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Amazon Pays Zero in Income Taxes
Amazon has been in the news recently for some controversial topics. First, was its decision to abandon plans to build a second headquarters in New York City. Activists protested the state's decision to provide tax credits to the company and the issues associated with those protests proved insurmountable.
But thanks to a developing situation involving Donald Trump, America's No. 1 tech company and $10 billion... this may soon be the most talked-about stock in America. Find out more about the "secret stock" here.
The second major story is also centered on taxes and that is the fact that Amazon as a company paid nothing in federal income taxes last year. As we explain in our latest article the low tax bill is a result of tax law and decisions made decades ago to address income equality.
In 1993, Congress sought to tackle the growing problem of income inequality. They did this by disallowing any tax deduction for salary expenses of over $1 million paid to top executives. The idea was to deter lavish executive compensation packages.
But there was an exception to the rule, compensation that took the form of stock options or stock grants would still be deductible. So, the 1993 change incentivized companies to increase their use of stock-based compensation for their executives.
As we explain in the article, that rule now allows Amazon to deduct more than $1 billion in compensation expenses. That could mean the company is a sound investment even though it pays no taxes unlike some companies that have paid no taxes as part of schemes to create an impression of profits.
You can read more in our latest free educational article which is available right here.
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