“The most visible and prominent winners of globalization are these big multinationals whose effective tax rates have collapsed,” said University of California at Berkeley economics professor Gabriel Zucman, who tracks wealth and inequality. “That can only lead to a growing rejection of that form of globalization by the people.”
The World Economic Forum, the organizer of the annual conference for the rich and powerful in Davos, Switzerland, issued a white paper this month arguing “taxation systems must be redesigned efficiently to tax capital and multinationals.”
Governments need the revenue and “progressive taxation will be an essential mechanism to compensate for the uneven recovery already under way,” according to the report.
There remain plenty of defenders of low taxes.
Conservative economists such as Douglas Holtz-Eakin, president of the American Action Forum, argue taxing the wealthy and corporations more heavily will damage the economy.
“Higher taxes on capital generally raises the possibility of a slowdown of productivity growth,” said Holtz-Eakin, who was an adviser to President George W. Bush.
That view is losing ground though as resentment grows over the ways that highly profitable corporations reduce their taxes.
Facebook, Apple, Amazon, Netflix, Google and Microsoft collectively skirted approximately $100 billion in U.S. taxes from 2010 to 2019, according to an analysis of regulatory filings from Fair Tax Mark, a progressive think tank. Many of those untaxed profits were shifted into tax havens like Bermuda, Ireland, Luxembourg and the Netherlands.
Amazon paid an effective corporate tax rate of 11.8% in 2020, according to a Bloomberg Economics analysis, and it’s hardly an outlier among highly successful tech companies. Facebook, founded by the world’s fifth-richest person, Mark Zuckerberg, paid 12.2% last year.
Asked to comment for this article, an Amazon spokesperson pointed to some of the company’s prior statements related to its tax bill, including, in part: “Amazon’s taxes, which are publicly reported, reflect our continued investments, employee compensation, and current U.S. tax laws.”
As a mix between a technology company and a retailer with massive physical infrastructure, Amazon is able to use a slew of long-standing, low-profile tax preferences for stock compensation, buildings, research and development. Bezos has pushed to re-invest profits into the company, a strategy that keeps taxable income low and tax breaks high.
Amazon completely avoided federal income taxes in 2017 and 2018 thanks to its savvy use of the tax code. Since then, the company has had to pay some income tax to the Internal Revenue Service, but it’s been far below the 21% headline rate installed under President Donald Trump.
Billionaire tech founders often pay even less personally than their corporations do.