Amazon Wins $1.5 Billion Tax Dispute Over IRS (reuters.com) 77
Amazon.com on Thursday won a more than $1.5 billion tax dispute with the Internal Revenue Service over transactions involving a Luxembourg unit more than a decade ago. From a report: Judge Albert Lauber of the U.S. Tax Court rejected a variety of IRS arguments, and found that on several occasions the agency abused its discretion, or acted arbitrarily or capriciously. Amazon's ultimate tax liability from the decision was not immediately clear. The world's largest online retailer has said the case involved transactions in 2005 and 2006, and could boost its federal tax bill by $1.5 billion plus interest. It also said a loss could add "significant" tax liabilities in later years. Amazon made just $2.37 billion of profit in 2016, four times what it made in the four prior years combined, on revenue of $136 billion.
Let's rephrase that title (Score:1)
"US Loses $1.5 Billion Tax Dispute With Amazon"
Transfer pricing should be illegal.
Good! (Score:2, Funny)
Large corporations shouldn't have to pay taxes at all, given the many benefits to society they provide. I think once a business reaches a certain size, it should become exempt from income tax. That will give small business owners the incentive to grow and create more high paying jobs.
China's economy is expanding so fast, we've got to do something to keep them from taking over. Eliminating income taxes for large corporations could be just what we need to keep the Chinese menace in check.
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Are you fscking serious? Large corporations don't pay enough tax. The effective tax rate of most of our large US companies are no more than 10%.
Lower taxes do not create jobs. Lower taxes on the rich and lower taxes on the corporations just allow them to keep getting richer. Nothing else changes.
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Yes, corporations should pay higher taxes. But, if you force them to pay higher taxes, they'll move, and take the jobs/money with them. So they should pay higher taxes, but if we charge higher taxes, were screwed anyway.
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Yes, but moving out of the U.S. means no recourse to the U.S. legal system except as a foreign entity. And Amazon will lose their low transportation costs if their "fulfillment centers" are not in the U.S.
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And Amazon will lose their low transportation costs if their "fulfillment centers" are not in the U.S.
You seem to be under the delusion that American tax law makes sense. It does not. Taxes are not based on where activities occur, but where the company is incorporated. So if an American company makes a laptop in China, and sells it in France, the profit on that transaction is taxable in America. This gives companies a huge incentive to either incorporate overseas, or to keep their capital outside of America (the profit isn't taxable until it is repatriated). No other country has such stupid job-killing
Amazon isn't moving (Score:2)
But, if you force them to pay higher taxes, they'll move, and take the jobs/money with them.
Exactly how is Amazon going to move outside the US? Their business model is dependent on being able to deliver stuff quickly which means they aren't going anywhere and are going to be subject to US taxes whether they like it or not.
So they should pay higher taxes, but if we charge higher taxes, were screwed anyway.
They don't need to pay higher taxes, they just need to be prohibited from weaseling out of paying taxes they rightfully should have to pay. And no, just because they found some clever loophole doesn't make it ok.
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These aren't taxes on activities that happened in America. If they decided to incorporate in e.g. the Caymans, they'd still owe US tax on US activities, just like today, but they wouldn't owe US tax on stuff made, shipped, and consumed in Europe, like they do today.
It's the tax system that's fucked up here.
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Yes, corporations should pay higher taxes.
No they shouldn't. Corporate taxes are regressive. The cost of the taxes are passed on to the customers (as higher prices), the employees (as lower wages), or the shareholders (as lower dividends or share prices). The first is equivalent to a sales tax. The second is equivalent to a payroll tax, which is even more regressive. The third is applied to all shareholders equally, so a working class family with a pension pays the same as a billionaire. It is better to just get rid of corporate taxes, and co
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"I don't think there's many blacks and other poor people in those places"
Ah yes, but those that are there have become rich beyond their wildest dreams because money just naturally flows to them when all corporate taxes are eliminated.
It's a law of nature.
Re:Good! (Score:5, Insightful)
"But if you lower the tax rate for large corps to zero, all that money they've got stashed overseas will flow back into the country where it can benefit blacks and other poor people who need money."
Ah yes -- Tinkle-Down economics.
Has never worked in the past.
But this time it's different.
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Ah yes -- Tinkle-Down economics.
Is that where the rich piss down your back and tell you it's raining?
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The real reason not to tax income of anybody for any purpose of-course is the moral one: slavery should not be authorized even for government to engage in.
Economically speaking it is also the worst thing that can be done, you get less of what you tax, so if you tax income you get less income because production is more expensive.
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That's crazy, we should do just the opposite. We should give the rich even more money because they're the ones with a good track record of managing it.
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No, that is wrong. The larger a corporation is, the more likely that it is reducing total employment, reducing product choices for customers, and taking advantage of its size and market share to keep prices higher and reduce competition. Corporations are artificial constructs created by law for the purpose of improving the economy. It is possible that corporations should be subject to a progressive income tax in order to discourage them from getting too large, but that is probably not easy to do well, nor t
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Corporations are artificial constructs created by law for the purpose of improving the economy.
Corporations are artificial constructs created by law to concentrate power and deflect liability.
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That will give small business owners the incentive to grow and create more high paying jobs.
I can't believe you typed that with a straight face.
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LOL, I admit I had a good chuckle writing it. You see, I'm home sick today with not much to do so I figured I'd write a quick troll on Slashdot and see if I could push anyone's buttons. As you can see, I've had a measure of success.
The first moderation of the post correctly labelled it as "Troll", but I'm glad at least a couple of other moderators saw the humor in it.
I've been reading Slashdot for some time, so I have a pretty good idea of how to "stir the pot"
Cheers!
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Following the law is not cheating. If you don't like the law as written petition congress to change it.
In most democracies this would be correct, but in the US corporations can literally buy the congress, so democracy is an illusion.
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Following the law is not cheating. If you don't like the law as written petition congress to change it.
In general, you are right, what Amazon, and other big corporations do, is not cheating. They are using legal tax code to avoid paying the higher tax amount that they would owe if they weren't able to claim deductions, etc., much like we all do.
However, very few of us can afford to pay lawyers, lobbyists, think tanks, etc. to get in the face of the politicians 24x7x365 or hand them wholesale bills to game the system in our favor. That's also why the "petition congress to change it" statement is pure and ut
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they won't listen unless you have 100,000 of your friends screaming the same thing.
They won't listen at all unless your friends happen to be named "Benjamin Franklin."
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Wish we could put "a pound of flesh" back in the tax code.
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Don't forget to include the blood and other tissue that will be removed as a consequence of removing the pound of flesh, or you may find that you can't actually collect the flesh. I think there was a story about this.
Re: Before everyone piles on (Score:1)
You're a fucking idiot. Have you been under a rock the past 20 years? Congress making laws for the people; yea right... Just as soon as we create PACs to do so.
You're missing the point (Score:2)
Re:Before everyone piles on (Score:5, Informative)
Nearly all other countries tax based on location. If you earn money in the country, they tax it. If you earn money outside the country, it's not their concern. Even if this is a tax cheat, it really has nothing to do with the IRS, other than being a money grab simply because nonsensical U.S. law allows them to do it. The profit in Luxembourg came from Amazon's European operations. If Luxembourg or the EU wants to sue Amazon over this, then that's their legitimate right. But it has nothing to do with the U.S. nor the IRS.
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Wait what? My tax form allows tax credit dollar for dollar of all foreign taxes paid.
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This isn't a tax cheat, at least not with respect to the U.S. The only reason the IRS tried to cash in on this is because the U.S. is almost unique in the world in taxing income that its citizens/corporations make abroad.
Isn't this particular case the exact opposite of what you're talking about? Amazon (and it's fellow transfer pricing compatriots) would like to claim that income earned in a particular country wasn't really earned in that country through accounting sleight of hand.
If individuals could legally use transfer pricing, the US government would financially collapse. Fortunately for US citizens, the laws prevent this calamity by only allowing this privilege of legal tax minimization to entities with income in the
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I think everything you say is true. And you're right. It's not equitable.
But that's probably not the issue here. I assume the issue here is the "usual" one of a large corporation manipulating its books so that many of its profits on income generated in a higher tax jurisdiction (e.g. the US) magically gets booked/paid in a country where the taxes are lower. The poster child being Apple which disappeared billions in profits through a "Head Office" in Ireland that existed (exists?) only on paper. No phys
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Take your "subject is part of the comment" format over to Daily Kos where it's the norm.
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And higher capital gains taxes.
Capital seeks returns. Net tax rates on investments must be globally competitive. Average earnings * (1 - Cap Gains Rate) * (1 - Corporate Tax Rate) must compete. The effective investor 'keep rate' is about 55% in all first world nations. To the extent it varies, it reflects the difference in earnings.
Which isn't to say it's really simple. Average earnings is noisy as fuck and past performance is no guarantee of future earnings. Earnings can avoid corporate tax rates by r
List of countries by tax rate (Score:4, Informative)
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This should be linked in more debates around here.
So the USA is 10th in federal corporate tax rate, behind such global economic powerhouses as Greece, Argentina, Bangladesh and Pakistan. (in some states, we're only second behind Greece, yay 47% combined tax rate)
Although, once you get down to the "basically 30%" range, there are a lot of nations, some struggling and some thriving. Another obvious trend is that the places with 0% corporate tax rate are mainly either tourism societies or wealthy exporters.
L
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They even have their own special tax courts,
But in Amazon's case, the IRS lost in one of those tax courts.
IRS Motto: We've got what it takes to take what you've got.
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Really? Jesus was very much anti taxes.
There was an article about times Jesus was a passive aggressive dick. One of the stories had tax collectors being forced to wait around all day as Jesus performed a miracle. As the fishermen would clean fish they would find a coin in each one. So at the end of the day the tax men were paid, but all of the money reeked of fish that was out in the sun all day.
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Really? Jesus was very much anti taxes.
There was an article about times Jesus was a passive aggressive dick. One of the stories had tax collectors being forced to wait around all day as Jesus performed a miracle. As the fishermen would clean fish they would find a coin in each one. So at the end of the day the tax men were paid, but all of the money reeked of fish that was out in the sun all day.
When people ask "What would Jesus do?", they should not forget that flipping over tables and chasing people around with a whip is one of the options.
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When people ask "What would Jesus do?", they should not forget that flipping over tables and chasing people around with a whip is one of the options.
As long as the targets are bankers, would anyone really complain?
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Like many things in the bible, it's not so clear cut [wikipedia.org].
"Just $2.37 billion of profit"? (Score:2)
Amazon made just $2.37 billion of profit in 2016...
Such a small profit. How ever will they manage to feed their families...
On $400 billion investment (lost money after infla (Score:3)
Amazon made $2.37 billion, on over $400 billion invested. So an owner (investor) who put in $10,000 of their retirement savings made $59. Whoohoo!
Due to inflation, $10,000 in 2015 was worth only $9,700 in 2016, so they actually LOST $241.
Yeah, "making" less money than you're losing to inflation is pretty dismal.
Corporations aren't people! (Score:1)
Shareholders, customers, management, employees... these are the people who profit. Corporations are piles of paper. Every dime taxed away from these entities hurts these people. The corporations don't care one lick, since paper doesn't actually have feelings.
Abolish corporate tax. Problem solved. The only people who would be opposed to such an idea would be the corporate tax attorneys, lawyers, accountants,
Sell/Pay (Score:1)
helping Amazon with their political views (Score:1)
Can you blame them for steering Amazon away from joining alt right groups, the tea party, CPAC, etc?
Before you know it, Amazon would have been pushing Rush Limbaugh down our throats.
Not just IRS, States go nuts (Score:1)
Multiple states have basically bluffed on the tax returns my CPA wife has done for a very large company.
More than one time in the last few years, a state will reject a return. Says the company has to pay millions. 1 day before the tax court date, the state drops disagreement.
3 states are trying to say that they agree that huge chunk of stock sold in another company investment capital gains, but hundreds of millions is company income in their state. So 3 different states are seeing big millions in capital ga