Amazon Pays Zero Federal Income Tax Again on $11.2 Billion Profit—Receives $129 Million Tax Rebate

Amazon paid zero federal income tax for the second consecutive year despite nearly doubling its U.S. profits to $11.2 billion in 2018. Beyond avoiding all federal taxes, Amazon actually received a $129 million tax rebate from the federal government—yielding a negative 1% effective tax rate. This occurred after the 2017 Tax Cuts and Jobs Act reduced the statutory corporate tax rate from 35% to 21%, demonstrating that even drastically lower tax rates could not compel Amazon to contribute to federal revenue.

The Tax Avoidance Details

According to the Institute on Taxation and Economic Policy (ITEP) analysis of Amazon’s financial disclosures:

2018 Performance:

• U.S. profits: $11.2 billion (nearly double the $5.6 billion in 2017)
• Federal income taxes paid: $0
• Federal tax rebate received: $129 million
• Effective federal tax rate: -1%
• Statutory corporate tax rate: 21% (reduced from 35% by Trump tax cuts)

What Amazon Should Have Paid: At the new 21% statutory rate, Amazon should have paid approximately $2.35 billion in federal income tax on $11.2 billion in profits. Instead, the company paid nothing and received money back from the federal government.

Tax Avoidance Mechanisms: Amazon’s financial statements disclosed that various “unspecified ’tax credits’” and “tax breaks for executive stock options” were responsible for eliminating the company’s tax liability and generating the rebate. The filing revealed the same mechanisms used in 2017, but deployed at an even larger scale to offset taxes on doubled profits.

Two-Year Pattern of Zero Taxes

Amazon’s 2018 zero-tax year established a clear pattern:

2017:

• Profits: $5.6 billion
• Taxes paid: $0
• Additional windfall: $789 million from tax law changes

2018:

• Profits: $11.2 billion (100% increase)
• Taxes paid: $0
• Tax rebate: $129 million

Combined Impact: Over two years, Amazon generated $16.8 billion in U.S. profits, paid zero federal income tax, and received net benefits exceeding $900 million from the federal government. At the 21% rate, Amazon should have paid approximately $3.5 billion over the two years.

The Tax Cuts and Jobs Act Failure

The 2017 Tax Cuts and Jobs Act was sold to the American public with explicit promises:

Proponents’ Claims:

• Reducing corporate tax rates from 35% to 21% would increase tax compliance
• Companies would pay lower rates but on a broader base, generating revenue
• Lower rates would reduce incentives for aggressive tax avoidance
• Corporate tax cuts would pay for themselves through economic growth

Amazon’s Demonstration: Amazon proved all these claims false. Even with the rate cut from 35% to 21%:

• Amazon still paid zero federal tax
• Tax avoidance mechanisms still reduced liability to negative rates
• Revenue loss from rate cuts was not offset by increased compliance
• The tax cuts simply transferred wealth to shareholders (primarily Bezos)

Bezos Wealth Acceleration

Jeff Bezos’s personal wealth increased by approximately $24 billion in 2018, driven by Amazon stock appreciation that was directly subsidized by tax avoidance:

The Wealth Extraction Math:

• Amazon avoided approximately $2.35 billion in federal taxes in 2018
• Plus received $129 million tax rebate
• Total benefit: $2.48 billion retained rather than paid to government
• This value flowed to shareholders through increased after-tax profits
• Bezos owned roughly 16% of Amazon stock
• Direct benefit to Bezos: ~$400 million in 2018 alone from tax avoidance

Two-Year Subsidy to Bezos: Over 2017-2018, Amazon’s tax avoidance transferred approximately $560 million directly to Bezos through his share of retained earnings that should have been paid as federal taxes.

Public Subsidy for the World’s Richest Man

By September 2018, Bezos had become the world’s first person with wealth exceeding $150 billion—an accumulation directly subsidized by:

Federal Tax Avoidance:

• Zero corporate income tax on $16.8 billion in profits (2017-2018)
• Tax rebates and credits totaling over $900 million
• Estimated total subsidy: $3.5+ billion to Amazon shareholders

Government Contracts:

• $600 million CIA cloud computing contract (2013)
• Competing for $10 billion Pentagon JEDI contract
• Numerous other federal agency AWS contracts

Infrastructure Subsidies:

• Postal Service delivery at below-cost rates
• Roads and highways built with federal funding
• Internet infrastructure developed with public investment
• State and local tax breaks exceeding $3 billion for facilities

The Irony: American taxpayers were subsidizing the wealth accumulation of the world’s richest man while Amazon contributed nothing to federal tax revenue.

Political Response and ITEP’s Impact

ITEP’s February 2019 analysis sparked significant political attention:

Congressional Reaction: Senator Bernie Sanders and Representative Ro Khanna cited Amazon’s tax avoidance in pushing for corporate tax reform. Sanders introduced legislation specifically targeting companies like Amazon that paid zero federal taxes despite massive profits.

Public Awareness: Snopes fact-checked claims about Amazon’s tax avoidance and rated them “True,” bringing mainstream attention to the issue. The combination of zero taxes and Bezos’s record-setting wealth created a powerful symbol of tax system corruption.

Amazon’s Defense: Amazon argued it was following all tax laws and that its tax strategies were legal and appropriate. This defense was technically accurate but missed the fundamental point: Amazon had shaped those laws through lobbying to ensure its tax avoidance would be legal.

The Stock Option Wealth Transfer

Amazon’s largest tax deduction came from stock-based compensation—a mechanism that transferred wealth from taxpayers to executives and shareholders:

How the Scam Works:

1. Amazon pays executives in stock options
2. Amazon stock price soars (partly due to tax-avoided profits)
3. Executives exercise options at huge gains
4. Amazon deducts the gain as a business expense
5. Larger gains = larger deductions = lower taxes
6. The system rewards stock price manipulation and wealth concentration

The 2018 Impact: As Amazon’s stock price roughly doubled from its 2015 lows, stock option deductions exploded. The more wealth Amazon executives accumulated, the larger Amazon’s tax deductions became—a system that literally paid the company to enrich its leadership.

Significance: Institutionalized Kleptocracy

Amazon’s second consecutive year of zero federal taxes demonstrated that corporate tax avoidance was not an aberration but an institutionalized system:

Tax Code Capture:

• Amazon spent millions lobbying on tax policy
• Lobbying investment generated billions in tax savings
• Tax savings funded additional lobbying
• A self-reinforcing cycle of political capture

Bipartisan Complicity: The tax avoidance mechanisms Amazon used—stock option deductions, accelerated depreciation, R&D credits—had been enacted with bipartisan support over decades. Both parties facilitated the system that allowed zero-tax outcomes.

Media Complicity: The Washington Post—owned by Bezos—covered Amazon’s tax avoidance as a policy story rather than as kleptocracy. Coverage explained the technical mechanisms but rarely framed the issue as democratic corruption or examined Bezos’s personal role in lobbying for favorable tax treatment.

The Accountability Vacuum

Amazon’s ability to pay zero federal taxes two years in a row while its founder became the world’s richest person revealed the fundamental corruption of American political economy:

No Legal Accountability: Everything Amazon did was legal, demonstrating that legality had become decoupled from legitimacy or democratic accountability.

No Political Accountability: Despite public outrage, Congress took no action to close the loopholes Amazon exploited. The company’s lobbying power and campaign contributions insulated it from reform.

No Market Accountability: Amazon’s stock price continued rising, rewarding the company for tax avoidance and proving that markets would not discipline anti-social behavior.

No Media Accountability: Coverage of Amazon’s tax avoidance was sporadic and technical, rarely connecting the dots between tax avoidance, Bezos’s wealth, political lobbying, media ownership, and democratic decline.

A System Working as Designed

Amazon’s zero-tax years were not a bug in the system but a feature—evidence that the tax code had been successfully captured to serve corporate interests:

• Legal mechanisms (stock options, depreciation) converted corporate income into tax deductions
• Lobbying ensured these mechanisms remained protected
• Campaign finance bought political protection from reform
• Media ownership shaped public discourse
• Wealth accumulation funded all of the above

Amazon paid zero federal income tax in 2018 not because of clever accounting tricks, but because American democracy had been restructured to ensure corporations and billionaires could legally extract wealth without contributing to the public revenue that made their wealth possible. The system was working exactly as it had been designed—by and for Jeff Bezos and his peers.