Blue v. Blue Struggle Session: Elizabeth Warren Clashes with Amazon

Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., talks to the media as she walks to the Senate chamber prior to the start of the impeachment trial of President Donald Trump at the U.S. Capitol, Thursday, Jan. 23, 2020, in Washington. (AP Photo/Jose Luis Magana)
AP Photo/Jose Luis Magana

Senator Elizabeth Warren clashed publicly with Amazon on Twitter Thursday night after she accused the company of not paying its “fair share” of taxes.

The battle is the latest example of rifts in the coalition of the left that brought the Democrats to power in the most recent elections. Amazon’s founder, Jeff Bezos, owns the Washington Post, the primary left-leaning newspaper of the nation’s capital. Its vice president of global corporate affairs is Jay Carney, who served as White House spokesperson in the Obama era and prior to that was director of communications to Joe Biden.

On Thursday, Warren uploaded a video to Twitter from a Senate Finance Committee hearing in which she accused companies of “manipulating the tax code to avoid paying their fair share.” She singled out Amazon as one of the companies that “exploit loopholes and tax havens to pay close to nothing in taxes.”

Warren has proposed a new corporate tax that would impose a charge on the accounting income of corporations. The aim is to force companies to pay a tax based on the income they disclose to shareholders rather than the income calculated according to ordinary corporate tax rules.

Amazon then fired back. As it has in the past, Amazon said that it simply pays as much taxes as the U.S. law requires.

 

It is likely that Carney, the former Obama administration official, controls this Twitter account. One person familiar with the operations of Amazon, who spoke on the condition of anonymity, said it is likely that Carney himself wrote these tweets. Amazon did not respond to a request for comment.

Warrn lashed out, claiming that Amazon’s lawyers and lobbyists were responsible for the loopholes in the tax code.

Her line about breaking up Big Tech so they are not powerful enough to heckle senators with snotty tweets has become a lightning rod for criticism.

Robby Soave at Reason Magazine wrote:

This is a classic example of saying the quiet part out loud. Warren inadvertently revealed that her crusade to hurt major tech companies is partly driven by personal animus: She wants to reduce the power of corporations so that they are no longer “powerful enough to heckle senators.”

In fact, everyone enjoys the right to “heckle senators,” if by “heckle,” we mean engage in constitutionally-protected political expression. Senators are elected representatives: They are supposed to be accountable to their constituents and the public more broadly. It is not “cancel culture” when people criticize Rep. Marjorie Taylor Greene (R–Ga.) for her previous enthusiasm for QAnon; similarly, there’s nothing sinister or harassing about Amazon clapping back at Warren.

The income reported by business for financial accounting purposes can differ from income reported for tax purposes because different accounting rules apply. For example, under current law a business that invests in equipment with a useful life of 20 years or less can immediately deduct the cost of that machinery from its income for tax purposes—just as it could expense like employee wages and interest expenses.  But for the purposes of so-called “book income,” it would only be permitted to subtract a fraction of the expense each year, so that the total expense is stretched out over the useful life of the equipment. As a result, taxable income would be lower than book income.

Another example, companies using accrual accounting report revenues when earned in the reporting period even though customers have not paid actually paid for the revenue-related sales. For instance, a company providing webservices under contract would report the revenue for each period it provided the services even if the customer has not yet sent in a check. For tax accounting, however, the company could delay reporting those revenues until they actually get collected. That would, again, make book income higher than tax income.

It’s not really clear that one is the “real” measure of profits. In fact, some analysts think that taxable income may be a better measure of a company’s financial health because the current costs of running the business are clearer and not hidden behind depreciation or inflated by expected revenue that may never materialize.

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