Amazon paid no federal taxes. So lets tax retirement income.

Screen Shot 2018-07-09 at 6.13.08 AM

When I write about how the state of Illinois doesn’t raise enough revenue to pay for the basic services the people of the state deserve I inevitably get someone writing to me to complain that retirement income in Illinois is not taxed.

Which it is not.

By the way, that’s true for everybody’s retirement income income in Illinois. Not just teachers, which is what I think they think it means.

The truth is that if the state were to end the crazy practice of taxing everybody else’s income at the same rate, rich or poor, JB Pritzker and the housemaids at the Pritzker family Hyatt Hotels, and enact a progressive fair tax, I would have no problem having my pension included as taxable income.

But then I hear from Bernie Sanders that Amazon paid no federal income tax last year.

Yep. That Amazon.

Jeff Bezos’ Amazon. The Jeff Bezos who is now the richest man in the world.

The Jeff Bezos who wants more tax breaks to bring his second headquarters to a city near you.

Politifact reports:

Amazon lists two line items that likely got them here: tax credits worth $220 million and stock-based compensation worth $917 million.

These reflect the normal workings of the tax system, according to Annette Nellen, professor and director of the Master of Science in Taxation program at San Jose University.

“I would stress Amazon is just following the provisions that are in the law,” Nellen said.

Companies aren’t required to spell out which tax credits they claim in their annual report, but Nellen said they likely include write-offs for research and development, domestic production, and equipment depreciation for Amazon.

Stock-based compensation, on the other hand, is spelled out a bit more clearly. Stocks are often handed out as a form of compensation to employees (usually executives) at small startups without much cash on hand. It’s also a common incentive for executives to make the company more profitable.

Companies are taxed on their income, which is revenue minus costs. When stocks are offered as compensation, they are counted as a cost. This reduces the company’s taxable income.

The trick for companies? They get to write off the value at which the stock was later traded, not the original price for which they sold their stock to employees.

In a related issue, read about the working conditions at Amazon.

Now I get that with this argument I am mixing state and federal tax laws. But it is even crazier that retirement income is taxed by the feds and Amazon pays nothing.

The average teacher pension in Illinois is $50,000 a year with no Social Security.

Even if you taxed it, how in the world does this address the revenue shortfall in the state when we are giving it all away to companies like Amazon?

7 thoughts on “Amazon paid no federal taxes. So lets tax retirement income.

  1. Fred,
    Amazon did pay over $200MM in state income taxes.

    they follow the law as written Fred, change the freakin law!!

    Amazon took advantage of a court ruling for years until the court changed the law on sales taxes. We understand the dislike of Amazon, but just change the law Fred. The system did work, just took a long time to get it to happen.

  2. We could make taxing pensions over 50k. This way it doesn’t hurt the average retiree and getting the likes of a Daley to pay his fair share. Of course there has to be a will to get major corporations to pay also seeing that essentially 2/3rds of them in Illinois pay nothing.

    1. 50k per individual?, 100k for couple? Dependents? If the HAVE TO tax pensions, let’s start at 125k for individuals, 250k for couples (indexed each year for inflation), additional up to 50k deduction per year on money spent on elderly relatives. In many cases the retired Illinois teacher(s) or retired public employee(s) in the family are the only one(s) who is able to help out the elderly parents and grandparents. Examples I have seen are things like helping pay for modification of a house so they don’t have to go to a nursing home, helping them get a car that they can get in and out of easily without pain, getting the air conditioning fixed on their house, as well as other routine things like lawn mowing, snow removal, property taxes, medicines, etc., etc., etc.. This money is spent here and then the people and businesses being paid are taxed.
      Overall though, I am against any new tax on pensions, as this is just a back-door pension cut to pay back money already taken from money the politicians owed to the pension funds. The money that built the schools, colleges, bridges, highways, new pavements, turn lanes, and other improvements to existing infrastructure were built on the backs of Illinois teachers and other public employees. We paid in to the pensions with every paycheck, we should not have a new tax on pensions to pay the employer (state or other public agency) portion.

  3. Off topic: Where was Rahm when the Dan Ryan was being shut down on Saturday? He said that he advocated the march. He missed a great photo-op with Father Mike, Eddie Johnson, and Jesse Jackson. He must have had some important business to tend to. Perhaps a meeting with Jeff Bezos? Ski trip?

  4. The FANG stock leaders where Hugh contributors to the Dems and HRC. The love the complexity of the system because it is filled with loopholes. They hire the highest price advisors (some that have side jobs in government that write these laws (aka MJM) so that do not have pay legally.

    Bezos , the richest man in world, is a piece of work. He has a newspaper that is continuously one sided (hard Left) – however do not expect for him to call any of these changes soon. He has to much too lose.

    JB’s “plan” needs detail – a lot of detail. If loopholes are in place the rate does not matter. They do not owe it. Also note these are not W 2 employees – they do get a paycheck and they tell their companies what and how to pay it. Plus they do have to take it. Also JB has plan lot “new” spending – before anything has even been collected. Note – collected is key here.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s