Tax Breaks For Amazon, Punishments For Struggling Iowans

Last week’s news put furrows in my brow.

As I ruminated on the headlines and details in the news accounts, I came away convinced something is out of whack somewhere.

One of the reports was that Amazon, the online retailing behemoth, cancelled plans to build a corporate headquarters in New York City. The company had said 25,000 employees eventually would work there.

Amazon’s decision came after persistent criticism from some New York politicians and community activists about the amount of incentives the state of New York and the city government were going to give the company — $3 billion, with a “B.”

It’s appropriate to note that Amazon’s founder and largest shareholder, Jeff Bezos, is the richest man on Earth. He’s worth about $100 billion.

Those government handouts were instrumental in persuading Amazon to choose the west end of Long Island over scores of other communities that vied for the headquarters. With its decision to not build there, Amazon presumably will reopen its search for a different location.

I understand the fiduciary duty corporations have to look after the best interests of their owners. But I also know that in much of America, the Amazon deal looked like a gold-plated example of corporate greed.

That point was driven home in a stretch limousine by another news story: Last year, according to the Institute for Taxation and Economic Policy, a research group, Amazon’s profits were $11.2 billion, a 50 percent increase over the year before. But it paid no federal income taxes for the second year in a row.

Let that sink in.

Individual working stiffs in Iowa are paying a bigger federal income tax bill on their annual incomes than Amazon did, even though the average Iowan’s yearly income would barely cover the cost of fueling Jeff Bezos’ personal 20-seat jet for one trip.

With Amazon’s corporate profits from last year alone, the state of Iowa could operate state government for the next year and a half without needing a nickel of our taxes.

But Amazon contributed zero last year in federal income taxes to help pay for the air traffic control system that Bezos’ personal jet and the company’s airplane freighters rely on. And zero for federal law enforcement that keeps Amazon employees and executives safe. And zero for our military. And zero for Medicaid health care, food stamps and housing assistance for its poorest customers.

Amazon complied with federal tax laws in preparing its income tax return last year. But Matthew Gardner of the Institute for Taxation and Economic Policy said the taxes the company is not paying will have to be made up somehow, either by cutting government spending or by increasing taxes on middle-income families and small businesses.

“Their U.S. profits doubled in the last year,” he said. “If anyone is ever going to be subject to the corporate income tax, you would hope it would be Amazon.”

The tax breaks Amazon used were approved by Congress. But senators and representatives rely on hefty donations from corporate executives, lobbyists and interest groups to pay for their campaigns, and the ears of Congress are often more attuned to the wishes and concerns of those donors, not people who make up the majority of their constituents.

A couple of other headlines last week contributed to the furrows on my brow. Those news reports illustrate the difficulty Joe Average Citizen encounters not just in Washington, but at the Statehouse in Des Moines, too.

State Senator Jim Carlin of Sioux City introduced a bill that would raise the anxiety level of men and women who lose their jobs and receive unemployment benefits.

His bill sets penalties for those out-of-work Iowans on unemployment benefits who apply for jobs when, as the bill says, “the applicant does not meet the minimum lawful requirements” for a particular job or when the applicant is “manifestly unqualified.”

People who receive unemployment benefits of a few hundred dollars a week for up to 26 weeks are required to apply for at least two jobs per week or be in a job training program. Carlin told an Iowa Senate subcommittee he is concerned some people are “gaming unemployment.”

Try explaining that to the unemployed person who lost his job when his employer closed and he’s hoping to keep food on the table until he finds a suitable new job.

Is Carlin’s bill really going to get more Iowans employed, as he believes? Or is it going to leave an unemployed breadwinner reluctant to apply for a job that might be a stretch or for which he might be overqualified because he fears doing so might jeopardize the unemployment benefits that are keeping the family afloat temporarily?

And then there are a handful of bills in the Legislature aimed at the frequent target of some lawmakers: Iowans who supposedly are abusing food stamps by not working.

Senator Jason Schultz of Schleswig introduced the latest bills, which would impose work requirements for many food stamp recipients and would cut off benefits to those not current on child support payments.

Most food stamp recipients in Iowa have jobs but make so little they still fall below the poverty line. It’s foolish to think someone who is able to work is going to forego a steady income or a bigger paycheck just to receive an average of $106 per month in food stamps.

Our nation would be better off if lawmakers everywhere worried less about poor people “gaming” the system and worried more about laws that allow hugely successful businesses like Amazon to be the ones actually doing the gaming.


by Randy Evans
Posted 2/20/19

8 Comments on "Tax Breaks For Amazon, Punishments For Struggling Iowans"

  • Thanks for this insightful piece—-so how do we accomplish, together, what you propose in your final paragraph?

  • The only people I see attempting to game the system are the politcians, like Senators Carlin and Schultz, writing legislation that further marginalizes the working/unemployed poor. And if they really belive Reagan’s “welfare queen” trope, they need to pull their heads out of the sand and actually look around at what their idiocies are doing to this state.

  • As they say, “Follow the money.” It is cheaper for corporations to fund the members of Congress than to put money in the U.S. Treasury. Unfortunately, that is what we get with expensive election campaigns. Start by changing campaign financing.
    The Republicans favorite whipping target is Medicaid. They regard those receiving public assistance as undeserving so they invoke rules to penalize and marginalize these people. No other federal entitlement program gets near the Republican scrutiny as Medicaid.

    • Thanks, Dr. Herwig. It always helps to get the opinions of people who have to deal with Medicaid and Medicare issues. I believe that no one wants to be poor and have to rely on other people for basic needs like food and medical care. If you are born into poverty, it takes a lot of help to work your way out of it. There are also genetic factors, poor nutrition, family mental health issues, poor education and problems with crime and the judicial system that the poor have to deal with every day.
      There are many countries like Canada, Norway and Sweden that know how to fix some of these human problems. We should study how they do things and use some of their ideas. The USA will continue its slow decline with people like Trump and his GOP cronies in power. Russia would be very happy to see us fail. If you have faith and believe in
      American ideals and democracy, it is time to start praying.

  • Here’s what they want: They want a two-class society; a class a ruling aristocrats (male aristocrats), and a class of peasants. They believe it’s the only way to keep the power in the hands of white heterosexual males. They will do anything to move forward. They will lie, steal, and kill to accomplish their goals. For them, those who serve in the military are nothing more than cannon-fodder, hence cutting military benefits; for them, those with brown/black skin are thought to be subhuman; for them, the disabled, sick, and poor are burdens to be abandoned in their suffering; for them, women are merely receptacles for their progeny. They are, yes indeed, preparing to establish a master-race.

  • Awesome reporting, Randy. Thank you. Try arguing with a Republican sometime about this. They seem to think whatever a company can get from city, county, state or federal governments is fair because you’re working on behalf of the capitalist system. Puts more money in CEO pockets which many of them are and more money in the pockets of the capitalist stock holders. Try to Google Zuckerberg tax and that will really get your dander up. Those CEOs never have to pay income tax either. Why aren’t people marching in the streets? I guess it’s just too cold outside and we’re all too comfortable.

  • Any tax on a company will result in higher cost to consumers. They just pass the cost on. So what is the point?

    • And your point is what, no taxes for business’s . Heck why should anyone have to pay taxes what dose the individual get out of government anyway……….I’d like to know your answer Monte Freeloader ?

Leave a Reply

Your email address will not be published.