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Jeff Bezos Brings His Tax-Avoidance Game To The Next Level

The Beez plays by his own rules.

Jeff Bezos is no stranger to tax avoidance. He chose Seattle as Amazon’s headquarters in part because Washington State’s small population meant that Amazon would legally have to collect sales tax on just a fraction of its orders. That there is no income tax in Washington has long been a boon to Bezos and other high-paid Amazon employees, and Amazon is now seeking major tax relief in its search for a second headquarters.


This search for second home is evidence Amazon-Seattle love affair has long been souring. It hit a new low this week, when the company announced it would cease expanding its operations in Seattle in protest of a new progressive business tax under consideration by the city council, which would add an estimated $20 million to Amazon’s tax bill annually.

There are good arguments to be made against the new proposal, which would tax the largest 500 to 600 Seattle businesses $500 per employee, in order to fund affordable housing construction and programs for the homeless. But Seattle’s homelessness problem is undeniable, and it is also facing a housing affordability crisis, despite being a shining example of a city that has been embraced new home construction, entrepreneurship, and economic development.

If Jeff Bezos believes that the state should spend more money to fight these worsening problems, he surely doesn’t believe that it he, Amazon, or its employees should be funding it. The reason the Seattle City Council has resorted to a proposal that can easily be characterized as a ‘tax on jobs’ is Washington State’s constitutional strictures against the income tax. This has forced the state to rely on sales taxes, and has left Washington with the most regressive tax system in the country. But in 2010, when a statewide ballot measure proposed to remedy this by income tax on families that make more than $400,000, Jeff Bezos campaigned against it, donating $100,000 to the cause.

That measure was more centrist than the one currently under consideration by the Seattle City Council. It would have used revenues for the state’s chronically underfunded education system, but also to lower property taxes and taxes on small business. The ballot measure failed in that Republican wave election, making Bezos $100,000 donation one of the more profitable investments he’s made in recent years.

And it's not as if a logical argument can’t be made for Seattle’s proposed head tax. Over the past decade, the city’s population has exploded, adding 220,000 new jobs, or an increase of 15%. Amazon itself has spearheaded the transformation of neighborhoods like South Lake Union, and it and other tech upstarts can be reasonably blamed for the 85% increase in home prices over the past five years, making the city unaffordable for many and uncomfortably congested or most. Absent more efficient means of taxation, like a progressive income tax, it makes some sense for lawmakers to ask companies like Amazon, which have helped create the affordability crisis, to contribute to programs that ameliorate it.

But Bezos is more inclined to see the positive effects of the money he’s made. And there’s no doubt that Bezos has much to be proud of. Amazon is a world-class company that is actually beloved by Americans during a time when the sheen is coming off many of America’s great tech firms. And unlike much of Corporate America, you can bet that Amazon won’t be spending its corporate tax breaks on stock buybacks and dividends, but investing it in job-creating ventures and new distribution centers. But Amazon’s rise created a lot of victims, too, from the countless local mom-and-pop retailers bankrupted from competition with Amazon to the folks displaced from their Seattle homes due to rising rents.

All of which just makes Amazon and Jeff Bezos popularity all the more remarkable. At this point in Sam Walton’s career, Walmart had already become the focus of liberal scorn, for having the much the same effect on local economies that Amazon is having today, and Walton never tried to buy the Washington Post. Bezos can probably thank the sheer irresistibility of Amazon as a service for the reason he has avoided the sort of bad press and boycotts that plagued Walmart throughout the 1980s and 1990s.

But it sure helps that President Trump has also decided to pick a fight with Bezos, apparently over negative coverage Trump has received in the Bezos-owned Washington Post. Bezos is Resistance-by-Association, and for this liberal America will likely overlook his relentless tax avoidance and growing monopoly power. Few people this side of Kim Jong-un will benefit so much from the president’s ire.

Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy. He previously held staff positions at Axios, Fortune Magazine, and Time Magazine, and has been published in Forbes and Debtwire.



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