In 2018 Amazon paid no federal corporate income taxes on $11.2 billion, as it reduces its tax rate using various credits and rebates.
Amazon did not pay any taxes and nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion, according to an analysis of the company’s corporate filings by the Institute for Taxation and Economic Policy (ITEP).
Due to various tax credits and a significant tax break available on pay in the form of company stock, Amazon received a federal tax rebate of $129 million in 2018, giving it an effective federal tax rate of roughly -1 percent as per Washington Post's analysis. This means Amazon's effective federal tax rate is below the rate paid by the poorest 20 percent of American households, which had an effective federal tax rate of 1.5 percent in 2015, according to the Tax Policy Center.
Amazon, in a tweet, clarified that it had paid $2.6 billion in corporate taxes since 2016. It further explained that it has invested $200 billion since 2011 and created 300,000 U.S. jobs. Amazon told Reuters that its low tax bill mainly stemmed from stock-based employee compensation, the Republican tax cuts of 2017, carry forward losses from years when the company was not profitable, and tax credits for massive R&D investments.
Amazon states that the problem is with the U.S's tax code and not their company. The company pays some taxes but has courted controversy in the United States and across the Atlantic to find ways to reduce its overall tax burden, something common among many corporate companies.
Matthew Gardner, an ITEP senior, called this a failure of American tax policy. By all indications, Amazon appears to be using the tax breaks that Congress has made available, Gardner said.