Amazon and Our Rigged Tax System
Introduction
Throughout Amazon’s history, corporate tax advantages have been essential to the company’s rapid growth and increasing market dominance, as well as the exploding wealth of the e-commerce giant’s top executives. This report documents the additional ways that Amazon and its executives unfairly benefit from a rigged federal tax system that has long prioritized large corporations and wealthy executives over regular people.
In the early years, Amazon made a deliberate choice to avoid state sales taxes that fund our schools, health care, and other vital public services. For decades, that choice gave Amazon a crucial, unfair advantage against local bookstores, toy stores, and other smaller retailers.
The 2017 Tax Cuts and Jobs Act (TCJA), passed by congressional Republicans and signed by President Trump, only accelerated the concentration of economic and political power among the ultra-rich, while leaving ordinary working people far behind.
As Congress attempts to extend and expand these high-end tax cuts, this analysis focuses on the implications for Amazon’s top executives, typical employees, and the company as a whole.
Because of strong secrecy protections regarding individual tax records, we rely primarily on Amazon’s public disclosures regarding its executives’ compensation and company stock sales. We also examine the tax implications of Amazon’s median worker pay and employer contributions to tax-sheltered employee retirement funds.
More detail on these findings, along with our sourcing and methodology, can be found in the full PDF. A summary follows.
Key Findings
Amazon has benefited from loopholes and the slashing of the corporate tax rate.
- Amazon has used credits and loopholes to avoid paying even the sharply reduced TCJA corporate tax rate of 21 percent. If they had paid the full statutory corporate rate of 21 percent between 2018 and 2021, their IRS bill would’ve been $12.5 billion higher.
- In 2018, Amazon actually recorded a negative federal tax rate, meaning the company pocketed more in credits and subsidies than it paid the IRS.
Jeff Bezos enjoys huge windfalls from the capital gains tax double standard.
- Since the 2017 tax reform, Amazon founder Jeff Bezos has pocketed $36.6 billion in capital gains from selling shares of his company stock. He owed $6.2 billion less in federal taxes on these gains than he would have if the 2017 Tax Cuts and Jobs Act (TCJA) had equalized the tax rates on income from wealth and income from work.
Typical Amazon employees are losing out on tax breaks enjoyed by the rich.
- In 2024, median pay at Amazon stood at just $37,181. At this low wage level, the typical Amazon worker is likely to be living paycheck to paycheck with little chance of benefiting from the discounted tax rates on capital gains.
- Between 2018 and 2024, the average Amazon worker’s income only increased by 3.3 percent, while rents increased by an average of 9.2 percent.
- Of the 1.2 million employees participating in Amazon’s 401(k) program in 2023, 72 percent had zero balances, meaning they could not afford to put any money aside in these tax-sheltered investment accounts.
Amazon CEO Andrew Jassy has saved nearly $7 million from the top tax rate reduction.
- Republicans aim to keep the top marginal income tax rate at the TCJA’s reduced rate of 37 percent. Amazon CEO Andrew Jassy saved at least $6.6 million as a result of this reduced rate in the law’s first seven years, based on the $263 million in salary and vested stock he pocketed during this period.
Amazon workers pay more Social Security taxes than Jassy as a share of compensation.
- As a result of the fixed cap on Social Security payroll taxes, Jassy’s contribution to this vital program amounted to just 0.4 percent of his taxable compensation in 2024, while the median worker’s contribution came to 6.2 percent of their salary.
Our rigged tax system weakens an already weak estate tax.
- If Congress extends the TCJA’s weakened estate tax, Bezos and Jassy’s heirs would enjoy savings of $5.6 million. If they eliminate the estate tax altogether, Jassy’s heirs could avoid about $199 million in taxes — and the Bezos family could avoid about $86 billion. The current estate tax does not apply to families with less than $28 million.
Recommendations
Amazon is a perfect case study in what’s wrong with our tax code. Unfair tax benefits that flow to multinational corporations and wealthy executives have allowed Amazon to grow into a behemoth that is able to squash independent small business, demand tax subsidies from counties and states, send armies of lobbyists to DC, and treat its workers poorly. The public bears the costs.
This rigged system not only leaves the wealthy even wealthier — it comes at the expense of public investments needed for national economic prosperity into the future.
Instead of new tax giveaways for corporate CEOs and other ultra-wealthy Americans, we need tax reform that lifts up ordinary families and small businesses, and discourages runaway executive pay and extreme wealth concentration at the top.
Here are some key elements of a pro-worker and small business fair tax agenda.
Raise the corporate tax rate, make it progressive, and close loopholes.
The corporate income tax is one of the fairest ways of raising revenue because it overwhelmingly comes out of the pockets of wealthy shareholders. Corporate tax rates should also be progressive, starting low for normal returns that reflect fair markets and then increasing sharply on high profits indicative of monopoly power.
We also support strengthening the Corporate Alternative Minimum Tax and fully implementing a global tax agreement that sets a 15 percent minimum tax regardless of where profits are earned.
Tax corporations with excessive CEO pay.
Higher taxes on companies with wide CEO-worker pay gaps would create an incentive to rein in executive pay and raise worker wages while generating significant new revenue for vital public investments.
The Curtailing Executive Overcompensation (CEO) Act would apply an excise tax to companies with pay ratios above 50 to 1. The Tax Excessive CEO Pay Act would tie a company’s federal corporate tax rate to the size of the pay gap between its CEO and median worker.
Increase the new stock buybacks tax.
The Stock Buyback Accountability Act would raise the current 1 percent excise tax on buybacks to 4 percent, a move that would discourage this wasteful practice while generating an estimated $166 billion in new revenue over the next decade.
Use tax policies to support worker power.
Congress should reinstate a tax deduction for union dues and pass the No Tax Breaks for Union Busting Act so businesses can no longer claim tax deductions for interfering with unionization campaigns.
Use tax policies to support small businesses.
Congress should implement equitable, bottom-up tax reform that delivers real benefits to America’s smallest businesses. On top of raising rates and closing loopholes to level the playing field between small businesses and large, particularly multinational corporations, Congress should provide sufficient IRS funding to support small businesses and crack down on tax dodging by larger companies.
Adopt a billionaire tax and/or a wealth tax.
The ultra-wealthy are able to avoid taxes by holding on to their assets and borrowing against them. A billionaire income tax would tax new investment income each year, whether that income is “realized” or not. A wealth tax would apply to an ultra-wealthy individual’s total accumulated wealth.
Tax income from wealth at least as high as income from work.
Preferential tax treatment for capital gains income disproportionately helps the ultra-wealthy: over 75 percent of the benefit goes to just the highest-income 1 percent of households. Income from working a job should not be taxed at up to twice the rate of living off the proceeds of great wealth.
Lift the Social Security wage cap.
The wealthiest Americans should pay their fair share into the system. The Social Security Expansion Act would subject all income above $250,000 to the Social Security payroll Tax.
Raise top marginal tax rates.
Congress should raise the current top income tax bracket and create additional higher marginal tax brackets to make the tax code more progressive.
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