Does Amazon pay any taxes?

People are fired up about this head tax issue. One Seattle Times reader sums up the anger nicely, “Cry me a river that Amazon has to start contributing to restoring the city.” I see what you did there. Let’s break this issue down a little more closely.

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First some basic assumptions. Private businesses exist for the purpose of delivering a service to people that makes the company money. Can we all agree on that? From the local artisan sandwich shop to the largest companies on the planet, the basic goal is the same: make money.

Every successful company is maniacal about the balancing act of maximizing profits and minimizing expenses, including taxes and wages. You and I just did this exact thing last month on our personal income taxes. Why should a company be any different?

Next, the biggest companies have very good accountants that understand how the tax code works and they move money around to — you guessed it — save the company money. This is not new. This is not illegal. And most people think this is not immoral. It’s just how the game is played.

You’d think with this hysteria that Amazon paid no taxes. That is not true. I was able to find their numbers from a 2017 Politafact article:

“Amazon paid a combined total of $412 million in federal, state, local and foreign taxes last year.” That was for 2016.

The same article estimates that Amazon’s effective tax rate is around 13 percent of profits. Now I’m not going to break down how they calculate profits, and if you want to get up in arms about this percentage, then screaming at a rally isn’t going to fix it. I would point out that the latest tax overhaul wanted to bring the corporate tax down to 15 percent, but I digress.

For comparison, Forbes estimates that for the same year, Microsoft paid 16.5 percent and Google’s parent company, Alphabet, paid 19 percent of profits.

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So yes, Amazon is paying a little bit less by percentage than other giant U.S. tech companies, but they also take a lot of their profits and pour them back into the company, which gives them — wait for it — a tax break.

“But they should do more!” Really, should they? Why?

Shouldn’t we really be looking at the city leaders that collected all the tax and be asking, “Why aren’t you doing more?”