Wanted: A Tax Code for the Digital Age

This article centers around a comparison of Amazon.com and Target as companies, and the differences in their effective tax rates. The main issue at hand is the fact that Amazon's effective tax rate is significantly lower than that of Target, almost 10% lower in fact. This difference means that Amazon has a significant advantage over many of their competitors (including Target). The cause for this differential is the make-up of the companies; Target is a U.S.-based company who does sales only stateside, and most of its retail comes from sales directly from the store. Amazon, on the other hand, is an international company that saw 46% of its revenue in the past year come from international sales.

This difference in the companies allow Amazon to take advantage of its lower tax rate and operate with a higher rate of profit. Part of what we've been discussing recently is the important role laws play in terms of protecting American companies and how complicated things can get, and this is a perfect example. Amazon is not doing anything illegal; rather they're just using a loophole in tax law to gain what appears to be an unfair advantage. Examples such as this exist everywhere in our economy.