Amazon paid no US income taxes for 2017

Let&#x27;s say Amazon is about to make $1B in profits. Instead, they go on a hiring spree, and quickly pay out $1B in salary. Ha ha, they say, we have a profit of $0, so we don&#x27;t get taxed!<p>But that&#x27;s good. The employees all made lots of money (and will be taxed on it, often at a higher rate than the corporation would have paid!)<p>So run the same scenario again, but this time say &quot;stock options&quot; instead of salary.

I haven&#x27;t looked into Amazon&#x27;s finances extensively, but I bet this is at least partly due to Net Operating Loss. In US tax law net operating loss means that you can deduct losses for prior years from this year&#x27;s earnings. The funny thing about this is that by losing money you actually add an asset to your balance sheet (deferred tax assets). Since Amazon has lost a lot of money in the past that probably helped with their 2017 taxes. Another interesting thing about this is with the new tax law cutting the corporate tax rate to 21%, many companies had to take a charge against earnings in order to write down the value of the deferred tax assets. If you lost $1M last year, you had $350,000 in deferred tax assets that got written down to $210,000 meaning your company technically lost $140,000, even though you got a tax cut. Accounting is truly amazing.

I wonder if journalists will ever tire of writing disingenuous articles like this.<p>The uninitiated in business will understand this as another company contributing nothing to the tax base, but they’re intentionally leaving out the other side of the equation.<p>The money deducted from employees exercising option grants doesn’t go into a black hole. It simply shifts the tax burden to the employee.<p>The real story is money never escapes the tax man. The burden may shift, but Amazon is creating wealth and the recipients of that wealth are paying taxes.