Koch brothers attack race for Amazon HQ2
Layfield Report CEO John Layfield and Kingsview Asset Management CIO Scott Martin on a Koch brothers-backed group’s ad campaign aimed at cities offering tax breaks to attract Amazon’s new headquarters.
Jeff Bezos’ sprawling e-commerce giant Amazon reportedly raked in more than $5.6 billion in U.S. profits in 2017, but despite that, the company essentially paid $0 in federal income taxes.
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That’s largely attributable to “excess stock-based compensation deductions” and the effect of the 2017 Tax Act, according to the company’s U.S. Securities and Exchange Commission filing earlier this month. In other words, Amazon was able to leverage the tax credits and breaks to zero out taxes it owed this year, according to the Institute on Taxation and Economy Policy (ITEP), a non-partisan think tnak.
The tax plan, which was signed into law by President Trump in late December, slashed the corporate tax rate to 21% from 35%, but it also instituted a mandatory one-time tax on accumulated earnings of foreign subsidiaries.
Amazon will receive approximately $789 million from the tax cuts, but according to filings, the company’s 2017 taxes do not factor in the impact of that second big tax disclosure. While the tax cuts generally took effect on Jan. 1, some companies, including Amazon, have managed to deter or postpone tax liability from prior years as part of a grandfather clause included in the law, ITEP reported.
Bezos, the richest person in the world with a net worth of $105 billion, is in the midst of a nationwide hunt for a second Amazon headquarters locale. Amazon officials said they expect to invest more than $5 billion in construction costs and create at least 50,000 high-paying jobs in the selected city, which has been narrowed down to 20 contenders.
But in hopes of wooing Amazon, a number of cities are offering tax incentives. State and local officials in New Jersey have offered a combined $7 billion in tax incentives to lure Amazon to Newark, and Chicago offered $2 billion in tax breaks (and hinted it was willing to go higher).
Generation Opportunity, a center-right political advocacy group that’s linked to billionaire brothers Charles and David Koch, has started running attack ads on social media opposing some of the tax incentives offered to Amazon.
“Amazon is one of the largest, most successful corporations in the world – it doesn’t need help from struggling taxpayers to build its second headquarters,” Generation Opportunity policy director David Barnes said in a statement.
Although Amazon is headquartered in Seattle, its European headquarters are located in Luxembourg, a country with a population less than 600,000. In mid-December, Luxembourg officials challenged a court order from the European Union, which accused the country of offering special treatment to Amazon and ordered it to recover $295 million in back taxes, according to Reuters.
And in October, the European Commission concluded that Luxembourg granted “undue tax benefits” to Amazon, allowing the online retailer to pay “substantially less tax” than other businesses, which is illegal under EU laws, according to a news release.
Amazon could not be reached for comment.
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