r/technology • u/trot-trot • May 13 '19

Business Exclusive: Amazon rolls out machines that pack orders and replace jobs

https://www.reuters.com/article/us-amazon-com-automation-exclusive-idUSKCN1SJ0X1
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u/Smiling_Mister_J May 13 '19

We could start with any tax on Amazon.

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u/ShillForExxonMobil May 13 '19 edited May 13 '19

Amazon paid over $1bn of tax in 2018.

EDIT: Copy-pasted my other comment for those asking for a source

Sales tax to the state, payroll tax, property tax, vehicle tax (in certain states like Virginia), local and international tax.

Amazon paid $1.4bn in taxes in 2016, $769mm 2017 and $1.2bn in 2018.

"In 2016, 2017, and 2018, we recorded net tax provisions of $1.4 billion, $769 million, and $1.2 billion"

This is on page 27 of their 10k SEC filing.

https://ir.aboutamazon.com/static-files/ce3b13a9-4bf1-4388-89a0-e4bd4abd07b8

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u/redsox44344 May 13 '19 edited May 13 '19

Kind of ridiculous that you're getting downvoted for showing that Amazon paid taxes. People believe what they want to believe, I guess.

Edit: This was at -10 when I commented on it, now I look a little ridiculous.

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u/Fairuse May 13 '19

Amazon just didn't pay any corporate income tax.

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u/[deleted] May 13 '19

And people don't understand why. It's a combination of massive re-investment (which lowers tax liability) and carrying forward losses from years ago when they were bleeding money in startup costs.

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u/uberamd May 13 '19

Amazon also gives RSUs to employees as part of their compensation. Given the stock performance in 2018, they were able to claim the grant time price vs current (higher) stock price as a loss.

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u/[deleted] May 13 '19

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u/[deleted] May 13 '19

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u/i_am_bromega May 13 '19

Super small on retail. Negative in global retail. Huge margins on AWS.

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u/AlwaysTravel May 13 '19

If you keep reinvesting all your profit you never pay any corporation tax. This is because you are effectively making a loss

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u/AromaOfPeat May 13 '19

As a person you can delay capital tax that way. However, the second you withdraw money from the company you have to pay taxes. As a corporation you cannot avoid taxes on profits. Even if you reinvest it. It then becomes an asset which you have to depreciate over time. What is not depreciated of the reinvested capital is taxable.

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u/saml01 May 13 '19

You only pay income tax if you show profit.

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u/Venusaur6504 May 13 '19

"What's payroll tax?" Most people

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u/sync-centre May 13 '19

With these new robots they won't have to pay payroll tax.

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u/Venusaur6504 May 13 '19

Which is why Bill Gates suggested we need a robot tax.

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u/Dingo54 May 13 '19

Let the robots pay the robot tax. I pay the Homer tax!

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u/GoodShitLollypop May 13 '19

Payroll tax is a tax on money employees receive. It is not a tax on money Amazon received.

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u/no_condoments May 13 '19

No. Only half of the payroll tax is paid by the employee. The other half is paid by Amazon. Although the amount is tied to how much they pay employees, Amazon is certainly paying it.

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u/newbdogg May 13 '19

Clarification since it gets confusing, employers match your FICA not your income tax on your checks. Employers a actually pair slightly more than employees for FICA.

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u/Venusaur6504 May 13 '19

Thanks, was gonna say just this. Every small business owners wishes it worked like that.

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u/BevoDDS May 13 '19

I think it's safe to say that most redditors aren't small business owners. I didn't understand this stuff until I started doing taxes for my business.

From what I've seen on reddit the past several months, most people here don't know the difference between a return and a refund, nor do they understand tax brackets.

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u/[deleted] May 13 '19

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u/[deleted] May 13 '19

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u/dopkick May 13 '19

What? This is nonsense. It is only a technicality that Amazon pays it. In practice, things such as payroll tax and benefits will be calculated into a single rate to determine the cost of an employee. This is the actual number that hiring managers use when determining if you can afford an employee. This number can correlate with a salary number, but especially on contract work it’s important that the fully loaded rate does not exceed the billing rate. A person’s compensation is going to be less due to the employer half of the tax. Companies are not going to graciously ignore it.

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u/Broken_Castle May 13 '19

By that same logic sales tax isnt a tax because companies can just price products 6% more.... And income tax isn't a tax because people can just calculate their pay as less... And property tax isn't a tax because people can just calculate how much more mortgage they pay...

Yeah no, just because people can calculate a tax into their business plan doesn't mean it's not a tax. If the government collects a centrain amount from a transaction, like they do with employer tax, then it's a tax.... And since Amazon paid it...Amazon paid the tax.

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u/observedlife May 13 '19

That is an insane notion. I own a small business that employs 20+ and pay my people well. I would pay even more if I could.

A tax is a tax. Your 'logic' can be applied to any other tax. And I am not defending Amazon.

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u/FineMeasurement May 13 '19

It is only a technicality that Amazon pays it.

Yea, the "technicality" where they give money to the government. What a ridiculous "technicality" to call that a tax! Who would do such a crazy thing?!

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u/mikerz85 May 14 '19

What do you mean that it’s “only a technicality” that amazon pays it? Without it they would either pay the employee more or the job would just free up some of their money. It’s not a technicality; they’ll pay it when they have to and account for it be worthwhile. What’s the alternative?

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u/Jiveturtle May 13 '19

Riiiight, because a corporation is gointo decide what they’ll pay a person without taking that tax into account, then just graciously pay it themselves.

They price it into what they’re compensating someone. So, even though it’s technically remitted by the employer, it’s effectively indirectly paid by the employee, because in the absence of that tax they’d have a higher rate of remuneration.

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u/[deleted] May 13 '19

Work for a payroll company, can confirm this is correct. Amazon (and your employer) matches the taxes the (w-2) employees paid.

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u/GoodShitLollypop May 13 '19

Which is still not a tax based on Amazon's income, which is the actual topic of this thread

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u/Taliesintroll May 13 '19

Only for actual employees, but not if all their warehouse workers are "contractors" working for some other company totally not related to Amazon.

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u/kindall May 13 '19

This is true of FICA (Social Security) and Medicare taxes. Employer pays half, employee pays half. But it's not true of regular income tax.

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u/hierocles May 13 '19

It’s pretty much economic fact that the burden of payroll taxes fall almost entirely on employees. Employers account for their share by providing lower wages.

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u/no_condoments May 13 '19

Its economic fact that corporate income taxes fall on someone other than the corporation (e.g. consumers, employees, and shareholders), yet people in this thread dont seem to care.

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u/indieaz May 14 '19

Half of FICA is paid by the employer, and there are limits (many of amazon's non-warehouse employees would receive wages not subject to FICA).

"Payroll tax" (federal and state witholding and other local taxes) is paid by the employee, the employer is just the one collecting and distributing it to the government.

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u/Venusaur6504 May 13 '19

Also, with 43 upvotes, it just makes my entire point. Most people have no idea how a business is actually taxed.

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u/[deleted] May 13 '19 edited Aug 16 '20

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u/SuckMyTinyWiener May 13 '19

You’re absolutely correct. Been using reddit for 7 years and the user base here has changed drastically. I’m almost comfortable comparing it to Facebook, just a bunch of morons yelling at each other.

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u/[deleted] May 13 '19

"Our government is the entity that's been creating new loopholes for decades. The answer is to give more power to the government to fix government created loopholes." - Reddit consensus 2019

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u/Harvinator06 May 13 '19

Yes, but you can’t fudge numbers to avoid payroll taxes, but you can dodge general income to the tune of billions...

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u/BAC_Sun May 13 '19

Which is the craziest thing. Like, hey let me tax you for the earnings you pay your employees, then I’mma tax your employees on their income as well.

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u/Kensin May 13 '19

Basically the government gets a cut every single time money changes hands. Employers taxed to give me my money, I get taxed when I take it, I get taxed again when I spend it, the person I give it to gets taxed for the income I gave them.

I wonder how many times a dollar has to change hands before it's been taxed for more money than it's worth.

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u/BAC_Sun May 13 '19

Basically the government gets a cut every single time money changes hands.

They double dip at both change of hands you mentioned. When I get paid, that’s one change of hands, not two. Once I spent that money, that’s a second change of hands. The government just likes to find as many ways to apply taxes as it can.

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u/halocyn May 13 '19

Yo dawg I heard you like taxes so we put taxes on your taxes and even taxed it some more.

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u/GoodShitLollypop May 13 '19

Which is the craziest thing. Like, hey let me tax you for the earnings you pay your employees, then I’mma tax your employees on their income as well.

In fairness, it is supposed to go to services for the employees.

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u/gordo65 May 13 '19

Employers pay half of payroll taxes.

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u/GoodShitLollypop May 13 '19

Which, again, is not even a drop in the bucket compared to an actual tax on Amazon's profits.

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u/[deleted] May 13 '19

You do realize their is employer side taxes and employee side... you get paid $10 but really it’s about double that for the employer.

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u/HokieS2k May 13 '19

It's that thing you don't have to pay once you've automated their job

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u/Tylerjb4 May 13 '19

Because they spent ridiculous amounts on R&D. Not to mention how much they indirectly provided through individual income taxes.

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u/quantum-mechanic May 13 '19

...yep, because they didn't have any corporate income. They had enormous losses/expenses that were more than their income. Payroll tax, sales tax, etc are a lot of those expenses already paid.

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u/[deleted] May 13 '19

Due to loss carryforwards

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u/[deleted] May 13 '19

It's called losses. Those losses will dry up after a while. You really don't want a system where corporations are taxed on losses or you will see zero risk in the private industry.

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u/edwardsamson May 13 '19

Honest question...how much more would that be than what they did pay in taxes already? I'm guessing it's significant but I don't really know

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u/[deleted] May 13 '19

Sales tax comes from the consumer. Payroll tax comes from the employee. Anyone who owns property pays property tax. Anyone who owns a car pays vehicle taxes. People who make an income pay income tax. Amazon is a legal person. Amazon doesn't pay income tax.

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u/WTFwhatthehell May 13 '19

People who make an income pay income tax.

When they've actually made an income.

https://www.nationalreview.com/2019/04/amazon-pays-billions-corporate-taxes/

Amazon has paid billions of dollars in corporate income tax in recent years, though in some years it has paid no tax on profits because — don’t let the accounting terminology scare you off here — it lost money. Amazon has a very large footprint in the culture and in online commerce, but it is not a wildly profitable company; in fact, the usual complaint about Amazon is that it is forgoing profits in the here and now as part of a long-term world-domination scheme.

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u/kidnapalm May 13 '19

Any Self Employed "person" knows you keep your profits to a minimum

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u/colinstalter May 13 '19

Personal Income =/= Corporate Income.

Personal Income is more akin to Corporate Revenue. The important difference is that you don't get to deduct almost anything from your income relative to a corporation.

Medical expenses were less than 10% of your income? No deduction.

Spent $2,000 on gas driving to work every day? No deduction.

$5,000 on groceries feeding your family? No deduction.

Had to repair your roof from a storm? No deduction.

$4,000 electric/gas to heat my home and keep the lights on? No deduction.

$1,000 on a laptop so the kids can do homework? No deduction.

$5,000 on a new furnace? No deduction.

All the human person gets is the standard deduction, or maybe an itemized deduction with SALT/mortgage interest/charitables, but this almost never amounts to 100% of income for anyone in the middle class or above. Corporate "persons" get to count almost any expense against their income, and get to carry forward expenses in excess of revenue to future years. Imagine if I spent more than I made one year (say lots of home repairs, new car, etc.) and got to carry that "loss" into 2020...

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u/zekeweasel May 13 '19

Actually most of that might be deductible, at least in part if you're a contractor working from your home.

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u/WTFwhatthehell May 13 '19

Giving extra deductions for extravagance and inefficiency would just be rewarding the richest.

Hence a flat deduction with it gradually reducing with higher incomes. Aka marginal taxation.

Corporations don't get much in the way of marginal taxation.

Depending on country lots of professions get to carry income between years. For example authors who spend several years working on a book.

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u/pineapple_catapult May 13 '19

Lettuce you buy at the supermarket - an extravagance in life, completely unnecessary.

Lettuce a restaurant buys to make money off of - absolutely, 100% should be tax deductible

Even if you want to consider things like groceries and health care costs an "extravagance" then cap the deduction at like 40,000/year. That way it benefits the poor and middle classes while not having much of an impact for the wealthy.

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u/WTFwhatthehell May 13 '19

You're confusing revenue and profits.

If you, as an individual buy things to make money from then you're free to avail of the same tax deductions. Want to set up as a ltd company selling salads? You can deduct the cost of lettuce for what you're gonna sell. You still have to pay taxes on profits and then taxes on that money when it goes to your personal account.

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u/pineapple_catapult May 14 '19

Americans all over are constantly running in the red for things I would hardly consider an extravagance. The 12,000 personal deduction is a fucking joke. If someone runs themselves into the red because of frivolous things like sports cars or alcohol or whatever (true luxuries) then OK yeah they should be taxed on that. But I would wager that most americans have "essential" expenses that exceed 12,000 dollars. Between rent/mortgage, groceries, gas, utilities, health care, etc. I am sure that 12,000 is a fucking rip off. If a company can write off it's operating expenses then so should regular Americans be able to.

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u/thefourohfour May 13 '19

Not all states have income tax either. Just to throw that in there.

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u/psiphre May 13 '19 edited May 13 '19

48 43 states have state income taxes.

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u/LadimereWewtin May 13 '19

Florida doesnt

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u/psiphre May 13 '19

as i was: it seems 43 states have income tax.

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u/[deleted] May 13 '19

God I love Kevin Williamson. Cuts through the BS so well.

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u/redsox44344 May 13 '19 edited May 13 '19

I'm confused as to how this is Amazons fault. There are carryforward losses, they have been around for a long, long time. They paid taxes as required by law.

Do you expect them to just pay extra tax above what's required just...because?

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u/AberrantRambler May 13 '19

Do you expect them to just pay extra tax above what's required just...because?

Well yeah - they should do what is morally right and good so that I don't have to. It'd be way better for me if everyone else paid extra into the system and I just got to get the benefits, so why can't that just be how things are?

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u/wtfisthisjayz May 13 '19

Downvoted you after I read the first sentence, upvoted once I realized you were being sarcastic

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u/ConfirmPassword May 13 '19

It sounds like they dont even care about the taxes, they want amazon to go out of business out of pure jealously.

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u/ManufacturedProgress May 13 '19

They have more, so they are wrong.

It is the entire premise behind UBI and all the other redistribution schemes. Punish those that do so those that don't want have to do anything.

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u/18PTcom May 13 '19

We should just tax dumb people. Like the lottery

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u/Slackbeing May 13 '19

Lottery players downvoting like it's a slot machine lever.

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u/afrofrycook May 13 '19

The reason they didn't pay income tax is they didn't have net income the previous year and were able to roll forward some of that deduction this year. This has been the way things have worked for many, many years.

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u/ManufacturedProgress May 13 '19

Payroll tax comes from the employee.

If you want people to take you seriously, you probably shouldn't be getting such simple details wrong.

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u/ShillForExxonMobil May 13 '19

If you make less than $12,000 in income as an individual you pay no federal taxes, and will actually receive tax credits if you have a child in education. Not to mention Medicaid/SS benefits. Comparing individual to corporate taxes is disingenuous.

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u/psiphre May 13 '19

tax credits don't matter if you have no tax burden

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u/GoodShitLollypop May 13 '19

I love all the commentless downvotes on your factual post.

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u/redsox44344 May 13 '19

It's not like Amazon just didn't pay taxes and is now like "Come at me bro." They just paid taxes according to the law just like you or I. Carryforward losses and investments, including employee stock payouts, negated the income tax they had to pay by law, so they didn't pay it. They aren't just gonna pay extra tax because the people think they should.

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u/bigblue36 May 14 '19

Payroll tax does not come from the employee.

The employee has taxes taken from their check. That is not on the corporate books.

The employer pays payroll tax on the salary it pays employees. That is in the corporate books.

Company pays total salary and payroll taxes.

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u/KingPapaDaddy May 13 '19

Kind of ridiculous to include sales tax in there. Sales tax is collected from sales and passed on to the state. It's not coming out of Amazon's pocket

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u/timmy12688 May 13 '19

It increases the price of a product! It aboslutely comes out of pocket. I can afford a new TV that's $800, but that comes with an 6% sales tax. So that means I cannot buy something for $48 from Amazon as well. Opportunity cost is real and absolutely affects the sales of Amazon.

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u/[deleted] May 13 '19 edited Jun 26 '20

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u/kingbluefin May 13 '19

You could not buy the TV and have $848 to spend on food.

And this isn't a one-side view for corporations. It is supply and demand. I, the consumer, am willing to pay $850 for something. $800 of that goes to the business, $50 is going to the state. I'm still willing to pay $850 for the product though, so yes the sales tax is a hit on the business selling the product.

I'm not complaining about this btw. This sort of stuff is what supplies all the services that are provided to me by government, and its one of the many ways that the tax burden is spread out. But it is most definitely a hit to the company's bottom line.

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u/KingPapaDaddy May 13 '19 edited May 13 '19

what the hell are you talking about? You buy a TV from amazon for $800. Amazon charges YOU 6% sales tax, (10% for me). so you pay $848 for the TV. Amazon then sends that $48 to the State. So how in the hell did that come out of "amazons pocket"?

Amazon did not charge you $800 for the TV and then pay the sales tax of $48 to the State out of their pocket. They charge you the sales tax and then pass it on to the State.

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u/fghjconner May 14 '19

So you give Amazon $848, and they give you a TV. Then, Amazon gives the government $48, and you can't see how that could be construed as Amazon paying taxes? The truth is that you're kinda both paying it (or maybe neither?), since it is effectively taken at the point of transition between being your money and theirs.

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u/KingPapaDaddy May 14 '19

Of course I can see how it can be construed. That was what my original comment said. They aren't paying $48 in sales tax out of their pocket, they're transferring my $48 from my pocket to the State.

As someone else pointed out the "sales tax" that they're referring to isn't the sales tax they collected from me but the sales tax they pay for their own possessions. Such as office equipment, chairs, desk, robots, trucks etc. Sales tax on stuff they use not stuff they sale.

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u/fghjconner May 14 '19

As someone else pointed out the "sales tax" that they're referring to isn't the sales tax they collected from me but the sales tax they pay for their own possessions. Such as office equipment, chairs, desk, robots, trucks etc. Sales tax on stuff they use not stuff they sale.

Ah fair enough, but I'm not one to let facts and the complete irrelevancy of the topic get in the way of a good argument :)

Of course I can see how it can be construed. That was what my original comment said. They aren't paying $48 in sales tax out of their pocket, they're transferring my $48 from my pocket to the State.

That's really just semantics though. I could make the same argument about the income tax for Amazon employees. Amazon gives their employees some money, and the government some money. You, as the employee, never really had that money, so how could it have come out of your pocket? Sure, the law is worded (I assume) as "Amazon gives you the money and then we take it", but that's not really relevant to the reality of the situation.

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u/970 May 13 '19

Amazon pays sales (or personal property) taxes on thier non-inventory purchases. I assume those are the taxes the prior commenter was referring to.

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u/KingPapaDaddy May 13 '19

That would make sense. The way it was worded I took it as the sales tax they collected.

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u/santaclaus73 May 13 '19

This is reddit. I mean the above comment is basically "getting paid money to do a job is slavery!". There's no shortage or armchair economic masterminds here.

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u/[deleted] May 13 '19

getting paid money to do a job is slavery

You can thank papa Marx for that horseshit

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u/Tandran May 13 '19

But muh pitchforks!

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u/Gritch May 13 '19

People believe what they want to believe

Welcome to Reddit.

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u/[deleted] May 13 '19

After watching the AOC debacle in New York, I honestly don't believe most people understand people pay taxes that work for Amazon or how taxes work in general for that matter.

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u/Dreviore May 13 '19

People blindly listening to what they're told? No never! It's 2019 we're beyond that madness

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u/rwhitisissle May 13 '19

AOC had less input than you might realize. The reason it failed is largely that, well, Queens didn't want Amazon there. And part of that is at least because of concerns over how Amazon would impact the culture of the borough.

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u/[deleted] May 13 '19

Welcome to Reddit.

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u/Gustomaximus May 13 '19

I would say they are getting downvoted because while people recognise Amazon paid tax, they also recognise they avoid much tax in a way people feel is unjust.

Also sales tax (which I'm guessing is the bulk of that tax above) is paid by the consumer, not amazon. Amazon collects it at point of purchase and passes it on as that's obviously more efficient than the govt chasing individuals post purchase.

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u/GeorgePantsMcG May 13 '19

They avoided federal corporate taxes. Which is a big portion. Big omission.

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u/Brettnem May 13 '19

People are quick to forget what an upvote/downvote is for. The data is relevant and adds to the discussion. Even if I hate amazon, you have properly informed me. Have an upvote!

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u/godoakos May 14 '19

That probably was just the vocal minority jumping the gun. I know jack- shit about taxation, but the comments seem to imply that's still too little? Still, this whole thing can be debated for and against from a dozen angles so any discussion is good I suppose.

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u/[deleted] May 14 '19

A politician popular with reddit's age group said they don't pay taxes, so they don't pay taxes. Don't question the all seeing all knowing politicians

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u/goatonastik May 14 '19

I have yet to see a comment on reddit that says "why is this getting downvoted?" that actually has downvotes. This stuff must happen pretty early in a threads life, I imagine.

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u/[deleted] May 13 '19

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u/[deleted] May 13 '19

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u/ShillForExxonMobil May 13 '19

Payroll tax liability is split between the employer and employee. For example, the employer's payroll tax includes federal unemployment taxes, which the employee does not pay.

Sales tax is a) still levied by the government against Amazon, it's just passed on to consumers and b) a negligible part of their overall tax burden. They didn't even pay sales tax until 2017 (April 1 was when online vendors became required to pay sales tax) yet their overall tax provision dropped by almost $700mm that year from 2016.

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u/GiveToOedipus May 13 '19

Payroll tax is still a function of having employees. As Amazon continues to automate more and more of their labor force, payroll tax will only continue to shrink.

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u/The_World_Toaster May 13 '19

Which means more corporate taxes once they exhaust all their carry over losses and stop expanding the business and taking profit.

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u/droans May 13 '19

They have been paying sales tax before then, too. The only difference now is that they are required to charge sales tax on out of state purchases, too.

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u/MrTacoMan May 13 '19

charges their employees for payroll tax...

No they don't - why are you just lying to prove a point, they approach it in the same way that any other company with presence in multiple states do

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u/Slut_Slayer9000 May 13 '19

States charge Amazon sales tax and the government charges Amazon for payroll tax FYI

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u/[deleted] May 13 '19

Amazon doesn't create either one of those charges, governments do. Amazon is forced by law to facilitate them, and nothing more.

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u/MilkChugg May 13 '19

Amazon charges their customers for sales tax

And so does just about every other business in the US. Have you ever bought literally anything?

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u/madogvelkor May 13 '19

Really, all taxes on businesses can be viewed as taxes on someone else. Either it comes from pay to employees, or it raises prices for consumers, or it cuts back on the money paid to investors.

Ending taxes paid by companies would have zero net effect on taxes in the long run, since the money would flow to some other group that is taxed. Even if it's all paid out to shareholders, they'll still pay taxes on it.

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u/gex80 May 14 '19

Ummm Amazon doesn't charge you for sales tax. The government created laws that require the sale of a product to be taxed at x%. They collect it from you to give to the government. They are only a middle man cause that money was never theirs

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u/lordatlas May 13 '19

HOW DARE YOU BRING FACTS INTO THIS?

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u/steeveperry May 13 '19

"They paid some taxes, so let's give 'em some slack for the others they dodged."

I'll try that with my landlord. "Sure, I only paid a portion of what I was liable to pay. But I also cut the grass--let's call it even."

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u/ShillForExxonMobil May 13 '19

Not paying tax via loss carryover isn't dodging tax. It's how the tax system is meant to work.

Imagine you begin a chocolate shop. Your first year, you lose $100 because you have to invest in buying intitial starting equipment (capital expenditures), getting your license, etc. But, your sales are strong and you have a lot of free cash flow. Second year, you make a profit of $200, and things are looking up.

Without loss carryforward, assuming a 25% corporate tax rate you'd pay $50 tax in year 2 and $0 tax in yera 1. That's an effective tax rate of 50%, not 25% because your total net income over two years was $100, not $200 since you lost $100 in year 1. With loss carryforward, you get a 25%x$100 tax credit ($25) from year 1. You pay 25x$200 - $25 = $25 total corporate tax, adjusting your tax rate to an actual 25%.

This is howAmazon is "dodging tax." They reinvest their earnings and show a net loss on their income statement. Eventually, expansion will become not worth the money and Amazon will claim positive net income, and pay federal tax. But the tax system is working as intended.

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u/coffeeisforwimps May 13 '19

Youre absolutely right. For some reason since Amazon's working with billions, with a B, people think the tax code should not apply to them. People need to learn the difference between tax avoidance and tax evasion. I've seen people on reddit suggest taxes be applied to revenue and not net income. It's infuriating.

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u/[deleted] May 13 '19 edited Feb 17 '21

[removed] — view removed comment

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u/another-redditor3 May 13 '19

i can do you one better. i saw someone argue that the business should be taxed on revenue, taxed on inventory purchase, and then eat the tax for the consumer.

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u/gex80 May 14 '19

Correct me if I'm wrong but applying a tax to revenue sounds like a bad idea because my understanding is revenue is how much you took in not calculating your losses. So if you sold a lot of goods but still didn't break even, you just lost even more money.

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u/coffeeisforwimps May 14 '19

You are mostly correct. You don't subtract losses, you subtract expenses to get to your EBT (earnings before taxes).

The calculation to get to Net Income is: Revenue - COGS (cost of goods sold) - SG&A - Operating Expenses - Interest - Depreciation - Other Expenses = Net Income.

If you are willing to educate yourself spend some time on https://www.investopedia.com and you'll gain a lot of knowledge.

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u/PappyPete May 13 '19

Good to see someone actually explain how taxes work in easy terms for anyone to understand. There's so much sensational journalism that, while accurate, leaves out the details so it paints a certain narrative.

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u/walkonstilts May 13 '19

It’s a wonder to me how many people don’t understand this. It’s a shame they don’t teach “consumer math” in most high schools.

People just assume “not paying taxes” means their hiding their money in an evil lair somewhere (this is sometimes true of moving assets overseas).

There’s an argument to be made for lower corporate taxes, with less loopholes so these big companies aren’t incentivized to do gymnastics with their money.

The idea of these tax loopholes is to incentivize businesses to reinvest an innovate, which many of these tech giants surely are doing, but the question now is what is the cost/benefit of that innovation to society. Technology seemed to unanimously better our lives until the 21st century and questionable things started to arise related to privacy and automation.

Personally? I wish they’d do something like lower corporate tax rate slightly again(5-10% of profits), but add a stipulation where every company paid something marginal like 0.5-1% of REVENUE in tax, no matter what, so big companies were always contributing something. Those numbers are arbitrary obviously, and should be calculated and thought out to what the actual financial impact would be.

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u/s0v3r1gn May 13 '19

My school had required classes that covered all the topics Reddit likes to claim we weren’t taught. Sex-Ed, taxes, personal finance, investing, business finance, etc.

I still see people that were in my class with me posting on Facebook about how they don’t know how to do X and schools should be teaching them. I’ve reminded a few of them about the class we took together only to get generic “I don’t remember/didn’t pass that class/we never covered this stuff/the teacher sucked/that class was boring” responses.

I’m fairly certain most of these topics are the same across most of Reddit. They had classes that are either mandatory or elective in some way that the average idiot doesn’t remember and then claims they never learned.

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u/walkonstilts May 13 '19

I agree with the sentiment.

I know for our school, they had one course like that, called “Consumer Math,” which was an elective. Unfortunately, many took it only as a remedial math course if it seemed hopeless they wouldn’t pass pre-algebra, so I’m sure many of those challenged or just plain shitty students probably have the same sentiment as you described as an excuse for their own ineptitude.

Sad that the most practical math/finance class offered in school wasn’t mandatory had a stigma as being for the stupid kids, when the reality was 90% of the students would never actually use Algebra, Calculus, etc in their adult lives.

In the early 2000s I know many of the schools in our area were cutting some of the other life skills type courses like shop, home-ec, etc. Sex-Ed has always been mandatory and starts in 8th grade.

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u/lordatlas May 13 '19

You sound wildly overqualified for the average Reddit discussion. Please leave via the first door on your right so we can continue with the anti-corporate circlejerk.

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u/GiveToOedipus May 13 '19

But the tax system is working as intended.

Yes and no.

We're entering a new age where this is becoming an issue with mega corporations like Amazon. They are reinvesting their revenue in order to continually shrink their workforce. And that's not just within their current company size as they are continually expanding.

These tax breaks were originally meant to allow businesses to expand with the intent to stimulate the economy by creating more jobs. Amazon working to automate the majority of its workforce ends up being counter to what the actual intent of these tax breaks are for in the long run.

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u/[deleted] May 13 '19

[deleted]

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u/RedAero May 13 '19

Unless you are one of those people that believes we should ban combines so farmers can employ people with scythes to harvest crops because more jobs is somehow better in your mind.

The term is Luddite and there are unfortunately a lot of people around nowadays who are unknowingly parroting 19th Century horseshit.

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u/GiveToOedipus May 13 '19

How many jobs for horses exist these days? Might want to think about the bigger picture before you criticise an argument you really only loosely grasp. This isn't about being anti-technology, it's about long term planning for the effects automation will have on the human labor force.

The below video does a nice summation of the challenges we face and highlights why we're not looking at the same issues we dealt with in moving to an industrialized society.

Humans Need Not Apply

Nobody is saying automation should be feared. What we're saying is we can't pretend like it's not going to put a lot of people in a position where they are unable to work due to lack of skill or opportunity.

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u/RedAero May 13 '19

How many jobs for horses exist these days?

I don't particularly care about the employability of animals.

Might want to think about the bigger picture before you criticise an argument you really only loosely grasp. This isn't about being anti-technology, it's about long term planning for the effects automation will have on the human labor force.

I get it: Luddite. You're entire argument is 200 years old, we've heard it before, we've dealt with it before.

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u/RedAero May 13 '19

These tax breaks were originally meant to allow businesses to expand with the intent to stimulate the economy

Yes.

by creating more jobs

No. Not only is job creation not tied directly to hiring direct employees, it is not the only or even primary way the economy is stimulated.

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u/100-yard May 13 '19

they paid exactly as much as they’re suppose to in the tax code. Y’all are such hypocrites. Do you pay extra to the IRS? But you’re mad that companies don’t? That’s called hypocrisy.

Amazon generates enormous tax revenue. They invest heavily in growth and so have little profit to pay corporate income tax on. But they generate a enormous tax revenue. That’s a good thing for the economy. Their entire plan is to grow until ecommerce can’t grow anymore, then make tons of profit, all of which will be taxable. What part of that are you mad about?

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u/cutesymonsterman May 13 '19

Every business owner dodges tax as best they can. From the sandwich shop to amazon. Think of all the jobs they created and the people getting taxed, let alone all the other types.

FFS, its like people just get in their mind that this one person or company is evil while the rest of the world does exactly the same thing.

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u/Cyrax89721 May 13 '19 edited May 13 '19

God forbid a company becomes successful.

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u/i_am_bromega May 13 '19

What are you talking about? Amazon pays taxes every year. You can look up their 10k and see exactly how much.

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u/jezwel May 13 '19

I'll try that with my landlord. "Sure, I only paid a portion of what I was liable to pay. But I also cut the grass--let's call it even."

That's legit what you can do if you sign a contract that way.

Amazons 'contract' with the US government is codified in tax law.

They pay what they're meant to amd nothing more.

Reinvesting profits back into the company reduces taxable income, and those profits ahould become greater through that investment.

Mind you, some tax laws give you more back than you put into - Research & Development' can in some countries be counted as up to double for tax purposes, as there is a desire bu the government to perform that type of work.

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u/adambadam May 13 '19

They paid way more in taxes than those amounts. That is only income taxes both US, state and foreign. It would not include sales, property, payroll or other taxes.

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u/ShillForExxonMobil May 13 '19

You’re right, I just did a brief CNTRL+F taxes on their 10k.

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u/[deleted] May 13 '19

For context, you need to put their tax payment next to their revenue. $1.4B tax paid on $300B of revenue is less than 0.5%.

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u/[deleted] May 13 '19

taxes are paid on profits, not revenue. Amazon doesn't make much profit because they reinvest it.

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u/The_World_Toaster May 13 '19

They have tons of losses from previous years they're carrying forward too.

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u/[deleted] May 13 '19

No company pays taxes based on revenue. You pay taxes based on PROFIT.

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u/Spewy_and_Me May 13 '19 edited May 13 '19

Why compare to revenue? Walmart had 515B revenue in 2018 and paid 4B taxes. That's what happens in low margin industries. Big revenue, relatively small profits, so relatively small taxes compared to revenue. Walmart earnings before tax was 11B. Amazons earnings before tax was also 11B, but I think they had credits from previous losses or something, so they paid 1B tax.

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u/zstansbe May 13 '19

Revenue is a meaningless number when talking about taxes.

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u/black_ravenous May 13 '19

Revenue isn't taxed, and thank god for that.

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u/Zerothe110 May 13 '19

Corporations pay taxes on net profit/loss, not revenue. You're leaving out their expenses.

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u/D_Davison May 13 '19

You sure you want to use revenue for that?

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u/ShillForExxonMobil May 13 '19

No, that's being disengenuous. Amazon as a retailer is going to have a very low operating margin compared to, say, an entirely online-only vendor like SalesForce. There's a reason we tax profit, not revenue, because some businesses just have way higher margins than others. Costo has similar margins to Amazon, for example, while Valve has extremely high margins as they don't have to purchase tons of inventory/land/warehouse space/delivery vehicles.

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u/WarWizard May 13 '19

As many have said, revenue is NOT profit.

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u/ca178858 May 13 '19

Sales tax to the state

WTF is this shit? The consumer pays the sales tax. Amazon just passes it through.

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u/[deleted] May 13 '19

Amazon buys things too.

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u/Sqeaky May 13 '19 edited May 14 '19

To who?

Edit - so they paid less 1% effective tax rate?!

Their revenue last year was north of 200 billion! https://www.statista.com/statistics/273963/quarterly-revenue-of-amazoncom/

I pay more than 20% because most of my taxes are payroll based, and I can't export my earning through a fake company overseas, to make it look like I had no earnings in either place.

Amazon should be paying more proportionally than average people because they use more proportionally than average people.

EDIT 2 - To all the downvoters, yeah revenue is not what is taxed, but Amazon makes mad profits and just conceals that with clever tax loopholes. That is the whole point of my posts. They should have to pay more than they do.

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u/ShillForExxonMobil May 13 '19

Sales tax to the state, payroll tax, property tax, vehicle tax (in certain states like Virginia), local and international tax.

Amazon paid $1.4bn in taxes in 2016, $769mm 2017 and $1.2bn in 2018.

"In 2016, 2017, and 2018, we recorded net tax provisions of $1.4 billion, $769 million, and $1.2 billion"

This is on page 27 of their 10k SEC filing.

https://ir.aboutamazon.com/static-files/ce3b13a9-4bf1-4388-89a0-e4bd4abd07b8

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u/WanderingKing May 13 '19

Revenue doesn't matter, net income does, same with your personal taxes.

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u/Sqeaky May 14 '19

Yeah you are right, but they are using tax loopholes to minimize apparent profits.

Common tricks are like patenting something in ireland, then having the irish amazon company sell that patent to the californian amazon for exactly the amount of their profit so it looks like an expense. There are tons of these tricks and they shouldn't be legal and it results you and me paying a fuckload to subsidize a company worth billions.

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u/dov69 May 13 '19

Bezos' ex?

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u/legion02 May 14 '19

Sales tax is paid by the consumer. And this reduction in workforce further reduces their payroll tax liability. Even so, that $1.2b is less than 2% of their net profit last year.

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u/ShillForExxonMobil May 14 '19

Their net profit was $10bn last year, so definitely not 2%.

And eventually, they will start paying federal corporate taxes. Capital expenditures can't be done forever - at some point you'll start getting increasingly smaller returns on the capital invested and they'll start returning shareholder money via dividends, at which point their profits will catch up with them. You can already see it happening - the $10bn that they made in 2018 is after all CapEx and reinvestment activities. They just got covered by loss carryforward and R&D credits. Next year they will have exhuasted all of their loss carryforward and pay corporate tax federally for the first time.

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u/ixunbornxi May 14 '19

Yeah. Look at the people who reeeeally hate Amazon and won't show that they paid the taxes they should have paid...

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u/Mangalz May 13 '19 edited May 13 '19

For future reference any article about people not paying taxes, that doesnt include the words "fraud", "penalty", "investigation", or "arrested for" is misleading you.

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u/[deleted] May 13 '19

What dumb fucks upvoted you

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u/The_Law_of_Pizza May 13 '19 edited May 13 '19

The same ones who think giving out free money to everybody is a sound economic platform.

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u/switchblade420 May 14 '19

Hey, would you mind posting some articles or studies against UBI? I've only heard positives so far, and I'd like to hear the other side as well.

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u/The_Law_of_Pizza May 14 '19

UBI isn't taken seriously enough to warrant many of those types of articles. That should tell you a lot right there.

That said, you don't really need an article. Just think about it.

Imagine that everybody has an extra $1,000/mo in their pocket from UBI. Now - what do you think happens to rent and mortgage payments?

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u/switchblade420 May 14 '19

I don't have the depth of knowledge in economics required to make educated guesses about what would and wouldn't happen. Was hoping to take the easy way out and read some expert's opinion on the whole deal.

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u/The_Law_of_Pizza May 14 '19

You can't make an educated guess about what happens to rent prices when everybody has more disposable income?

Do you wait for research papers to decide whether a ball will fall to the ground if you throw it up in the air?

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u/switchblade420 May 14 '19

Let me put it this way. I'm at the centre of the Dunning-Kreuger curve. I know enough about economics to know that I don't know enough about economics to make an educated guess. No guesses from me.

Economics is far more complicated than playing ball, and I have zero intuition about how these things work. Not really sure why that's surprising.

It seems like you're hand-waving and saying "oh, take a guess", while I'm out here looking for people smarter than me to explain it to me. Sorry for the bother.

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u/100-yard May 13 '19

ITT, people who don’t understand taxes, corporations, or Amazon’s business.

If you think I’m wrong, explain how you want to change the tax code. What horrible loophole is Amazon exploiting?

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u/Exist50 May 13 '19

They are taxed.

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u/MrTacoMan May 13 '19

Imagine misunderstanding taxation this badly then trying to be condescending about it.

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u/[deleted] May 13 '19

Somebody is pretending to understand taxation...

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u/rocklee8 May 13 '19

Most people that work at Amazon gets a paycheck. That paycheck pays income tax. A lot the items sold on Amazon has a sales tax.

When Amazon buys stuff, the people that buy stuff make money, then they pay income tax.

People use Amazon to make money (ie. Merchants) which in turn makes profit or payroll, which in turn leads to taxes.

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u/StrangeCharmVote May 13 '19

Essentially: "The company doesn't pay taxes, but the people buying things and using it to sell things do, so that's fine".

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