As millions have lost jobs and economic security due to the pandemic, Oxfam calls for a new tax system to help the US rebuild and curb runaway inequality
(May 12, 2021) – Ahead of Tax Day, Oxfam points to the deep inequity between what the average American pays in taxes and what rich companies and wealthy executives and investors are able to dodge. Amazon and its CEO Jeff Bezos exemplify this yawning chasm of inequality.
While the average US worker pays a tax rate of 22%, Amazon’s federal tax rate last year was just 9%, despite earning a record $20 billion in US profits.
According to Oxfam calculations, if Amazon paid the current US corporate tax rate of 21% it would pay an additional $2.5 billion in taxes a year—enough to provide Supplemental Nutritional Assistance Program benefits (SNAP) to 1.7 million Americans facing hunger. A 3% wealth tax on Jeff Bezos alone would generate $6 billion in revenue from his $198 billion fortune, enough to provide childcare to every child under 4 in Amazon’s home state of Washington – 440,000 children. Finally, a pandemic profits tax on Amazon would yield $11 billion in additional revenue, enough to vaccinate 580 million people around the world.
“This country will never achieve a fair and equitable recovery from COVID-19 if we continue to have a system where corporations and the wealthy get richer while everyone else is left behind,” said Gina Cummings Vice President of Alliances, Advocacy and Policy for Oxfam America. “This past year has called on all Americans to make unprecedented sacrifices. But a small number of people—namely corporate CEOs and wealthy investors—have profited in the midst of this pandemic. Even more galling, these same rich companies and wealthy executives have not contributed their fair share in taxes.”
On Tax Day, Americans come together to fund the shared services that the country needs—hospitals and roads, teachers and firefighters. Yet Amazon has been able to lower its tax bill by taking advantage of loopholes in the US tax code that allow the company to treat rewarding rich executives with stock options as a tax write-off and carrying forward operating losses from years earlier.
Amazon’s skyrocketing profits have made Jeff Bezos, its founder and CEO, astronomically wealthy. Bezos’s wealth has increased by $85 billion since the start of the pandemic. That is enough to give each of Amazon’s 1.3 million workers a $65,000 bonus, while still leaving Jeff Bezos with the $113 billion fortune that he had prior to the COVID-19 crisis.
President Biden’s American Jobs Plan and American Families Plan would go a long way to unrigging the rules that have allowed so many wealthy American corporations and individuals to get away with paying so little in tax.
The American Jobs Plan would raise the corporate tax rate, close offshore tax loopholes, and decrease the incentive to offshore American jobs. The American Families Plan would raise the marginal rate for those earning more than $400,000, increase the capital gains rate for the wealthiest Americans, and provide much-needed resources to the IRS to make sure tax cheats pay their fair share. No one making less than $400,000 would pay more tax than they do now, and the vast majority of Americans would pay less.
Both plans would make desperately needed investments in well-paying jobs, childcare, and efforts to combat the climate crisis.
“These proposals are vitally important to curb runaway inequality and ensure that the US tax system rewards work, not wealth. Congress should act swiftly to pass them into law,” said Cummings. “But the proposals don’t go far enough to address the inequality crisis and fund the essential services that the COVID-19 pandemic requires. “
President Biden’s proposed plan does not equalize the tax rate that corporations pay on their US and foreign earnings, which continues the incentive US companies have to offshore US taxes and jobs. Congress must level the playing field by taxing the foreign profits of multinational corporations at the same rate as US profits.
Congress must also pass a pandemics profits tax to ensure that companies—like Amazon—that profited directly as a result of the pandemic are taxed fairly on their windfall gains. Finally, Congress must pass a wealth tax of 2% on fortunes over $50 million and 3% on fortunes over $1 billion.
“Given that the vast majority of generational wealth is held by white men, a wealth tax is a vital tool to begin to redress the gender and racial inequities that pervade US society, including in our tax code,” said Cummings.
/ENDS
Notes to editors:
- Today a European court overturned a ruling that would have required Amazon to repay hundreds of millions of dollars in missed tax revenue to Luxembourg. The Oxfam reaction to that decision is here. Recently released financial accounts show that despite skyrocketing sales of €44 billion in Europe, Amazon recorded a €1.2 billion loss on its 2020 tax returns and paid absolutely no tax at its Luxembourg-based European headquarters last year.
- Oxfam sourced all information about Amazon’s revenues, taxes, and number of workers from the company’s 10-K and 10-Q filings with the SEC.
- Oxfam calculated the amount of federal tax Amazon would have paid by multiplying their total US revenue by the federal statutory rate of 21% and then subtracting their current US tax payments for each of the past three years, since the passage of the Tax Cuts and Jobs Act in 2017.
- The average SNAP recipient receives $1,500 in benefits per year.
- The cost of providing childcare to children 0-4 in Washington State is based off of EPI estimates, and state population data.
- The average vaccine cost, $19, is based on the median average of the 5 leading vaccine producers. At this price, the $11 billion in pandemic profits tax on Amazon could pay for 580 million doses. The Peoples Vaccine does not endorse a price of $19 dollars and is only using this as an illustration. Prices can and should be far lower than this to make vaccinating the world possible.
- Oxfam calculated Amazon’s pandemics profits tax based on the design developed by Professor Reuven S. Avi-Yonah, previously used by Oxfam in Pandemic Profiteers Exposed and Power, Profits and the Pandemic.
- On May 26, 2021, Bessemer, Alabama Amazon worker, Jennifer Bates will present Oxfam’s shareholder resolution at Amazon’s annual general meeting calling on the company to consider putting an hourly worker on its board of directors.