[Retric]

It’s hard to imagine the average small business successfully evading taxes as well as Amazon.

In 2019 Amazon paid zero taxes receiving a net $129 million refund from the federal government, in 2018 they received a $137 million refund after paying 0$ on a net income of 11.2 billion dollars.

In 2020 they paid a net tax of $162 million on $13.9 billion of pre-tax income a net tax rate of 1.2%.

[BeetleB]

I was just listening to a small business owner yesterday. She paid a $120K down payment on a property, and has set everything up so that the tax benefit of that property is $180K.

That's not $180K deduction, but a $180K credit.

She'll rent the place out for a meager profit, so doesn't have to pay the rest of the mortgage. Essentially, the taxpayers bought her the house - she got a house + cash out of the deal.

Small business owners definitely play games with taxes.

[Alupis]

The Range Rovers... don't forget about all the Range Rovers (and similar large vehicles small business owners tend to use)[1].

Write off practically the entire vehicle (sometimes the entire vehicle) in the first year... making it nearly or completely free.

There's a lot of credits and deductions available to those who seek them out, or are in a position to best use them. They are not loopholes - these provisions were explicitly laid out by Congress.

[1] https://taxsaversonline.com/range-rover-tax-write-off/

[fnimick]

Care to share how you can get a $180k tax credit for buying a house?

[BeetleB]

Real estate businesses have a ridiculous amount of tax benefits. The terms to look up are:

Cost Segregation

Bonus Depreciation

(There's a third one I can't remember).

She basically utilized all three. The larger the value of the house (over $1M in her case), the greater the benefit.

[fnimick]

These just allow you to claim deductions which reduces your tax liability - it's not like you get a _credit_ out of it.

[BeetleB]

Yes, but because of the high value of the property, your deductions can be huge. I was using the word "credit" a bit loosely. The point is that her deductions is well above the quoted $180K. The equivalent extra refund she'll get due to them was $180K.

This is also because they are high income earners (one of them has a regular job), and they've manipulated things so that they can apply the deduction to the W-2 income (not usually possible). The federal tax bracket is 35+% - not sure if they can apply it to their state's income tax, but if they can, it's another 10-11%. So you don't need a massive deduction to get the equivalent of $180K refund.

[Domenic_S]

net tax rate is meaningless in this context. Besides the fact that they're doing what each one of us do (take deductions following the law), it completely ignores all the other tax they pay - like payroll tax on a massive employee base and so forth.

To imply Amazon (or any corp) are floating by with a total tax load of ~1% is either profoundly disingenuous or profoundly naïve.

[Retric]

Saying companies pay payroll tax is like saying they pay sales tax when you buy something from them. It’s sort of true and sort of false.

[BeetleB]

It sounds like you don't understand the basics of payroll tax.

The SS tax that gets deducted from your paycheck is only half the amount. Employers are required to pay the other half.

If you're self-employed, you pay both halves, and that is one of the penalties of being treated as self employed.

[gowld]

That's just an accounting/presentation gimmick. Mathematically, it would be the same if the deduction was 0% or 100% shown in paycheck, instead of 50%.

[BeetleB]

So you're saying it's fair to say employers pay payroll tax?

[DimitriPetrova]

I think they still have loss carryforwards, they didn't make money for several years initially

[Retric]

They where profitable and paid net taxes in 2016 and where hugely profitable yet paid zero taxes in 2017, 2018, and 2019. So I don’t see how this could be loss carry forward offsetting a several billion dollar annual tax bill for 4+ years.

[Karunamon]

"Tax evasion" is illegal and what the parent poster clearly meant by "taking cash". Companies (and individuals for that matter) take the entirely rational step to use all legal methods to pay as little tax as they can.

Additionally, receiving a refund indicates that Amazon overpaid on their income taxes and that the government agreed.

Also additionally, the figures you are throwing around are income taxes only. Amazon likely pays many other taxes far in excess of the net worth of anybody involved in this conversation. Implying that Amazon "paid zero taxes" without further qualification is wholly dishonest, and you know it, and you should stop doing it.

[Retric]

I am not making a specific accusation, but illegal tax evasion occurs at both large and tiny companies. The form of this evasion varies where small companies may need to handle things under the table large companies have plenty of other options. Considering how often Amazon has been caught breaking other laws I would be shocked if they kept things strictly legal.

Also getting a refund does not imply you paid any income taxes can get refunded even if they send in 0$ money as was the case for Amazon in 2017, 2018, and 2019. The refund simply refers to getting money back.