Trump, Who Just Gave Amazon a Huge Tax Break, Wants the Company Taxed

President Donald Trump lashed out at online retail giant Amazon via Twitter on Thursday, saying it doesn't pay its fair share of state and local taxes. But what Trump didn't mention is that the company paid zero federal income tax last year, and may even see a large federal tax refund in coming years thanks to the tax overhaul the president signed into law in December.

After Axios cited an anonymous source saying the president was "obsessed with Amazon," on Wednesday, Trump tweeted that the company pays "little or no taxes to state & local governments" and is "putting many thousands of retailers out of business!"

Noticeably absent from Trump's critique of the company's tax payments was its treatment under federal tax law. Amazon, which is currently valued at $673 billion, paid zero federal taxes in 2017 despite earning $5.6 billion in U.S. profits, according to an analysis of Amazon's latest annual report by the Institute on Taxation and Economic Policy's Matthew Gardner. The amount of money the company owes the federal government is expected to fall below zero, thanks to a 40 percent reduction in the top corporate tax rate that Republicans passed last year. This means Amazon could actually receive a tax refund from the government moving forward.

"That could happen for the same kind of reasons that it happens on the individual side," Gardner told Newsweek on Thursday. "There are tax credits and deductions you can get even if your tax bill has gone down to zero to begin with."

The White House did not immediately respond to a request for comment. An Amazon spokesperson told Newsweek the company was in full compliance with all tax laws worldwide.

Since 1993, the top tax rate for American corporations has been 35 percent, which last year's tax bill lowered to 21 percent. But Amazon, like many large companies, has not paid anywhere near the official tax rate of 35 percent, which Gardner called an "accounting fiction." In 2016, the Government Accountability Office found that between 2006 and 2012, 19.5 percent of all profitable large corporations paid no federal income tax.

"This was an especially low year for them, but Amazon is a company that routinely paid below the 35 percent statutory tax rate over the long haul," Gardner said, adding that over the last five years Amazon paid an average federal tax rate of just 11.4 percent. This low tax liability has been a huge asset in the company's battle against brick-and-mortar retailers, which typically pay a much higher tax rate. WalMart, for example, usually pays around 30 percent of its profits to the federal government.

Despite low effective rates for many corporations, Trump stumped for his tax cut by repeatedly declaring that the U.S. had the world's highest corporate tax rate. While it is true that the U.S. had on paper the highest corporate tax rate of the 35 industrialized nations of the Organization for Economic Cooperation and Development, the U.S. tax system's many loopholes resulted in U.S. companies paying an average tax rate comparable to companies in other economically developed nations.

While some companies have disclosed to shareholders the size of their expected tax break under the new tax regime, Amazon has not. It has, however, told the SEC that it expects a $789 million windfall from deferred taxes from previous years it expected to pay moving forward, but no longer is required to, thanks to the new tax bill.

Trump, Who Just Gave Amazon a Huge Tax Break, Wants the Company Taxed | U.S.