Amazon's billion-dollar tax shield
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When you are taxed at 44% on earnings, you tend to look for ways to legally reduce your tax liabilities.
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The Luxembourg structure, outlined by media including the Guardian newspaper in April, fulfils a corporate obligation to shareholders to maximize returns. There is no suggestion the company has broken any laws; Amazon, which started out selling books and now offers everything from tools to toys, paid an average 44 percent tax on its U.S. earnings in the last five years.
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Luxembourg has a headline charge on corporate income of 29 percent, but under certain circumstances it will exempt income a company earns through intellectual property by up to 80 percent, a government spokesperson said. This cuts the effective tax rate to below 6 percent. Tax advisers and academics say rates close to zero can be achieved using other methods.
It appears Luxembourg is serious about attracting business. Frankly, 44 percent effective taxes are insane and it's easy to understand why companies want to move jobs and operations out of the US to escape this insane burden that is ultimately simply passed on to consumers who pay the taxes in the form of higher prices.
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The Luxembourg structure, outlined by media including the Guardian newspaper in April, fulfils a corporate obligation to shareholders to maximize returns. There is no suggestion the company has broken any laws; Amazon, which started out selling books and now offers everything from tools to toys, paid an average 44 percent tax on its U.S. earnings in the last five years.
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Luxembourg has a headline charge on corporate income of 29 percent, but under certain circumstances it will exempt income a company earns through intellectual property by up to 80 percent, a government spokesperson said. This cuts the effective tax rate to below 6 percent. Tax advisers and academics say rates close to zero can be achieved using other methods.
It appears Luxembourg is serious about attracting business. Frankly, 44 percent effective taxes are insane and it's easy to understand why companies want to move jobs and operations out of the US to escape this insane burden that is ultimately simply passed on to consumers who pay the taxes in the form of higher prices.
I call necessary evil. At least amazon and zappos still have jobs in California and Nevada available. I'll compare steriods in sports use to corporate superlawyers. There were only a handful in the old days, and now that everyone does it and we know what to look for, everyone eventually gets exposed.
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In effect, Amazon used inter-company payments to form a tax shield for the group, behind which it has accumulated $2 billion to help finance its expansion.
So lower taxes allow businesses to expand? Who knew?
In effect, Amazon used inter-company payments to form a tax shield for the group, behind which it has accumulated $2 billion to help finance its expansion.
So lower taxes allow businesses to expand? Who knew?
Originally Posted By: javacontour
Frankly, 44 percent effective taxes are insane ..
That's agenda-based reporting.
The key phrase is "on its U.S. earnings".
Just like in Europe, Amazon claims its earnings in whichever jurisdiction gives them the lowest rate. So its "U.S. earnings" are far less than its net income from selling in the U.S.
That's the unfair advantage of being a multinational corporation. Local businesses can't claim their earnings are in Nevada or Bermuda.
General Electric reportedly paid an effective tax rate of only 2.3% over the past decade. Microsoft claims its U.S. software licensing revenue in Nevada, despite having only a token office there.
Frankly, 44 percent effective taxes are insane ..
That's agenda-based reporting.
The key phrase is "on its U.S. earnings".
Just like in Europe, Amazon claims its earnings in whichever jurisdiction gives them the lowest rate. So its "U.S. earnings" are far less than its net income from selling in the U.S.
That's the unfair advantage of being a multinational corporation. Local businesses can't claim their earnings are in Nevada or Bermuda.
General Electric reportedly paid an effective tax rate of only 2.3% over the past decade. Microsoft claims its U.S. software licensing revenue in Nevada, despite having only a token office there.
60 Minutes did a segment on various countries that are tax shelters.
Originally Posted By: Tempest
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In effect, Amazon used inter-company payments to form a tax shield for the group, behind which it has accumulated $2 billion to help finance its expansion.
So lower taxes allow businesses to expand? Who knew?
Yes, it's expansion to eliminate small business
Quote:
In effect, Amazon used inter-company payments to form a tax shield for the group, behind which it has accumulated $2 billion to help finance its expansion.
So lower taxes allow businesses to expand? Who knew?
Yes, it's expansion to eliminate small business
Originally Posted By: javacontour
When you are taxed at 44% on earnings, you tend to look for ways to legally reduce your tax liabilities.
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
When you are taxed at 44% on earnings, you tend to look for ways to legally reduce your tax liabilities.
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
Originally Posted By: JOD
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
According to THIS, it's "only" 31.6%. Yeah, can't possibly see why they would only want to pay 5% or so in a foreign country.
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Founded in 1995 and listed two years later, the company lost money every year until 2003.
Somehow, people always seem to forget that.
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
According to THIS, it's "only" 31.6%. Yeah, can't possibly see why they would only want to pay 5% or so in a foreign country.
Quote:
Founded in 1995 and listed two years later, the company lost money every year until 2003.
Somehow, people always seem to forget that.
It was 31.5 total in the last fiscal year. Effective rate. The average over the last 5 years was 25%. Where did the "journalist" from the article get 44%?
25% is about an average affective rate for multi-national corporations. Amazon is kicking butt and taking names. I order from them all the time. What are we arguing about?
Objectivism in this country is dead, which is why I no longer watch any news.
25% is about an average affective rate for multi-national corporations. Amazon is kicking butt and taking names. I order from them all the time. What are we arguing about?
Objectivism in this country is dead, which is why I no longer watch any news.
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So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
Originally Posted By: Tempest
Originally Posted By: JOD
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
According to THIS, it's "only" 31.6%. Yeah, can't possibly see why they would only want to pay 5% or so in a foreign country.
Quote:
Founded in 1995 and listed two years later, the company lost money every year until 2003.
Somehow, people always seem to forget that.
First, you're cherry-picking the numbers. 31.6 is, by a significant margin, the highest they've ever paid. Averaged over 5 years, it's significantly less.
Secondly, yes--5% is a lot less than the 12% they've averaged since they became public. Guess what? Luxembourg isn't training their workers, defending the nation in which they're housed, providing the transportation infrastructure for them to move their products, building roads to get their employees to work, etc. They're providing a tax shelter. To claim that Lux is "serious about bringing in business" is such a laughable comment that I don't even know where to start?
And yes, they lost money forever, by design. No one "forgot this". But while they were losing money, they were still using resources--and a lot of them. Ones which people like me pay for while they were getting a free ride. So, yes, now that they're in the black I think it's reasonable for them to actually pay taxes!
The effective tax rates of large US corporations is comparatively low, and it's lower than it's been in decades. To claim otherwise based solely on the marginal rate is pretty much the definition of disingenuous. If you want to argue that the marginal rate should be significantly reduced and loopholes eliminated, you'll get no argument from me. Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Originally Posted By: JOD
Sorry, but that is complete nonsense. Excluding 1 year, Amazon's effective tax rate up until 2006 was exact "0". As in nothing. Since then it's been 21-31%. I realize you're just repeating what was in the article, but it's not even remotely close to being true.
Their effective tax rate is public record, so it's not like it's a secret. Where the guy writing the article got that is beyond me. It doesn't even make sense? The top US tax rate before any deductions is 35%, and there's not corporate tax in the state of WA?
According to THIS, it's "only" 31.6%. Yeah, can't possibly see why they would only want to pay 5% or so in a foreign country.
Quote:
Founded in 1995 and listed two years later, the company lost money every year until 2003.
Somehow, people always seem to forget that.
First, you're cherry-picking the numbers. 31.6 is, by a significant margin, the highest they've ever paid. Averaged over 5 years, it's significantly less.
Secondly, yes--5% is a lot less than the 12% they've averaged since they became public. Guess what? Luxembourg isn't training their workers, defending the nation in which they're housed, providing the transportation infrastructure for them to move their products, building roads to get their employees to work, etc. They're providing a tax shelter. To claim that Lux is "serious about bringing in business" is such a laughable comment that I don't even know where to start?
And yes, they lost money forever, by design. No one "forgot this". But while they were losing money, they were still using resources--and a lot of them. Ones which people like me pay for while they were getting a free ride. So, yes, now that they're in the black I think it's reasonable for them to actually pay taxes!
The effective tax rates of large US corporations is comparatively low, and it's lower than it's been in decades. To claim otherwise based solely on the marginal rate is pretty much the definition of disingenuous. If you want to argue that the marginal rate should be significantly reduced and loopholes eliminated, you'll get no argument from me. Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Quote:
Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Ever though how good industry would do paying 2-5% ?
Boom town maybe?
Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Ever though how good industry would do paying 2-5% ?
Boom town maybe?
Originally Posted By: Trav
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
US Corporate taxes averaged 12.1% of earnings at the end of fiscal 2011, reported by WSJ, not exactly a left-leaning rag... That's the lowest in over 40 years. Meanwhile, corporate earnings are at a 60 year high.
As a certain point it's time to look past the propaganda which is being spoon-fed about the evil US government stealing everyone's wealth and "punishing success"...
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
US Corporate taxes averaged 12.1% of earnings at the end of fiscal 2011, reported by WSJ, not exactly a left-leaning rag... That's the lowest in over 40 years. Meanwhile, corporate earnings are at a 60 year high.
As a certain point it's time to look past the propaganda which is being spoon-fed about the evil US government stealing everyone's wealth and "punishing success"...
If we are going to look at averages, off the top of my head, the Federal Government is about 18% (on average) of GDP. So why do we tax job creators at a rate higher than this percentage?
After all, not only are they paying taxes higher than the GDP percentage, but they are also paying payroll taxes on their employees, excise taxes and well as employing folks who also pay taxes.
Five percent may not be sustainable, but the costs to provide the roads, defense, bridges, education, etc are only 18% of GDP, so why would we tax corporations more than this if we want to foster job growth?
After all, not only are they paying taxes higher than the GDP percentage, but they are also paying payroll taxes on their employees, excise taxes and well as employing folks who also pay taxes.
Five percent may not be sustainable, but the costs to provide the roads, defense, bridges, education, etc are only 18% of GDP, so why would we tax corporations more than this if we want to foster job growth?
I'm all for a very flat tax, everyone, wait a minute EVERYONE pays 18-20% including FICA taxes. If you graduate out of some FICA taxes due to high income, then you pay more income tax.
All business, individuals and types of income are taxed the same way.
No special deals based on high, low, or any other type of income due to source or any other imagined reason. No benefit to having an army of lawyers because the small business guy pays the same rates at the largest corporation. The richest people pay the same, non-reducable rates as you and I.
The problem isn't that Warren Buffet has too low a tax rate, it's that the rest of us who are paying higher rates, especially when FICA taxes are included are paying rates that are too high.
This whole debate on taxes is simply a distraction and will not solve the issue that neither party can balance a budget and rather than doing their job, they screwed it up and want to take more of our money for doing a poor job of being stewards of the tax payer's money.
Originally Posted By: JOD
Originally Posted By: Trav
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
US Corporate taxes averaged 12.1% of earnings at the end of fiscal 2011, reported by WSJ, not exactly a left-leaning rag... That's the lowest in over 40 years. Meanwhile, corporate earnings are at a 60 year high.
As a certain point it's time to look past the propaganda which is being spoon-fed about the evil US government stealing everyone's wealth and "punishing success"...
All business, individuals and types of income are taxed the same way.
No special deals based on high, low, or any other type of income due to source or any other imagined reason. No benefit to having an army of lawyers because the small business guy pays the same rates at the largest corporation. The richest people pay the same, non-reducable rates as you and I.
The problem isn't that Warren Buffet has too low a tax rate, it's that the rest of us who are paying higher rates, especially when FICA taxes are included are paying rates that are too high.
This whole debate on taxes is simply a distraction and will not solve the issue that neither party can balance a budget and rather than doing their job, they screwed it up and want to take more of our money for doing a poor job of being stewards of the tax payer's money.
Originally Posted By: JOD
Originally Posted By: Trav
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
US Corporate taxes averaged 12.1% of earnings at the end of fiscal 2011, reported by WSJ, not exactly a left-leaning rag... That's the lowest in over 40 years. Meanwhile, corporate earnings are at a 60 year high.
As a certain point it's time to look past the propaganda which is being spoon-fed about the evil US government stealing everyone's wealth and "punishing success"...
Originally Posted By: Trav
Quote:
Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Ever though how good industry would do paying 2-5% ?
Boom town maybe?
The only places with those sorts of effective tax rates are places like The Congo and Pakistan. No thanks... Industrialized societies need money to educate a work force, provide infrastructure, invest in basic research and defend itself. While you can certainly argue about how certain money is spent, the bottom line is that those things cost money, and the US as a nation taxes a lot less than most.
Quote:
Somehow though, I don't see that happening. Large corporations like to complain about the 35% rate while paying 13%...
Ever though how good industry would do paying 2-5% ?
Boom town maybe?
The only places with those sorts of effective tax rates are places like The Congo and Pakistan. No thanks... Industrialized societies need money to educate a work force, provide infrastructure, invest in basic research and defend itself. While you can certainly argue about how certain money is spent, the bottom line is that those things cost money, and the US as a nation taxes a lot less than most.
Originally Posted By: Trav
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
Soon? How about really soon?
Quote:
So lower taxes allow businesses to expand? Who knew?
Who would ever think that?
Unfortunately in the US at the moment the emphasis is on how do we punish success.
Soon this country will tax, food stamp and entitlement itself into third world oblivion.
I wonder what ts like in Greece in the winter.
Soon? How about really soon?
Quote:
If you want to argue that the marginal rate should be significantly reduced and loopholes eliminated, you'll get no argument from me.
BING BING BING. We have a winner!
If you eliminate the loopholes and lower the rates people won't have to find shelters for their money. Hard earned money or not, Tax systems have always been something of a joke.
It seems that nobody ever does anything but make the rules more convoluted so that Tax Lawyers are needed in every facet of life whereby raising the barrier of entry into business for anyone.
It just seems that these days the answer to a problem is an even scarier solution.
If you want to argue that the marginal rate should be significantly reduced and loopholes eliminated, you'll get no argument from me.
BING BING BING. We have a winner!
If you eliminate the loopholes and lower the rates people won't have to find shelters for their money. Hard earned money or not, Tax systems have always been something of a joke.
It seems that nobody ever does anything but make the rules more convoluted so that Tax Lawyers are needed in every facet of life whereby raising the barrier of entry into business for anyone.
It just seems that these days the answer to a problem is an even scarier solution.
Originally Posted By: javacontour
I'm all for a very flat tax, everyone, wait a minute EVERYONE pays 18-20% including FICA taxes.
You'd raise taxes on Mitt? COMMUNIST
I'm all for a very flat tax, everyone, wait a minute EVERYONE pays 18-20% including FICA taxes.
You'd raise taxes on Mitt? COMMUNIST
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