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The United States of Amazon

Amazon does not pay the government taxes. The government pays Amazon taxes.

Some residents of the chutzpah capital of the world predictably rebel against this arrangement. Just call them modern-day tax resisters. Hopefully, Jeff Bezos’s Internal Revenue Service audits them all — or at least revokes their Amazon Prime privileges.

New Yorkers put Amazon’s HQ2 in its shopping cart. Then they looked past the reviews Jeff Bezos wrote under a nom de Amazon. They hit delete. Amazon, in a juvenile I-dumped-you-first press release, then announced the cancellation of this second headquarters planned for New York City.

The initial rollout appeared about as self-indulgent as anything since “The Decision,” LeBron James’s 2010 announcement, delivered for an ESPN special, that he planned to sign with the Miami Heat rather than the Cleveland Cavaliers. Amazon put the creation of 25,000 jobs on blast. It hit mute for that part where the Big Apple and the Empire State provide $2.8 billion in “incentives” — newspeak for subsidies and tax breaks — to Amazon for the privilege of hosting the Seattle-based company’s second headquarters, to serve as its sidepiece, its Lauren Sanchez. The New York Post reports that the sweetheart deal included a potential $505 million in construction grants, no property taxes for 11 years, and $897 million in Relocation and Employment Assistance Program funds.

Amazon’s thirst for state and local taxes extends to the federal level.

The company doubled its profits from $5.6 billion to $11.2 trillion this past year. While the 21 percent corporate rate suggests a $2.4 billion tax bill, Amazon pays nothing, according to the Institute of Taxation and Economic Policy. In fact, the company reports a nine-figure tax rebate from the feds. This follows another year in which the corporate behemoth paid nothing — a lot less than your struggling local used bookstore or the remaining shops in those ghost towns we call malls — in taxes.

“The company’s newest corporate filing reveals that, far from paying the statutory 21 percent income tax rate on its U.S. income in 2018, Amazon reported a federal income tax rebate of $129 million,” the Institute of Taxation and Economic Policy explains. “For those who don’t have a pocket calculator handy, that works out to a tax rate of negative 1 percent.”

Perhaps Amazon’s penchant for reinvesting to gain a greater market share explains the refund, or maybe, given the preliminary nature of the 2018 filing, Amazon ends up paying something. But ultimately, people, even devoted Amazon customers, see something perverse in the company owned by the richest man on earth paying a lighter tax bill than a struggling, underemployed American might pay.

The taxdollars flowing into the coffers of one of the world’s richest corporations suggest two solutions. Americans could demand further tax reform, perhaps a cap on corporate deductions and an Alexandria Ocasio-Cortez-style 100 percent federal tax on local subsidies of the type that Mayor Bill de Blasio and Governor Andrew Cuomo sought to bestow on Amazon. Or, alternatively, we could just do the honest thing and rename the country the United States of Amazon.

Amazon morphed from a bookseller into the largest clothes retailer in the world, a successful cloud web service, and a thousand other things. Is the ultimate ambition to change the acronym for that USA initialism?

The taxes flowing to rather than from Amazon makes one wonder.

Why did Jeff Bezos buy the most influential newspaper in the nation’s capital? Why does Amazon’s political action committee split millions in campaign donations between the two parties? Why do enquiring minds want to know?

The answer seems to involve the pretensions of a private business of becoming a public institution. And what’s good for Amazon, contrary to a previous generation’s accepted aphorism regarding General Motors, is not always good for America, and vice-versa. The company’s legendary efficiency may help the country, as some suspect, streamline the bloated healthcare industry. But this requires, for it to pass ethical muster, the company to make money through the market and not through a government payoff. Unfortunately, billions of Amazon’s profits come from Americans getting a tax bill, and not a book, video game, or Alexa, in the mail.

Willie Sutton said he robbed banks because that’s where the money is kept. Jeff Bezos, for similar reasons, looks to the government.

Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of six books.

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