I think that Amazon is very powerful and has a big impact on not only the American economy but the world economy. Amazon is a multi- billion-dollar company that is expanding its grasp across the e-commerce market at an exponential rate. Amazon was started in 1994 and was originally an online book shop and then slowly evolved to what it is today. Amazon was originally started in Bellevue, Washington and presently has their primary headquarters in Seattle, Washington. Amazon is currently owned by billionaire Jeff Bezos, whose net worth is estimated at roughly $111 billion. Amazon’s sales in reports from 2019 indicate they made roughly $10 billion in profit, as stated on GoBankingRates.com.
Due to the huge size of big corporations such as Amazon, the amount of corporate taxes they have to pay annually is often higher than what the average business pays. However, companies such as Amazon often end up paying next to nothing; Amazon uses tax breaks and underlying incentives to minimize tax pay-outs and maximize the amount of money they reinvest into the company. Some of the main areas in which they reinvest their money to claim tax breaks are in research and development. Forbes magazine reported that in 2017 Amazon reached the top of the list for the most spent in a company for research and development: they spent roughly $22.6 billion, which they were able to claim in taxes. Another way in which Amazon was able to lower taxes was through investing in property and equipment. This move made Amazon eligible for tax credits as the economy of big cities can widely benefit from Amazon’s investment in property as it can create many jobs within the city and surrounding areas. According to Forbes’ April 7, 2018 article, Amazon’s Property and Equipment expenditure has been steadily on the rise for the past five years, amounting to an accumulation of roughly $60 billion at the end of 2018. The final substantial way in which Amazon reduces its taxes is by compensating its employees with stocks rather than take home pay. This approach is beneficial for the company as it gives management higher incentives to provide the highest quality for investors as it will directly benefit them the better the company does and the more people invest. The less Amazon pays in taxes the more it is expanding its empire and increasing the amount of power they have.
Amazon’s influence on the economy is unprecedented in more than one way. For instance the company helps lower inflation and provide more jobs. They achieve this by driving prices extremely low; this in turn eliminates competition that cannot compete with Amazon’s prices and are forced to go bust. They are able to have such low prices as they don’t need to make as much profit from their e-commerce website as they are getting profit from elsewhere. For instance their web services, or AWS, which offers cloud space to big corporations. This is an extremely profitable business, as it allows companies to have control over their data without having to build data centers or buy servers and data when they need it. Most companies use AWS without even knowing it, for instance when watching Netflix and other streaming networks. This was clearly shown in Forbes’ article “Is Amazon Holding Back Inflation.”
I think that Amazon is in fact too powerful. I think this because if anything happened to Amazon it would have a drastic effect on the world economy, as they provide a countless number of jobs for people in many different countries. They also help to lower prices for everyday items. They are also growing at an exponential rate, due to the changing nature of the way people shop.