Business

OP-ED: Why are you paying more in taxes than Amazon and Netflix?

MINNESOTA SPOKESMAN-RECORDER — This tax season, millions of Americans will be receiving smaller refunds from the IRS — or worse, a bill.

Published

7 years ago

March 19, 2019

Oakland Post

By Morris Pearl

This tax season, millions of Americans will be receiving smaller refunds from the IRS — or worse, a bill. At the same time, two of the most profitable companies in the country are not only avoiding paying taxes altogether, but one is receiving a federal rebate check of hundreds of millions of dollars.

Both corporations and individuals are subject to federal income taxes. For those individuals who earn their money through work, the rates are anywhere from 10 to 37 percent. For those of us who live off investment income, marginal tax rates are zero percent, 15 percent and 20 percent (this sucks too, but I’ll get into that at another time).

On the other hand, the corporate tax rate is 21 percent. It would be reasonable to assume that companies like Amazon and Netflix would pay 21 percent — or at least close to that figure — after applying deductions and other tax credits. This has not been the case.

From 2012 to 2017, Amazon paid federal income tax at an average rate of 11.4 percent on over $8 billion in profits, almost half the highest marginal tax rate for corporations now and less than one-third the marginal tax rate for corporations before 2018, which was 35 percent. In both 2017 and 2018, the company paid $0, and this year, the company will be receiving a $129 million rebate.

Netflix didn’t pay much more, either. The streaming service paid $0 in tax in 2017, and their tax rate was 1 percent for 2018. This is despite Netflix boasting 139 million paying subscribers in 2018, with a profit of about $845 million.

Unfortunately, this is a longstanding problem with the tax code; not simply a result of Republicans’ Tax Cuts and Jobs Act going into effect. In 2017, after raking in $5.6 billion in U.S, profits, Amazon paid $0 in federal income tax. They achieved this zero-dollar tax bill in part by claiming tax credits for executive stock options.

These companies get a tax deduction when people with stock options exercise these options. For example, say two years ago (when the stock price was $140), the company issued stock options with an exercise price of $140. Let’s say that now, the stock price is $340, and employees cash in their options. The company issues them shares of stock, and the company gets a tax deduction of $200 per share even though the company does not actually have any cash expenses (on a cash basis, the company is actually up $140 per share). In fact, for financial accounting purposes, the company only has the much smaller expense of the value of the option at the time it is granted.

Netflix did the same, as well as something even more ridiculous. To lower their tax contribution, Netflix claimed a number of research and development (R&D) credits. This credit doesn’t just mean that research is deductible (like any other expense), but that (for the eligible R&D costs) the federal government actually pays 100 percent of the costs one of two ways.

A company can either take 100 percent of the eligible R&D costs and deduct it from whatever they owe or have it added to their refund. Interestingly, in all of the discussions of that credit that I read, members of Congress were always talking about inventing lifesaving drugs to cure cancer or something similar. I never heard anyone discuss the need for taxpayers to pay for research into making better recommendations for what shows you might like to stream, but alas.

Obviously, Netflix’s effective tax rate of 1 percent is fundamentally unfair, and Amazon getting a refund is absurd. But, after Republicans’ tax overhaul in late 2017, one can be sure their tax rate is lower than that of middle-class Americans is now absolutely by design and not a mistake.

There’s no reason why two extremely successful companies have lower effective tax rates than the average middle-class American, but here we are.

Morris Pearl is a former managing director at BlackRock, Inc., and Chair of the Patriotic Millionaires.

This article originally appeared in the Minnesota Spokesman-Recorder.

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Oakland Post: Week of March 18 – 24, 2026

The printed Weekly Edition of the Oakland Post: Week of March 18 – 24, 2026

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Financial Wellness and Mental Health: Managing Money Stress in College 

While everyone’s financial situation is unique, several common sources of stress have the potential to strain your financial health. These include financial and economic uncertainty, existing debts, unexpected expenses, and mental or physical health changes. Financial stress may differ from situation to situation, but understanding the factors contributing to yours may help you begin to craft a plan for your unique circumstances.

Published

2 weeks ago

March 17, 2026

Oakland Post

Sponsored by JPMorganChase

As a college student, managing financial responsibilities can be stressful.

If you’ve found yourself staying up late thinking about your finances or just feeling anxious overall about your financial future, you’re not alone. In one survey, 78% of college students who reported financial stress had negative impacts on their mental health, and 59% considered dropping out. While finances can impact overall stress, taking steps to manage your finances can support your mental, emotional and physical well-being.

When it comes to money, the sources of stress may look different for each student, but identifying the underlying causes and setting goals accordingly may help you feel more confident about your financial future.

Consider these strategies to help improve your financial wellness and reduce stress.

Understand what causes financial stress

2. Determine your financial priorities

Start by reflecting on your financial priorities. For students this often includes paying for school or paying off student loans, studying abroad, saving for spring break, building an emergency fund, paying down credit card debt or buying a car. Name the milestones that are most important to you, and plan accordingly.

3. Create a plan and stick to it

While setting actionable goals starts you on the journey to better financial health, it’s essential to craft a plan to follow through. Identifying and committing to a savings plan may give you a greater sense of control over your finances, which may help reduce your stress. Creating and sticking to a budget allows you to better track where your money is going so you may spend less and save more.

4. Pay down debt

Many students have some form of debt and want to make progress toward reducing their debt obligations. One option is the debt avalanche method, which focuses on paying off your debt with the highest interest rate first, then moving on to the debt with the next-highest interest rate. Another is the debt snowball method, which builds momentum by paying off your smallest debt balance, and then working your way up to the largest amounts.

5. Build your financial resilience

Some financial stress may be inevitable, but building financial resilience may allow you to overcome obstacles more easily. The more you learn about managing your money, for instance, the more prepared you’ll feel if the unexpected happens. Growing your emergency savings also may increase resilience since you’ll be more financially prepared to cover unexpected expenses or pay your living expenses.

6. Seek help and support

Many colleges have resources to help students experiencing financial stress, like financial literacy courses or funds that provide some assistance for students in need. Talk to your admissions counselor or advisor about your concerns, and they can direct you to sources of support. Your school’s counseling center can also be a great resource for mental health assistance if you’re struggling with financial stress.

The bottom line

Financial stress can affect college students’ health and wellbeing, but it doesn’t have to derail your dreams. Setting smart financial goals and developing simple plans to achieve them may help ease your stress. Revisit and adjust your plan as needed to ensure it continues to work for you, and seek additional support on campus as needed to help keep you on track.

 JPMorgan Chase Bank, N.A. Member FDIC