Scott Shellady, Rebecca Walser on Amazon’s next CEO
Jeff Bezos, the richest man in the world, publicly backed President Biden’s plan to dramatically increase taxes for wealthy Americans and corporations, despite Amazon’s behind-the-scenes work to preserve a tax loophole that a new report says makes it possible reduce his liability.
The founder and CEO of the e-commerce giant announced in April that he supported Biden’s proposal to increase the corporate tax rate from 21% to 28% to fund a major infrastructure overhaul – a notable statement after President Bezos voted for it had revealed how little Amazon pays federal taxes.
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“We understand that this investment requires concessions on all sides – both in terms of the details of the benefits included and the way they are paid for (we support a corporate tax increase),” Bezos wrote in one Statement that was published on the company’s website. “We look forward to Congress and the government coming together to find the right, balanced solution that will maintain or improve US competitiveness.”
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But privately, Amazon has taken steps to keep its tax bill down, according to a new report released Thursday by Politico highlighting the difficulties Biden may face to ensure the tax measure becomes law.
In June, Amazon hired tax lobbyist Joshua Odintz, a former Democratic congressman and alumnus of the Obama administration, to lobby for the section of tax law that deals with deducting research and development taxes, the outlet quoted as saying Disclosure Statement.
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And the R&D coalition – a coalition of companies that will benefit from the withdrawal including Amazon, Intel, the National Association of Manufacturers, and others – hired a number of seasoned tax lobbyists at PricewaterhouseCoopers earlier this year, Politico reported. Among those hired is a former senior advisor to the Senate minority leader, Mitch McConnell.
According to the current guideline, companies can account for research and development costs in full as an expense, meaning they can deduct R&D costs from their taxable income, according to the tax foundation. The R&D tax credit, first introduced in 1981, has enjoyed widespread bipartisan support among lawmakers.
It’s unclear how much money Amazon saved on the research and development tax credit, but in a regulatory filing with the Securities and Exchange Commission earlier this year, the company said the tax credits helped reduce its US tax burden, ” primarily related to US federal research and development credit. ”
Of course, Amazon benefits from other tax laws, including one that allows it to deduct the cost of the stock it gives its employees as part of their salary packages.
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Biden hasn’t targeted the R&D tax credit as part of his roughly $ 4 trillion spending plan. However, Politico reported that if Congress fails to act, the loan could depreciate in value over the next year, as the 2017 Republican Tax Act included a provision that would prevent companies from immediately deducting the full amount of R&D spending in 2022 .
Instead, companies would have to withdraw some of it every year for the next five years.
The Tax Foundation estimates that repealing the changes would cost about $ 131 billion in a decade, but would increase GDP by 0.1%.