In a reveal that shocked no one, Amazon paid zero taxes in 2018.
There’s been a recurring theme in defence of Amazon – that they employ thousands of people who therefore pay income tax and, more importantly, spend their income elsewhere which employs more people and creates sales tax revenue.
I’ve covered this in the past, but as we have a specific example allow me to express once again my issue with how capitalism works here.
Amazon provides both goods and services. They are probably best known for their service, which is delivering goods from other companies to customers. Their warehousing and logistics is world class and what put them on the map. They do also produce things now.
All of that requires money. We have the cost that goes directly into producing their goods, and indirect costs that go into running the company. They need lights on the buildings. The printers need toner. They want coffee in the break areas. That all costs money.
And, of course, they have the salary and benefits for their employees. That cost is 100% compensation for the time and effort of those employees. This is a cost of doing business. Cost. Remember this word: cost.
Now at the end of this process we have a good or service to sell to customers. For how much do we sell the good or service? Well, anything less than the amount it cost to produce that good or service is a loss to the organisation, and that will eventually cause the organisation to fail. Anything above the amount is cost to produce that good or service covers the cost and provides some extra: profit.
This is the thing I cannot stress enough: profit is not money for which people have worked hard. You know all the sayings about “digging yourself out,” “pulling yourself up by your bootstraps” (by the way, the origin of the phrase specifically seems to allude to the impossibility of the task), and the like. Profit has nothing to do with that. Cost.
So we have a company like Amazon that takes in $11B in profit. Not revenue. Are we still following? It cost Amazon way more than that to do business in 2018. A lot of people, thousands, worked tirelessly to provide goods and services to millions of people, from the woman who put tape on a package to ship, to the guy who delivered the package, all the way to Bezos. They invested time and energy into providing those things. That’s the cost of Amazon doing business.
After all of that was said and done, Amazon had $11B more than that cost. They received compensation for that effort, and then $11B more. They will pay zero taxes in 2018.
They employ thousands of people who will pay income tax and sales tax. So we are getting taxes from Amazon that way. And the sales taxes go to other companies who employ people, and those people pay income tax and sales tax.
Here’s the rub. Those people work for Amazon. They receive a salary (or hourly rate) and benefits that Amazon deems fair compensation for the amount of work they put into the company. Remember? We discussed this already. It’s a cost of doing business for Amazon. That’s the Amazon perspective.
Now let’s flip the view. I’m James from Amazon’s Warehousing Department. I’m in business for myself. I go to work so I can earn a salary and benefits to support my family. I provide a service – something to do with warehousing. I have a contract with Amazon and we determined that those services have a value of $X per year. Amazon pays me exactly that much. Zero profit. I receive a revenue that we determined exactly equal to the cost.
From that revenue, I pay an income tax to the government. I also have to purchase things for my family, and those purchases (depending on where I live) include a sales tax.
Oh, and those purchases? They all take place with organisations doing the same thing Amazon is doing. I buy a toothbrush, part of that is covering their cost, part of it is pure profit. I buy a sandwich, part of that is cost and part is profit. Every single transaction in which I participate as buyer is, by definition, unequal as I am contributing above the fair value of their good or service. Because they are not looking to be reimbursed for their cost – they are looking to profit.
I receive an income that corresponds directly with my cost, and then I make expenditures that are beyond the cost.
I can work myself to death – I will receive compensation equal to what is deemed my cost in the equation. They, a very select few compared with the total population, will get to pocket a profit without doing a thing.
“They work hard, too. It’s not like they do nothing.”
I agree. And they receive compensation for that. It’s also part of the cost for whatever organisation to which they belong. All of this profit is excess they simply receive.
Amazon does create jobs and generate income tax through that. They also removed $11B from society last year. Why exactly do they not have to provide any of that in the form of tax revenue for the government to provide services like making medical costs affordable, providing high quality education, building and repairing infrastructure, or increasing our security?
We can quibble over exactly what amount it should be, but $0?
Am I say it wrong? Thousands of employees are paying taxes out of the compensation they receive equal to their cost. Amazon, a corporate giant who wields its money for political thought and may influence public policy, pays nothing out of its excess. If they want to influence a Congressional bill, they will throw whatever money they deem necessary at it. They can’t put some of their $11B in single-year profit towards fixing some of these societal ailments? You know, the sorts of things Amazon’s own employees deal with on a daily basis?