Breitbart Business Digest: Manchin’s Tax Hike Does Not Touch Amazon’s Biggest Tax Break JOHN CARNEY 2 Aug 2022 (Found this on $Stock*Shop. Thanks, MG. Wish you folks required links. It would make lifting things easier. <g>)
Amazon is not sweating the corporate tax hike in the Joe Manchin-approved climate spending bill.
The deceptively named Inflation Reduction Act would impose an alternative minimum tax on companies with over $1 billion in financial profits. It levies a 15 percent tax on financial account income, the kind that gets reported to investors in quarterly and annual company filings.
Amazon’s tax bills were part of the inspiration for a minimum tax. The company faced no federal corporate income tax liability in 2017 and 2018. In the years since, it has had an effective tax rate that is just a fraction of the 21 percent rate put in place by the Trump administration’s tax reforms. According to the calculations of Matthew Gardner of the Institute on Taxation and Economic Policy, over the past four years Amazon’s effective aggregate tax rate was just 5.1 percent.
Last year, President Joe Biden singled out Amazon’s ability to avoid paying more in taxes, saying it was “just wrong” that a company so profitable could pay so little. Sen. Elizabeth Warren (D-MA) has made Amazon her personal tax piñata, frequently saying the company should be required to pay much more in taxes. When Sens. Warren, Ron Wyden (D-OR), and Angus King (I-ME) proposed a similar 15 percent minimum tax last year, they specifically said they were targeting Amazon.
The day Sen. Joe Manchin (D-WV) announced he had reached a deal with Majority Leader Chuck Schumer (D-NY) to raise taxes and hike spending on climate change pork, Amazon’s shares were trading around $121. On Wednesday, they closed above $134, a ten percent gain in less than a week. Amazon reported earnings that beat Wall Street’s expectations during that week, which explains the jump. But it does not seem like investors are worried that Amazon may soon face a tax bill three times larger than in recent years.
There’s good reason for that. While the alternate minimum tax would prevent companies from using deductions for capital investments or stock-based compensation, it continues to allow them to use tax credits, Daniel Bunn of the Tax Foundation told us. In fact, the bill includes hundreds of billions of dollars worth of new tax credits aimed at fostering green technology adoption. And Amazon plays in beast mode when it comes to using tax credits to reduce its tax bill.
Jeff Bezo’s retail giant said in its annual report that tax credits reduced the taxes it would have otherwise owed by $1.1 billion. The company has said that most of those tax credits are federal research and development credits, although it does not give much detail in its annual reports. The Manchin-Schumer tax bill would not touch this. Amazon will lose the benefit of the write-off for stock-based compensation, but the company will most likely at least partially offset that by using the green tech tax credits. The end result could be no change in Amazon’s tax rate.
It’s possible that Amazon’s tax rate could even fall if it aggressively cashes in on the climate change tax credits.
News 
Market Data 
Discover 
