AMAZON: Tax Trouble = Fury and Fire

Jeff Bezos of Amazon fame has topped out as the richest Man on earth with a net worth of $112 billion. His closest competitors are Bill Gates at $90 billion and Warren Buffet at $84 billion.   Amazon has come under the grid by Trump for the fact that despite revenue of $177.86 billion in 2017 – it’s tax bill came to $-0-.   But it isn’t the first year that the retail Giant has paid little to no taxes, it has been the agenda of Bezos, a Hillary supporter and Democrat, since the early 2000’s.   And Trump is determined to redefine Bezos comeuppance.

In 2004, Bezos and a host of tax avoidance experts created Project Goldcrest in which a series of intercompany agreements effectively transferred intellectual property, licensing agreements etc… to a vast structure of subsidiaries thereby reducing their tax liability to $-0-.

Newsweek uncovered secret meetings between Bezos and EU Commissioner, Claude Juncker who was the former Prime Minister of Luxembourg, during which time a secret ‘sweetheart tax deal’ was created.   Since then, the EU has attempted to collect back taxes from Amazon in the amount of $14.5 billion. According to the Commission, Juncker granted Amazon a preferred tax rate that was not granted to any other business and had absolutely no justification.

Interesting that the same Juncker now heads the commission that is fining Amazon when he was instrumental in creating the loophole.

Last September, Amazon announced it was searching for a second US city hub to open shop, claiming that in so doing they would create 50,000 new jobs, and an economic windfall of upwards of $38 billion over a six year period.   As of January, Amazon released a list of 19 potential US cities and Toronto as candidates for their second hub. A bidding war has erupted as cities vie for the privilege of Amazon’s $0 tax base.

It isn’t just federal and state corporate taxes at stake, Amazon retailers sometimes forego collecting sales taxes as well, hurting the state income inflow that would normally be generated by malls and local retailers.   Developers are watching as mall development stalls and declines.   So, who is winning in the Amazon profile?   Bezos, obviously. In January 2013, Bezos net worth was estimated to be roughly $24 billion.   Growing 466% in 5 years has proven to be the Amazon tax loophole.

Bezos penchant for taxes is matched for his penchant for charity. To date, it appears that he has made two donations, one to Princeton for $15 million and one to the Museum of History and Industry for $10 million.   As a percentage of wealth, it is relatively negligible   Amazon’s Seattle Office Space is stated to include an area greater than 3.2 million square feet, and Bezo’s various homes boast anywhere from a piddling 10,000 square feet to upwards of 29,000 sq ft including 165,000 acres for his aerospace company in Texas.

It is of course not surprising, but rather inane, that two of largest media conglomerates, the New York Times and the Washington Post, which is owned by Bezos, would defy the obvious and claim that Amazon pays it’s fair share of taxes, ie payroll taxes, unemployment insurance, and those property taxes…   No mention of corporate or State Income taxes. Short term memory loss would conjure stories from the presidential campaign in which these same organizations demanded Trump keep the high tax bracket on corporations…   Oops.

Although Amazon averaged between 11% and 13% of all combined taxes from 2007 thru 2015, they weren’t the lowest. In fact, Facebook was the all time lowest positive contributor at 3.8%!   Google contributed roughly 16% and Apple 16.5%…   All lean Liberal, all promote heavy taxation as Democrats, all pay considerably less than even the S&P average of 26.9%.   The companies holding up their share include:   Lowes, CVS, Home Depot, Exxon Mobile, UPS, Starbucks, Walmart and Disney at 30.7% to 39.3%.

SHAME SHAME.

EU Commission, Claude Junker – Running out of gas

EU Commission president, Juncker, is showing fear. He wants to know what a Trump presidency will do with respect to the failed NATO and EU Commission? He is making demands before Trump even takes office. He is making defamatory statements about Trump and even ridiculing his knowledge of Europe. Not a good start in making ‘friends’.

His most recent rant was to tell students that it will take him two years to explain to Trump what Europe is and how it is run… WOW – how to ingratiate yourself without really trying!

What’s his beef? Fear. He is attempting to create an offensive attack thinking that somehow this will make Trump cave. Stupidity. He obviously has not studied either psychology or military tactics, and has not read The Art of War. I imagine Trump will not take his remarks lightly.

What is he afraid of?

  1. If the US were to pull out of NATO, they would lose 23% of their income. A fair cause for concern given NATO is the primary military agency for many EU countries. Including Junker’s own Luxembourg which is a Socialist Monarchy.
  1. Junker is an EU stayer, Trump supported BREXIT. The EU Commission is funded by EU members, when they leave, they take their money with them.
  1. With a population of just about ½ a million, Luxembourg has over 40,000 registered conglomerates using their tax haven status to pay sometimes less than 1% in taxes. With over $1 trillion under management, banking is their only real asset supporting the economy. If that rug were pulled – they’d go under fast.
  1. Despite Luxembourg boasting one of the world’s highest standard of living and the second highest income to gdp, their net contribution to the EU is rather small…they need the EU to help prop them up and anything or anyone who proposes to untangle their structure is – the enemy.

Recently, those havens have come under scrutiny as not being in compliance with EU Rules, and questionable clients such as North Korea.   These irregularities make Junker look bad given this all came to be under his tutorial. And a cornered critter is likely to bite!

Disrespecting Trump isn’t exactly the best game plan. Perhaps Trump could give him a lesson in ‘diplomacy’…

Quickly attempting to hedge his bets, Juncker is calling for Europe to form their own military. Luxembourgs own military is comprised of 800. That would require quite a bit of fresh new taxes on the people who otherwise have a relatively $-0- defense budget.

The NATO numbers are a bit convoluted given they have three distinct budgets; defense, civil and investment. While the US ante’s just over 22% of the defense budget, that would be in addition to our own military. Most of the NATO countries have NATO because like Luxembourg they have no military. So basically the US is paying for ‘two’ separate and distinct militaries.

While the NATO budget is significantly less, the US has been propping up the budget for decades as other countries simply refuse to ante their share. Many countries in the EU feel NATO has over-extended it’s main function, and is a political swamp of overinflated budgets. The US – is not alone.

The only way Europe will approve an EU military would be if it were a combined effort instead of an added military for say France, Germany, and Italy who ante the bulk on behalf of EU countries as well as maintain their individual militaries.

So Junker has a rather rocky uphill battle in his attempt to keep failed agencies from falling away – including his own EU Commission. Alienating the US via Trump was a stupid move. Biting the hand that feeds you – is a stupid move.

Not recognizing what The People want and what The People are sick of – will earn him the same fate as Hillary/Soros. He would be wise to be humble and to learn.