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Amazon and Taxes!

Amazon has been criticized for not paying their “fair share” of taxes in the media. What is often not discussed is how our accounting system works. The 2 main tax payers in a company are:

  • The employer
  • The employee

The employer is allowed to deduct from their tax return the amount of compensation that they pay to their employees – this is typically the single largest expense that they have control over. They can choose to pay their employees less, and therefore report a higher income/profit and pay more taxes. OR, they could pay their employees a lot and would therefore reduce their income/profit and pay less in taxes relative to other companies.

Hopefully we are presuming that the media is not suggesting that Amazon slash salaries so that it pays more in taxes!

In addition, the highest corporate tax rate is 21% and the highest individual tax rate is 37% (not including the higher Social Security and Medicare taxes that are paid into the system); therefore…the media, IRS and politicians who want more taxes, are in essence getting it now under the current system.

Everyone can just relax…..and SMILE!

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