, repurchases tend to raise share prices which benefit huge numbers of Americans in their 401K/IRA's.

Unless a case is made that shares were trading at prices below "value," repurchases made poor economics sense.

We need to factor the differences between GAAP net income and tax net income. legitimately doesn't pay so much in taxes because of prior years' tax loss carry-forwards; allowable income tax deductions for plant and equipment purchases; and research and development tax credits.

>NY's AMZN HQ2 opposition only makes sense to intellectuals and socialists.

That's a little unfair. HQ2 will significantly increase housing costs, traffic, etc. in the local community, and those costs hit at the individual level. Unfortunately, many individuals (aka stakeholders) also don't stand to benefit from the expansion; they don't work in IT, they aren't recipients of governmental services, etc.

It's all-cost, no-benefit *to them* It's perfectly reasonable to be skeptical under those conditions.

Absent no deal, no Amazon and no alternative business, I think the deal would be a net positive for NYC even if it didn't provide the local community with many jobs, even if it raised prices for housing etc. Tyler is correct in that even with the tax breaks, those 25,000 workers would have been paying a lot of taxes to NYC and spending a lot of money in NYC.

But is that a reasonable assumption? My counterfactual was suppose 5,000 businesses move in each hiring 5 employees? Why not? Mathematically possible.

I think the power rule applies here. One business that hires 25,000 people is likely to spawn 5,000 smaller businesses that hire 5 people around it. The reverse is also true. 5,000 businesses with 5 people is likely to spawn a 25,000 person company.

I think a city's economic development policy should try to be indifferent to growing top down or bottom up. Hence I would be skeptical of bespoke tax deals for big name trophy companies. Instead I would preset a public list of tax incentives for wholesale large employment by any entity. Why should Amazon get a special deal for 25K employees hired in 5 years or so while a homegrown company that rapidly expands inside NYC to 25K gets none? Why should Amazon get a deal because it catches headlines while a deal for 5 companies that each add 5K workers gets slim headlines?

Tyler overlooks the obvious incentive problem with bespoke tax deals. NYC should instead have a menu. Hire 5,000 people in 3 years or less and here's the special tax rate. 10K, 25K etc.

Bespoke deals incentize politicians to cut deals that give far too much away in the out years and bend too much for sexy companies with trophy names. I'd rather see 5 mid-sized companies enter NYC with 5K jobs each than Amazon with 25K but no politician is going to win an election on getting Sprockets and Springs Inc. and other dull sounding companies to relocate to the city.

You can’t hate both share buybacks and profit reinvestment!

This is misleading. Extremely. Hardly anybody hates either one entirely, especially not the reinvestment.

The current dislike of share buybacks is that the Trump tax cuts were advertised - falsely, of course - as stimulating reinvestment with consequent employment. They didn't do that, and companies largely spent the windfall on buybacks effectively dividends.

The dislike of reinvestment is dislike for the expensing provisions, which are an irrational giveaway to corporations, hence their shareholders.

The statement by Tyler is a great example of "mood affiliation," - his fancy term for partisanship.

Is this post just a honey pot for the economically innumerate to double down, thus consuming the time they might otherwise use to spread their ignorance further? If so, it is subtly brilliant.

Why can't one be "hate" both share buybacks and profit reinvestment, assuming "hate" here means tax as it appears to do so. They can also spend their budget on higher wages or more workers which, as you point out, are already disincentivized by payroll taxes. Why not keep the marginal rate the same across all expenditures?

There could be an argument that if might be good to subsidize capital intensity for long run growth, but it's wrong to imply the only options are stock buybacks or capital investments.

What makes you think that reinvestment doesn't include both higher wages and more workers? What do you think they're doing with that money? Buying concrete?

Context: "That is in fact the kind of incentive our tax system is supposed to create, and does so only imperfectly, noting that many economists have suggested moving to full expensing."

Full expensing is specifically about capital expenses.

> There is no $3 billion that NYC gets to keep if Amazon does not show up. That “money” was a pledged reduction in Amazon’s future tax burden at the state and local level.

I've heard other economists argue the opposite of this: whether government gives out a tax credit or gives direct payment, it's the same thing. I can't find a link. Tyler Cowen seems to suggest that giving out tax credits isn't giving out real money.

Next, while I completely agree that Amazon is a prized jewel of the US economy, all US cities should eagerly welcome Amazon. If Queens opts out, that's Queens' loss, and another US city's gain. Amazon had 20 US cities on their short list. I don't see the US or Amazon losing out, just Queens.

True, Amazon reinvests a lot of its profits, but it also significantly limits its exposure to US corporate tax through questionable transfer pricing practices. This results in the shifring of income to low tax jurisdictions and loading costs into the US. This minimizes its tax bill in the US and maximizes it in low tax countries. I have no issue with this when there is a good faith intra-party payment made for the transfer of residual claimant rights between entities, but this is often done in a very sketchy manner.

Not saying that I agree with corporate taxation, or income taxation in general, but under the current tax regime Amazon and many other MNCs are not exactly patron saints to be extolled for their virtue.

Certainly, I don't get to deduct *my* income simply because I reinvest it.

Shorter Gary Stone: To him, "questionable" means 100% completely legal in every way.... but he still doesn't like it, so he's here to whine.

Shorter Tom T: He is an idiot.

According to BEA data the effective corporate tax rate --taxes as a percent of pre-tax profits -- is now some 10% as compared to about 20% a year ago..

So if Bezos' basis is stepped up at death, there is simply no tax ever paid on that massive amount of value creation? That hardly seems fair or efficient.

An estate tax of 40% would be due at death, assuming he took no steps to reduce it. The exemption would be immaterial in his case. If it passed to a spouse, the estate tax is delayed until they die.

The after tax remainder would be stepped up on transfer to his heirs.

>When it comes to the discussion surrounding Amazon and taxes, I can only sigh…

.... and keep voting Democrat.

I have real ignorance on the subject, so please educate with decency:

In the beginning of this text, Mr. Cowen states that Amazon may have a low Federal tax bill, but that they do pay in State and Local taxes, and presumably those taxes are calculated and have some correlation to local needs to meet infrastructure, other spending issues, etc.

But then in order to move to Brooklyn, they ask for special tax breaks on the local taxes Mr. Cowen sites as reasons why they would, in fact, pay taxes if they came.

But don't those statements contradict each other? Could an argument not be made that IF business isn't paying Federal taxes due to re-investment of profits, but is ALSO not paying State/Local taxes to pay enough to support local expenditure requirements, that this, in fact, means they aren't such a boon to an area?

I am not that clued in on this issue, but would the opposition to Amazon been successful if they hadn't ask for tax breaks on the taxes Mr. Cowen sites as the reason they pay taxes?

The break on local taxes was not 100%, and it was only on Amazon's share of payroll and other taxes. Those being employed would still be fully liable for their income taxes. And Amazon would still need to gross up pay rates to offset those tax liabilities to attract the necessary labor, like all other NYC area employers.

While the tax breaks were a compelling talking point for those opposed, they were far from the only objection. Other objections were Amazon's resistance to unionization and the gentrification that would result from such a large development.

The resistance to unionization was probably the critical element. NYC area unions thrive on graft and NYC politics is largely funded by union spending. Allowing a large and influential employer into the area who doesn't play the union game would seriously upset the status quo.

I guess the Libertarian philosophy now includes special tax brakes for favored companies?

Good points Tyler. I agree with what you say

Tyler, when you temporarily closed the comments, I thought it might have been a mistake, but wading through the comments the last couple of days after not doing so for several months (I still read your posts), I think it might be time to close them. The deterioration is astonishing from what the sections were like a decade ago.
Here is a non-profit, non-partisan think tank stating the real reason Amazon paid negative corporate tax due to loopholes on executive stock options. Do I believe a non-partisan, non-profit think tank or do I believe a man funded by the Kochs?
I can only sigh...

That treatment of options not a "loophole". It is the *exact* same treatment as paying cash compensation to employees.

To wit:

- If a company pays an employee cash compensation, the employee has taxable personal income, and the company has less taxable income (due to the expense).

- It is the same with the type of options (non-qualified stock options, or NQSO's) that reduce corporate taxable income. There is offsetting compensation income for employees.

The person writing this at ITEP either doesn't understand what he's writing about or is being deliberately deceptive.

4th in her class studying Economics at Boston University. Should AOC meet with an unfortunate accident, BU Provost would be the first person to be interviewed by the detectives.

It would not be unreasonable, IMO, to outlaw share buybacks. If the company wants to distribute cash to shareholders let it pay dividends.

The buybacks are essentially just a way for the company to offer its shareholders a way to defer taxes on distributed cash.

Very important discussion

Amazon's profit runs 2-3%. The sales taxes they avoid run 5-9%. Therefore, if audited for tax evasion they would go under. Amazon is an online tax-avoidance scheme on par with Madoff. Hey, invest in my IRA and I won't pay any taxes or penalties when you take your money out and we will put Schwab, Ameritrade, etc. Out of biz like Amazon did to mainstreet. Bastards.

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