Actually, most of this is just not relevant. The reason that corporations pay less taxes is because they are taxed on their income. While individuals are taxed on their revenue.

i.e. in the equation revenue - expenses = income. We get taxed on the revenue (i.e. your salary = revenue in this example) but don't get to subtract out our expenses. But corporations do.

In the case of Amazon that equation would look like this 100 - 99 = 1. So, they get taxed 21% of the 1 vs us getting taxed on the 100.

Then they are able to further reduce that 1 because they had losses in past years they can carryforward to offset the 1. And one of the big ways they reduce that 1 these days now that the past losses have been used up is stock compensation expense. If they issue a lot of stock options to employees they can apply that expense over a period of 3-4 years further reducing that 1.

Sure, they use Ireland's lower rates to avoid taxes in Europe but that has nothing to do why they pay little to no federal income taxes.

Finance professional with a passion for reading, writing, history, economics and the world.

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