Amazon and corporate responsibility March 13, 2018 0 Comments Share tweet Harrrison Hohman Columnist By: Harrrison Hohman | Columnist Throughout its rise to prominence, Amazon has quietly presided over one of the most successful cases of brand management of any company in American history. Despite a litany of red flags, including the appalling treatment of its workers, ever-growing privacy invasions and a general quest to achieve dominance over every facet of American life, our collective attitude towards the company has remained largely one of ambivalence. This is not exactly a coincidence. Amazon’s entire business model is one of image preservation. Everything from the cheeky smile on their corporate logo to its bright-colored, playful packaging invites one to see the bright side of this industrial giant. Even the very process of ordering a package from their ever-growing store (three clicks, two days and it’s at your doorstep!) encourages us to ignore the inner workings and internal mechanisms of its sales process, a level of opaqueness traditional retail simply isn’t afforded. One of the greatest successes for Amazon in its quest to maintain such a pristine public image is the level of taxes that it pays in the United States, which is to say, none. In 2017, Amazon paid no U.S. income tax. None. Amazon, the corporate giant, trustbuster wet dream and unabashedly Machiavellian behemoth of 21st century capitalism paid no U.S. taxes last year. There’s something seriously wrong with that! Could you imagine the political and societal backlash that would occur if, say, an oil company or big bank paid no money to the United States government for the last 12 months? Its nothing short of unfathomable. In 2017, Amazon took home some $5.6 billion in profits and a further $789 million from the Republican tax reforms. It also had $178 billion in total sales and its CEO Jeff Bezos become the first human in history to have a net worth in excess of $100 billion. The point is, they made a lot of money. And yet, thanks to a small army of corporate lawyers, and a byzantine, if loophole-ridden US tax code, none of that money made it back to the American people. Over the past five years, Amazon did pay an effective corporate tax rate of 11.4 percent, a shockingly low rate in its own right (compared to the on-paper standard of 35 percent) but a rate at the very least. However, in the 2017 fiscal year, Amazon leveraged a complex series of deferments and tax credits that made the company, in one economist’s words, “Not excessively burdened by the workings of the US tax system.” Some of these manipulations included the aforementioned $789 million windfall from the new tax plan and an additional $980 million from the exercising of tax-deductible stock options, but without a fuller picture of their tax payments and returns (which aren’t released in SEC filings or other public documents), we don’t truly know what steps they took. Compounding those domestic concerns is the fact that Amazon’s headquarters is located in Luxembourg, a landlocked European nation famed for its tax haven status. But even by Luxembourg’s generous taxing standards, Amazon pays only a pittance, as evidenced by the fact that the European Union is currently suing Luxembourg, claiming it gave illegal tax benefits to the internet giant. Even more suspect is the fact that only three-tenths of one(!) percentage point of its employees are actually located in Luxembourg. Offshoring money and “headquarters” location is by no means a new concept, but the audacity required by Amazon, one of America’s most visible and image-friendly companies, to leverage these loopholes to the extent they have is perverse to an extreme degree. Amazon’s tax dodging hasn’t stopped there however. Over the course of the last year, a constant source of news has been the “inter-city hunger games” taking place for the right to serve as the “HQ2” (A somewhat baffling title given that Seattle, and not Luxembourg is the presumed “HQ1”) for the company. Across America, cities from Denver to Miami have been falling over one another to offer billions more in tax breaks to Amazon, on the basis of the supposed jobs and prosperity such a move could bring, despite past studies suggesting that this logic is an utter fallacy. Amazon has been largely successful in portraying this as a sweepstakes to be won rather than a brutal quest to pit cities against one another in a twisted game of one-upmanship. Once again, Amazon’s branding has won the day. All of this isn’t to say that there are no solutions to these problems. Some have suggested outlawing such public subsidies for private companies in order to prevent municipalities and states from offering themselves up as sacrifice to the benefit of major corporations. Others simply want to simplify the tax code, in order to close many of the loopholes that Amazon has manipulated to such an incredible extent. Perhaps the greatest large-scale change that we could embrace, however, is a collective reckoning of just what it is that Amazon is doing. Few companies in this country have a greater presence in day-today life (a presence whose rate of increase is so astonishing that it’s not even worth attempting to dive into here), and yet the vast majority of this country remains oblivious to the harm that Amazon causes and the negligible that price they pay for it. It’s no longer a niche opinion to believe that Amazon is more evil than the oil companies and big banks that we tend to demonize, but still too few are actually calling for any concrete actions to be taken against them. For now however, Amazon marches on. Alexa continues to spy on our conversations and prime puts your neighborhood retailers out of business, while Jeff Bezos and his C-suite dehumanize their workforce to charge up the Forbes 500 list. And yet, despite all of those presumed causes for concern, the world mostly turns the other way. The very least we can do is make sure they pay their taxes. Contact Harrison at hhohman ‘at’ stanford.edu. Amazon hq2 tax cuts taxes 2018-03-13 Harrrison Hohman March 13, 2018 0 Comments Share tweet Subscribe Click here to subscribe to our daily newsletter of top headlines.