[seunosewa]

The article is reluctant to mention the reason why they got those tax rebates, and focuses on the way people feel about it. This seems like bad journalism.

According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.” https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-feder...

These are the actual things we should be talking about.

[chii]

> carryforward losses from years when the company was not profitable

yes, this definitely should be talked about. Why can't people's income be carried forward like this as well?

If i made a lot of money one year, why can't i claim away taxes from years that i didn't make income (such that my tax bracket is lower)?

[dcosson]

None of the “well actually” replies you’re getting has yet mentioned that carrying forward personal capital losses is capped at $3000 per year. How could anyone argue that is remotely the same as Amazon avoiding billions in taxes?

There are also a lot of other ways companies get much more favorable tax treatment than people — for one thing just very fundamentally, they are taxed on profits but people are taxed on revenues, with no ability to deduct most major costs like paying rent or healthcare bills below a very high cutoff.

Kind of a tangent here but I can’t help thinking about this discrepancy when I hear about ISAs, and how people should be able to use the funding methods that companies do like selling shares in themselves. You can be a company but without any of the favorable treatment!

[bryanlarsen]

In theory, that's what the standard deduction is for. If you spend $1MM/month on rent, that's a luxury and should use after-tax dollars. If you spend $500, that's a necessity and should use before-tax dollars. Thus the 12,000 standard deduction: the first $1000/month you spend on rent, food etc is done with before-tax dollars, subsequent dollars use after-tax dollars.

[TheCoelacanth]

Businesses get to deduct their actual expenses, though, not just their minimal subsistence-level expenses.

[dcosson]

I'm taxed on my actual income though, not something like the whole country's median income. But I can only deduct a crude approximation of the whole country's minimum necessary expenses.

It definitely works against you both ways in high COL areas, where salaries are higher in part bc expenses are higher, but deductions are still fixed.

[apexalpha]

This is offtopic but my country (NL) allows this:

I earned €1600 in 2016 as a student and then €50k in 2017 and 2018 as I started working fulltime. So now I can make a request for 'averaging' my taxes and I now get a some money back.

[amirs]

Same in Israel

[namdnay]

Not making money is not the same as making losses. You can carry forwards losses you've made on investments.

[lugg]

> Not making money is not the same as making losses.

I have rent and bills to pay regardless of whether I'm making money, that is the definition of making a loss.

[jerf]

"I have rent and bills to pay regardless of whether I'm making money, that is the definition of making a loss."

That is not a loss. That is an exchange of value; you pay $100 for your heating bill and receive $100 of heating.

A loss is when you have some value, and it disappears, and you have no compensating value. Buying a stock at $100 and selling it at $50 is a transaction in which you have less money at the end than you had at the beginning, and where you also had no compensating value exchange

Normal taxpayers do have rights to do things like carry forward losses in many circumstances. Business do get to be not taxed on expenses, but there are conditions on that. You can tell there are conditions on that because you can't just form an LLC and declare all your expenses to be losses, because you won't meet the conditions for your expenses to be losses. Note that that is the source of the problem, "form an LLC" is something you can totally do very easily, it's the failure for your personal expenses to qualify that is the problem.

While it might be emotionally satisfying to tax businesses on expenses, it's not hard to think about it a bit and realize why letting taxpayers deduct all their expenses, or trying to tax businesses on their expenses even when they didn't make a profit, are both not great ideas. (Think about the incentives created. Taxpayers don't need any more incentives to spend all their money on "expenses" as it is, if you've seen the credit card debt statistics.)

[chii]

A company paying a cost of $50 to produce widgets for 1 year (and don't sell any that year), then selling all the widgets on the 2nd year for a profit of $100, can claim that they made a loss of $50 in the previous year, and therefore only have $50 that's taxable.

A person who works for 1 year for $100 income, then stops working the 2nd year (and live off their income from the 1st year), must pay their taxes at the $100 rate. If they are allowed the same 'carry forward' as a corp, they should pay at the tax rate of $50 for both years, rather than at $100 for the first year, and $0 at the 2nd year. And yet, this isn't allowed for a person. Of course, you could claim that the gov't can't tell that the first $100 is supposed to be 'averaged out' in the future. So would the situation be any different if you lived off savings for the first year, and replenished them in the 2nd year? I don't think this is any different.

[cascom]

Sorry that is not how it works - basic tenets of accounting (matching revenues and costs) those widgets would sit on the balance sheet and no loss would be recognized in year 1 and just profit in year 2

[phkahler]

Paying wages and by extension R&D is nothing more than business expenses. It's hard to see why that qualifies as losses that can be used to offset future earnings. I'm sure there is an "explanation", but that is ultimately what people are upset about. It has lead to where they are today and to many people that doesn't sit well.

[jerf]

I am a believer in being upset about the right things. "Expenditures" are not automatically "losses". There are things that may be upsetting about how businesses are taxed, but there mere fact that they are taxed differently than people, or that it subjectively feels unfair that they are, is not one of them. There are reasons for that variance in taxing. Many of them are quite good and ultimately play to the benefit of both the employees of that business (who like having a functioning business around to pay them) and society (who like not just the taxes that come from the business, but all taxable activity it generates, including paying people incomes and health insurance and such).

If most people feeling their way through this problem got their way, they'd simply destroy businesses entirely. They wouldn't necessarily mean to, and only a handful of people would actually appreciate that as a result, with even fewer of those would appreciate it after ten years of experiencing it, but it would be the result.

This is a thing that has happened, and can be studied in history, and is actually happening in the world right now; countries have destroyed their entire business base for good, feel-worthy reasons. Generally speaking, most people have not liked the results. It is not a thing that is beyond the pale, or impossible to happen, or can't happen here, so it's worth encouraging people to be more careful than just feeling.

(This is more opinion than the above, but I don't really believe in the existence of "businesses that aren't taxed", because the business is non-trivially responsible for all of the income tax their employees generate, and directly pay Social Security, health care taxes, sales tax on all the things they buy, and so on. It isn't really the case that there are companies that reach the end of their fiscal year and not a single dollar was "paid in taxes". All it is is that they aren't necessarily paying income taxes, one particular tax, in a field full of lots and lots of taxes. The idea that "companies aren't being taxed" is a lot of rhetoric, which isn't intrinsically a problem, but it can be very misleading and lead to emotions not well-calibrated with reality. By this standard, there's actually a lot of Americans who "don't pay taxes" too, which really makes it all seem a great deal less unfair, and even pay negative taxes, but they still pay various taxes even so, because income is only one taxation element.)

[caprese]

I love the debate on how evenly distributed the government stuffs its coffers

It pits everyone against each other to make sure someone else gives more money to the same entity

Fascinating

[sokoloff]

Rent and bills are (in general) not deductible expenses.

[chii]

but the rent and bills of a corporation are deductable? Why is it different?

A corporation has the same legal rights as a person, but a person has to pay more for these rights. It's unfair imho.

[sokoloff]

Ordinary and necessary business expenses (expenses incurred with a reasonable overall expectation of profit) are, in general, deductible in the US because we tax income.

Personal expenses are not.

People end up paying all taxes anyway, just sometimes one or two steps removed from the legal entity/TIN who files the returns.

[cascom]

1. There is a practical aspect - every person would have to have a balance sheet/financial statements

2. Those expenses are in the furtherance of generating profits rather than for personal consumption are we really going to give people write offs for their Apple watches and $6 latte’s?

[mikekchar]

Sounds silly, but feel free to become a corporation. Well, it's not quite as easy as I say. When I went remote I had to start my own contracting company. Because I live in Japan and (at the time) corporations were the default company configuration, my contracting company was formed as a corporation. There are lots of advantages:

- I can deduct the rent for my work space. In fact, theoretically in Japanese law I can even rent an entire building and offer myself the ability to rent living space for about $150 per month, with the company eating the rest as a loss. Probably you can do something similar in other countries (although I couldn't actually do it... because in order to rent a place I need a company and in order to form a company I need an address... so... well, it didn't quite work out).

- Internet, some of my utilities, etc, etc are expenses. Some furniture as well. Some of it has to be depreciated, though, so I don't get the benefit immediately.

- I can set my salary to anything I want. If it is beneficial for the company to make a profit and for me to make peanuts, then it's fine. If the opposite is beneficial, then it's fine.

- A fair number of expenses can be deducted by having a life insurance plan for employees, etc, etc.

On the downside:

- I have to submit all my accounts using dual entry accounting. The government gets stroppy if I make a mistake because they expect me to be a corporation.

- I have to submit year end accounting. Seriously, I have no time for this and employ a wonderful tax accountant to do this for me. My tax accountant saves me money, but getting a good one is like getting a good car mechanic -- it's hit or miss and can be very expensive if you choose the wrong person.

- I have to do the payroll, calculate withholding tax, pay fees and employment taxes. I have to do this every month and if I'm late I get a really big fine. Luckily my wife does this (seriously, I would never do this without my wife doing all the heavy lifting)

- I have stupid amounts of bank fees because I have to transfer money between 3 different banks just to pay myself. We actually use a sneaker net in one phase: I literally withdraw our payroll from the ATM and deposit in another ATM just to save $20 in transfer fees. Of course, I have to document all of this so the government knows I'm not fiddling anything.

In the end, it's an absolute PITA. I don't really recommend it. I think I save a little money this way over when I was being paid salary. It's really hard to tell, though. However, if you factor in all the work that I need to do, I think I'm being paid about $2 an hour for that effort. Or I should say my wife is. If I didn't have her, it would not be worth it at all.

[temp1831]

Let's say you run a gas station, which is a notoriously low margin business. You have $1,050,000 in revenue this year, and $1,000,000 in expenses, so you make $50,000.

Let's say you run a small software company, which is a high margin business. You have $1,050,000 in revenue this year, and $500,000 in expenses, so you make $550,000.

You should be taxed on the $50,000 and the $550,000, not on the $1,050,000. Otherwise, if business expenses were not deductible, low margin and capital intensive businesses would be punished severely. We would have decreased investment in the economy and everyone would suffer for it.

If individuals could deduct their expenses, it would encourage people to spend every penny they make. The mortgage interest deduction is one example where this nudge becomes apparent (albeit real estate has merit as an investment, not just consumption). We already have a low enough savings rate as it is.

[fjsolwmv]

You get a personal exemption and a standard deduction for your living expenses. Yes, it's unfairly low compared to Jeff Bezos's deduction for his Gulfstream plane and executive cafe.

[OscarCunningham]

They're related. Suppose someone makes $100000 net over two years. Should the amount of tax they pay depend on what happened in the first year?

[C1sc0cat]

I thought you could carry forward income tax if you say paid a lot in one year due to share options? you could use this to offset later years tax.

[fjsolwmv]

Only if you set up a corporate tax shelter for yourself.

[ex_ex_nihilo]

Individuals can only do this for 7 years FYI. Corporate carry forward is much longer (is there even a limit? I'm not sure. I usually don't keep my corporations that show a loss for longer than a few years before dissolving them and forming new ones).

[ensignavenger]

While the article states it as "did not make a profit" what actually happened was they lost money, that loss was carried forward.You can do this too! If you have previous years where you had a loss, you can carry that loss forward just like Amazon does. There are rules around it, but it isn't that complicated.

[TomMckenny]

There used to be allowed. It was called "income averaging". But then the tax philosophies of the 80s happened.

[Waterluvian]

Forms of that happens in Canada. My effective tax rate was 11% last year because I maxed out my tax shelter retirement savings plan from all the years I made no money.

[cascom]

You can carry forward capital losses.

Theoretically, this is appealing - practically, I see a lot of problems

[TomMarius]

What you suggest is something completely unrelated.

[civilitty]

Those all sound like corporate tax policies. That's literally what they're talking about. Clearly, a growing portion of the electorate doesn't like those policies.

That's the first step in democracy, no? Engagement?

[lfcc]

I agree that engagement and discussing policies is important. But it does feel disingenuous and aimed at provoking outrage (to trigger a knee-jerk reaction) when you just mention a fact like "look at these rich guys that don't share anything!" and ignore the context of why it got to be the way it is.

And I'm not saying that there aren't changes that could and should be made. Just that this particular article doesn't have the feel of a fair debate aiming to inform people, but more of an outrage-inducing propaganda.

[Shivetya]

jealousy leading to anger is all part of the political play book and the NYT is there to serve its political masters by running stories that will soon be picked up by candidates to run with.

it is all part and parcel with an upcoming election. get your direction from the PAC you deny feeds you stuff, write an article with enough truth in it to pass muster but leaving out enough to make a "rational" decision. Thereby upsetting people by appealing to jealousy, envy, and such, by playing on their morals. After all everyone is for justice, protecting children, the environment, and fairness, aren't they?

tripe like this doesn't belong on HN but with the election season spinning up we will get flooded with both direct and indirect stories that are politically driven.

[civilitty]

Right, except the candidate with the most detailed and thought out policies designed to tackle these issues (and one of the front runners currently) is Elizabeth Warren, a senator who has built her career doing the exact opposite of what you're claiming. The vast, vast majority of her funding comes from individual contributions and the vast majority of the rest comes from such "lobbying powerhouses" like Emily's List. Are you seriously claiming that the NYT's political master is the woman who spearheaded the CFPB?

Intellectually void "everyone is corrupt why cant the sheeple see" tripe is best saved for Reddit.

[locklock]

I'm fine with outrage-inducing propaganda against people who have tens or hundreds of billions of dollars since that class as a whole spends so much time putting out propaganda in their favor. I'm not particularly interested in the details as long as it elevates consciousness about the inherent problems with a society that allows Jeff Bezos to have more money than he could spend in ten thousand lifetimes while millions of people aren't entirely sure how they're going to afford food next week

[delecti]

> Jeff Bezos to have more money

Out of all the rich people we could talk about, Bezos is actually one of the ones I have the least problem with. Bezos has a lot of money, but he doesn't have tens of billions of dollars of "money". His net worth is mostly tied up in Amazon ownership, and if he tried to liquidate more than a small fraction of it then it'd suddenly be worth much less, both because of increased supply, and because Amazon's value is very tied up in his ability to drive the company. Maybe we could talk about problems with a system that allow Amazon to be worth as much as it is, but for the founder of a company to be worth a lot because they built a big company, that doesn't seem like a problem to me.

[lfcc]

Amazon is not Jeff Bezos. Taxing him would be a whole different topic of conversation. Probably more on the topics of executive compensation, taxes for high incomes, and a bunch of other possible subjects.

Interesting discussion to be had, for sure, but not what the article is really about.

[locklock]

It all falls under the same umbrella, which as you accurately described as "rich guys who don't share anything" and as far as I'm concerned any amount of elevated consciousness around that is a good thing, even if strictly speaking taking money from Bezos the man and Amazon the company are two separate types of taxation and two different discussions. Bezos and his company Amazon both make almost unfathomable amounts of money and don't pay anywhere near what I'd consider a fair share of it back into society. As Amazon's PR people point out this is legal, naturally, but this article does a good job of contrasting Amazon using every tax trick in the book with normal human beings who aren't able to deduct their expenses for cancer treatment. Likely because the lobby representing the financial interests of individuals with cancer is not all that strong.

"Amazon doesn’t pay taxes, but I pay taxes" is a very good sound byte from this, even if the reasons why that's the case are obviously more complicated.

[fjsolwmv]

Amazon is not a human person. Which human people pay too little taxes for the wealth they receive or consume? That's what matters.

[benchaney]

How about we don’t encourage outrage inducing propaganda against anyone? If you have an issue with some someone has actually done (like for example putting out their own propoganda) then by all means be critical of that. What value is there in accepting vapid nonsense, just because it targets someone you dislike?

[civilitty]

Fair enough. I agree that the word count would much better be spent on discussing the relevant legislation and resulting tax codes.

But let me be honest. I wouldn't read that story. I'm not a tax policy wonk, nor am I qualified to opine on the legislative process except to express exasperation at the gridlock. I am however qualified to vote for candidates who are and that first requires awareness of the issues, a topic orthogonal to a precise understanding of the solutions, just like I need a doctor to tell me what to do about my infection after the pain has brought attention to it, not explain the intricate details of how assays work or how antibiotics disrupt bacterial functions.

[bryan_w]

> I'm not a tax policy wonk, nor am I qualified to opine

Which makes it so easy for the NYT to manipulate you into jealous frenzy.

A lot of people see an outrageous headline and too few ask "what's the other side of the story?" The media knows this and can use it to direct your ire at any of their competitors because it's so effective

[civilitty]

The other side of it is what my personal and business's accountants do. I don't need to know the intricate details of their work to look at the final bill and realize that maybe I should be paying more for the benefits I enjoy in this country, especially considering my native tax rate - which gets me a hell of a lot less in Russia than the nearly equivalent effective rate does in the US.

[cascom]

The problem is that the NYT ignored the why almost entirely to generate outrage because they are creating an issue. Most people wouldn’t be outraged if you said “this company didn’t pay tax this year on its $2B in profits because it lost $1B last year, and invested $1B in a new research facility (and got accelerated depreciation)”

[jrumbut]

I thought this (among other paragraphs) provided context:

"Though both parties have sought to lower the top corporate tax rate in the last decade — President Barack Obama proposed lowering it from 35 percent to 28 percent — Republicans in 2017 pushed it down to 21 percent, in addition to expanding some generous tax breaks. The new law allowed immediate expensing of capital expenditures, for example, in order to goose investment. That was one of the primary reasons that more corporations paid no federal taxes, according to the report.

Mr. Trump and his Republican allies argued that the tax changes would stimulate investment and economic growth. That has happened, though not by as much as they predicted."

There's no debate here, the article was written by one person. It juxtaposes several facts (changes in tax law over the last 10 years, a group of profitable corporations with an effective corporate tax rate of 0 (or negative), poll results, factory closings, and a number of statements by presidential contenders) and, for context, adds a handful of statements from voters and minor activists to give the reader a sense of of how voters in Ohio are viewing these changes.

It's full of charts and dates and numbers. While the title is a little provocative, I find the body text to be informative and interesting, and feel the temperature is kept relatively low given the extremely contentious subject matter.

[lfcc]

It mentions tax rate laws, but those don't actually cover why Amazon effectively paid no taxes. I.e. massive investments in R&D, stock-based employee compensation, carry-forwards losses, and whatever else I may still be missing.

I don't think it can be considered fairly informative if it doesn't cover how we got to those values. From reading this article, one could still ask if a tax rate is at 21%, how does that mean a profitable company doesn't pay any taxes?

[jrumbut]

I don't think its an article about Amazon's tax bill as such. It's about how Ohio voters and presidential candidates are reacting to Amazon and several other firms' effective tax rates.

If they went through what Amazon and Goodyear and GM and Duke Energy all did then they would just be rehashing the report that they conveniently linked.

[AlexTWithBeard]

No.

The only thing worse than a fool is an engaged fool.

First educate the people, then crank up the engagement. Doing it in the opposite order is a recipe for disaster.

[kamarg]

That kind of sounds like you're saying "These people aren't smart enough to have a say in how their lives are run".

[benchaney]

That isn’t what he is saying at all.

No one is smart enough to make good decisions while uninformed.

[SilasX]

I thought it was education. Like, about why carry-forwards make sense. If there's a (somewhat) reflectively consistent reason why we want to break the "only tax profits" model, and voters generally understand the tradeoffs, great, that sounds like a good debate to have. As it stands, like the OP suggests, it comes off more as misleading rabble-rousing.

[netcan]

>>These are the actual things we should be talking about.

I (hesitantly) disagree. That specific tax policy change is a tree in a vast forest. It happens to be relevant here, but without it... It's not like Amazon, Google, apple, etc would have paid anywhere near the simple tax rate had that legislation not been enacted. Amazon had a different loophole/strategy in 2016 and will have another one for whenever the 2017 one expires whatnot.

Ultimately, corporate income tax has been broken for over 50 years, and it's been brought ken internationally, not just in the US.

...broken in the sense that the "rate" can be 35%, 23% or whatever and the total tax raised in an economy some number unrelated to that.

Reporting the way you suggest implies that in 2016 things were different, or that canceling that policy will yield a meaningfully different result. That's not the case.

[lfcc]

> (...) It happens to be relevant here (...)

Then it should be discussed. Along with the policies already mentioned in the article and it's disingenuous not to do so. How can we expect to make informed decisions if we selectively choose what information to expose or hide for discussion?

[fatnoah]

>and stock-based employee compensation.

Do we have any more information on this line item? I'm in a position where over 1/2 of my income is via RSU grants from my employer. If those are deductible from corporate taxes, that seems to make sense since they are treated as regular income to the recipients, just like salaries (other payroll taxes, etc. are another story). I know there are other forms of equity-based compensation as well. I'm curious to see how these things work.

[cascom]

This is a good article on the subject

https://hbr.org/2009/08/expensing-stock-options-the-co

[noworld]

I wish there were individual income tax credits for R&D work.

[TheBobinator]

Go look at Amazon's 8k and 10k filings; If memory serves it wasn't until 2015 or 2016 they turned a profit after almost 2 decades. It's been illegal, under racketeering laws, to sell at a loss in order to capture a market for a long, long time, and that's the real story here.

Republicans and Democrats have let that one go; blaming political parties is a straw-man argument. They expect to utter the words and hope you believe it and not fight what they're doing.

In 2008 after the crash the retail industry switched to hiring part-time jobs only; Wal-mart, Meijer, Kroger, almost everyone and a lot of that was due to pricing pressure from online retail namely E-bay and to a larger extent Amazon. People began working 3 or 4 unstable part time jobs to piece together 60+hr weeks in order to make ends meet and still living in destitution (not having savings for a car or house repair). Many turned to drugs and alcohol to deal with the trauma of being in a sitaution where that looked to be a permanent state of affairs. Today, Wal-mart has stopped drug testing new hires, they've implimented a drug rehab program for new hires because they drug test 100 people and literally 99 fail. Other retailers and employers are doing the same.

Any company that views it's customers as the product ultimately is looking to do what anyone does with a product once they are done with it; throw it into the garbage. CNBC is filling your head with garbage and turning you into garbage just like Amazon and the retail industry did to those retail workers I just mentioned; now they get to clean up their mess. Those people get to lose a good 15-20 years of productive live due to this. You have literally nothing to gain by listening to them whatsoever; take a news literacy course and invest a little bit of money on real journalism.

[elliekelly]

> It's been illegal, under racketeering laws, to sell at a loss in order to capture a market for a long, long time, and that's the real story here.

You're thinking of an antitrust violation, not racketeering. The Sherman Antitrust Act prohibits any "attempt to monopolize" which includes predatory pricing. Racketeering is running a criminal organization for-profit (a Ponzi scheme, dealing dreams, illegal gambling, loan sharks, prostitution, etc.).

[TomMarius]

Not turning a profit does not mean or even imply selling at loss at all.

[lugg]

It does actually. Cost of doing business includes all costs.

If amazon believes they need to spend money on R&D then that R&D is a cost of doing business, if its not turning a profit with that R&D spending then the business is not sustainable by definition.

Amazon was not doing R&D for shits and giggles. Just because the time horizon was long doesn't mean it wasn't any less of a requirement for their success. Amazon would not be in the same place it is today if not for that expenditure so claiming it wasn't a "cost" is just disingenuous.

[formercoder]

Should we have been allowing amazon to capitalize that R&D though? It creates one of their largest assets and yet is not reflected on the balance sheet and is expensed immediately.

[icebraining]

> if its not turning a profit with that R&D spending then the business is not sustainable by definition.

Why? If the revenue perfectly matches the expenses (including R&D), it won't turn a profit, but it can be sustained indefinitely.

[TomMarius]

It doesn't actually. When we're talking about taxes, we have specific timeframes in mind, that is one year. You don't have to turn a profit at year 1 or even year 100 in order to be profitable.

[kgwgk]

In the last 16 years (2003-2018), Amazon had only two years of negative earnings: 2012 and 2014.

[icebraining]

If Amazon was selling at a loss until 2016 (almost twenty years since their IPO) where was the rest of the money coming from?

[ikeboy]

AWS

[icebraining]

That may account for half the time, at most.