Amazon.com Inc.’s widely reported US tax bill last year, down to $2.8 billion from $7.6 billion in 2024, is a data point. Congress rewrote the tax code to allow for immediate expensing of capital investment and research costs, betting that companies would accelerate their investments in response.
Amazon did exactly that, pouring $128 billion into capital spending tied heavily to artificial intelligence and related infrastructure. The underlying idea is that letting companies deduct large investments immediately and reduce the upfront cost of mobilizing capital will pull tomorrow’s investments into today. The payoff would be faster innovation, more domestic infrastructure, and a stronger productive capacity—all of which would offset temporarily lower tax receipts.
Full expensing created a testable hypothesis. If it’s correct, we should see a surge in domestic capital formation and real benefits to society. The Amazon example gives us a clear test case.
Framing policy this way enables accountability. With the investment visible, we can double back and ask first-principle questions. Did the spending expand productive capacity over a longer timeframe or accelerate investments that were going to happen anyway? Were the gains broad-based or concentrated among firms that were already positioned to deploy their capital at scale?
Most importantly, are we comfortable with the fiscal cost and distribution of benefits we received in the trade-off?
The mistake would be to treat Amazon’s outcome as a scandal or surprise. Congress figured that pulling investment forward and accepting lower near-term revenue would yield an economic payoff worth the cost.
If this surge in investment strengthens domestic capacity, builds technological leadership, and delivers durable growth to society, the policy deserves to be defended. If it doesn’t, then the failure lies with elected lawmakers who mispriced the trade-off, not the companies that took the deal.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed President Donald Trump’s lawsuit against the IRS, the PCAOB’s governance structure, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
New OECD Rules Impact Tax Incentive Design for Global Businesses
The new OECD side-by-side framework is likely to influence the design of tax incentive regimes across jurisdictions. It provides greater flexibility for countries to introduce or maintain incentives aimed at supporting economic activities.
US Affordability Crisis Demands a $4,000 Dividend for Workers
Congress must transform the earned income tax credit into a prospective labor dividend to address the growing affordability gap.
US Audit Board Needs Structural Reform, Insulation From Politics
The PCAOB was meant to be a steady steward of audit quality. To fulfill that role in a technology-driven economy, it must be insulated from political volatility and recommitted to long-term, strategic oversight.
It’s Time for Treasury to End the Backlog of Microcaptive Cases
If the syndicated conservation easement backlog of cases in Tax Court is untenable, the small captive backlog is bordering on insurmountable.
Mexico’s New Digital Access Law Creates Continuous Tax Oversight
Advisers should confirm whether groups’ Mexico-facing activities fall within the RMF’s covered digital services, then perform an analysis of what data should be made available.
Trump IRS Lawsuit Poses Risk to Democracy If Allowed to Continue
Congress should pass laws to bar senior officials from collecting government settlements while in office, as one part of building stronger guardrails against corruption.
UAE’s New Anti-Money Laundering Law Brings Risks for Businesses
In the new UAE regulatory landscape, tax mistakes can trigger criminal scrutiny, anti-money laundering investigations, and reputational harm. Businesses must be aware of the risks.
Canada’s Higher Sales Tax Credit for Groceries Is the Wrong Fix
A plan to increase Canada’s goods and services tax credit will do little to tackle the growing affordability crisis among Canada’s middle class and raises a larger question: Why does Canada tax food at all?
Indian Ruling Signals Shift in Tax Treaty Benefit Assessments
A recent Indian Supreme Court ruling reinforces that the tax authorities may question arrangements that lack genuine commercial substance, and are empowered to look beyond documentation when doing so.
Technically Speaking
India’s tax incentives for global data center services should discourage US states from offering tax breaks to data centers so freely, Andrew Leahey argues in his latest Technically Speaking column.
US states can’t provide the certainty of India’s new 15% safe harbor or 20-year tax holiday, so they shouldn’t compete with India on its terms, Andrew writes, adding that if states insist on granting incentives, the tax breaks “must be conditioned on concrete and enforceable infrastructure commitments.” Read More
News Roundup
Congress Votes to Make Washington, DC Adopt Trump’s Tax Cuts
The Senate cleared legislation Thursday to repeal a Washington, DC, tax law that deviates from federal law, but local officials say the Senate’s actions came too late.
IRS Mistakenly Shares Data on Thousands of Immigrants With ICE
The IRS mistakenly gave the Department of Homeland Security personal data on thousands of immigrants as part of the agencies’ controversial data-sharing agreement, according to a new court filing.
LA Mansion Tax Opponents Get One More Chance With Ballot Measure
The political battle around the Los Angeles “mansion tax” is coming to a head, as California groups watch whether an aggressive tax-limiting initiative qualifies for the November ballot.
Companies’ Big Overseas Tax Bills Spur Profit-Shifting Concerns
Some big US-based multinationals are paying more in taxes to other countries than to their own, fueling questions about whether companies are shifting profits abroad to cut their tax bills.
Tax Management International Journal
AI Era Requires Continuous Tax and Finance Transformation
Tax and finance must constantly evolve to leverage AI, improve data quality, and meet changing regulatory demands in the AI era.
Spain Revives Equity Capitalization Reserve as Business Tax Tool
Spain’s 2024 tax reforms offer enhanced equity incentives and holding company benefits, making it a competitive destination for international business structuring.
Tax Management Memorandum
Courts Scrutinize ERISA Fiduciary Process: Are You Prepared?
Recent Supreme Court decisions emphasize that ERISA fiduciary prudence is determined by a well-documented decision-making process rather than just investment outcomes.
Fuel Tax Refund Implementation Encounters Appropriation Hurdles
Section 6435’s fuel tax refund for downstream parties stalls due to appropriation limitations.
Career Moves
BDO USA Names National Managing Principals for Assurance and Tax
Accounting and advisory firm BDO USA on Monday announced the appointment of Demetrios Frangiskatos as national managing principal of assurance and Mat DeMong as national managing principal of tax.
BakerHostetler Adds Yonadi as Partner to Tax, Benefits Teams
Joseph P. Yonadi Jr. rejoined BakerHostetler as a partner in its tax practice group and employee benefits and executive compensation team in Cleveland, the firm announced Monday.
McDermott Will & Schulte Adds Robbins to Private Client Practice
Caroline Robbins joined McDermott Will & Schulte as a partner in its private client practice group in Los Angeles, the firm announced Monday.
Blank Rome Hires John Kiely as Trusts and Estates Of Counsel
John Kiely joined Blank Rome as of counsel in the tax, benefits, and private client practice group in New York, the firm announced Tuesday.
Dinsmore Adds Pilar Puerto as Partner in Tax Practice in DC
Pilar Puerto joined Dinsmore & Shohl as a partner in its tax, benefits, and wealth practice, the firm announced Tuesday.
Morgan Lewis Adds Salim Rahim to Global Tax Practice
Salim Rahim joined Morgan Lewis as a partner in its tax practice in Washington, DC, the firm announced Wednesday.
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