Sen. Bernie Sanders’ presidential campaign unveiled an ambitious plan to reform corporate America on Monday. The proposal holds one company up as an example of how a lax regulatory environment has created an economy that rewards the rich and powerful at the expense of everyone else, from Sanders’ point of view.
Amazon is cast as the villain in Sanders’ story; a symbol of corporate misbehavior to be bridled by his proposal. The plan mentions Amazon three times more than it does any other company.
In response, Amazon says it pays all of the taxes it owes under the law. The company also stands by the benefits it offers to employees. In 2018, Amazon raised the minimum wage it pays to all workers to $15 an hour following criticism from Sanders over conditions in the company’s warehouses.
In one revealing line, Sanders’ proposal references a protracted tax battle Amazon fought with officials in its hometown, showing the lasting impact that a local Seattle issue had on the national stage. The proposal says big firms “create laws that benefit them, as we’ve seen with companies like Amazon [that] fight to pay no taxes in the communities where they operate, while at the same time paying nothing in federal taxes.”
The head tax headache: The Sanders campaign appears to reference a 2017 dispute between Amazon and the Seattle City Council over a piece of legislation commonly referred to as the “head tax.” After months of negotiations with the business community, the City Council unanimously approved a per-employee tax on Seattle’s largest business to raise money for affordable housing and homeless services, two major needs in the region. Most of the revenue would have come from Amazon. The company blasted the legislation as a “tax on jobs” and threatened to slow its growth in the city, going so far as to pause construction on one of its buildings. The City Council repealed the tax a few weeks later, in an abrupt reversal that continues to influence the housing debate in Seattle today.
The Sanders campaign says it will address this type of behavior and push corporations to pay their fair share in federal taxes, too. Sanders estimates that under his plan, Amazon would have paid up to $3.8 billion in taxes last year.
“Between 2017 and 2018 Amazon, owned by the wealthiest person in the world, made $16.2 billion in profits,” the plan says. “But not only did Amazon pay nothing in federal income taxes over those two years, it received a tax refund of $270 million from the IRS. And Amazon was not alone.”
Amazon’s answer: “We’ve paid $2.6 billion in corporate taxes since 2016,” an Amazon spokesperson said in response to Sanders’ proposal. “We pay every penny we owe in the U.S. and every country where we operate. Congress designed tax laws to encourage companies to reinvest in the American economy — we have. We’ve made $200 billion in investments since 2011 and created 300,000 U.S. jobs.”
Fact check: Amazon did not pay federal income taxes on $11.2 billion of income in 2018 according to the Institute on Taxation and Economic Policy, a progressive think tank. The same was true for Amazon’s income of $5.6 billion the previous year, according to the analysis. ITEP says that Amazon’s low tax bill was the result of tax credits and loopholes made available by Congress and a federal income tax rebate of $129 million in 2018. Amazon did not disclose the type of taxes or jurisdictions in which it paid the $2.6 billion, but the ITEP report is focused on federal income tax narrowly. It is difficult to know exactly how much Amazon pays in taxes because much of that information is confidential.
Sanders’ vision for corporate America: Among other policies, Sanders’ plan would:
— Give workers an ownership stake in their companies and representation on corporate boards
— Require companies with annual profits or balance sheets of $100 million and publicly traded firms to provide 2 percent of stock to employees each year until the company is 20 percent employee-owned
— Ban stock buybacks
— Require companies that replace jobs with robots or overseas labor to share the gains from the changes with displaced workers
— Stop in-progress “mega-mergers,” break up “existing monopolies and oligopolies” and empower the FTC to halt mergers
— Ban non-compete agreements and mandatory arbitration clauses
— Repeal corporate tax breaks enacted in 2017 and reform other aspects of the tax code
— Re-establish a corporate tax rate of 35 percent
— Apply the same tax rate to offshore and domestic income to combat tax havens
Big picture: Big Tech has become a punching bag across the political spectrum. It’s a rare bipartisan issue in a historically polarized time, though Republicans and Democrats have varying criticisms of the industry. Regulating — and in some cases breaking up — Big Tech has become a rallying cry for liberals vying for the Democratic nomination in 2020. But legislative remedies to their concerns aren’t likely in the near future, particularly with lawmakers distracted by the impeachment inquiry.
Take note: By Sanders’ read, the Seattle tech ecosystem is rife with companies that need reforming. In addition to Amazon, Sanders calls out “mega-mergers like the one between T-Mobile and Sprint,” as a “gross concentration of power that runs counter to the public good.” T-Mobile is a Seattle-area company that announced plans to absorb Sprint in early 2018.
Sanders’ focus on Seattle tech giants is notable because, on the public policy side, the region is known as an incubator for the type of progressive policies that comprise the candidate’s platform. Seattle adopted a $15 minimum wage, became the first city in the nation to allow gig workers to unionize, and it tried to enact a tax on the wealthiest companies in the city.
Seattle’s progressive arm and business community are currently sparring over an election next month that could dramatically reshape the City Council. It’s an election that could become a microcosm for the battle between the business-friendly policies that have dominated the Republican and Democratic parties for years and the new wave of progressive policies heralded by candidates like Sanders.