HONG KONG — Xu Jiayin was China’s richest man, a symbol of the country’s economic rise who helped transform poverty-stricken villages into urbanized metropolises for the fledgling middle class. As his company, China Evergrande Group, became one of the country’s largest property developers, he amassed the trappings of the elite, with trips to Paris to taste rare French wines, a million-dollar yacht, private jets and access to some of the most powerful people in Beijing.
“All I have and all that Evergrande Group has achieved were endowed by the party, the state and the whole society,” Mr. Xu said in a 2018 speech thanking the Chinese Communist Party for his success.
China is threatening to take it all away.
The debt that powered the country’s breakneck growth for decades is now jeopardizing the economy — and the government is changing the rules. Beijing has signaled that it will no longer tolerate the strategy of borrowing to fuel business expansion that turned Mr. Xu and his company into a real estate powerhouse, pushing Evergrande to the precipice.
Last week, the company, which has unpaid bills totaling more than $300 billion, missed a key payment to foreign investors. That sent the world into a panic over whether China was facing its own so-called Lehman moment, a reference to the 2008 collapse of the Lehman Brothers investment bank that led to the global financial crisis.
struggles have exposed the flaws of the Chinese financial system — unrestrained borrowing, expansion and corruption. The company’s crisis is testing the resolve of Chinese leaders’ efforts to reform as they chart a new course for the country’s economy.
If they save Evergrande, they risk sending a message that some companies are still too big to fail. If they don’t, as many as 1.6 million home buyers waiting for unfinished apartments and hundreds of small businesses, creditors and banks may lose their money.
“This is the beginning of the end of China’s growth model as we know it,” said Leland Miller, the chief executive officer of the consulting firm China Beige Book. “The term ‘paradigm shift’ is always overused, so people tend to ignore it. But that’s a good way of describing what’s happening right now.”
speech accepting an award for his charitable donations.
He went to college and then spent a decade working at a steel mill. He started Evergrande in 1996 in Shenzhen, a special economic zone where the Chinese leader Deng Xiaoping launched the country’s experiment with capitalism. As China urbanized, Evergrande expanded beyond Shenzhen, across the country.
Evergrande lured new home buyers by selling them on more than just the tiny apartment they would get in a huge complex with dozens of identical towers. New Evergrande customers were buying into the lifestyle associated with names like Cloud Lake Royal Garden and Riverside Mansion.
annual report was Wen Jiahong, the brother of China’s vice premier, Wen Jiabao, who oversaw the country’s banks as head of the Central Financial Work Commission.
elite group of political advisers known as the Chinese People’s Political Consultative Conference.
“He could not have gotten so big without the collaboration of the country’s biggest banks,” Victor Shih, a professor of political science at the University of California, San Diego, said of Mr. Xu. “That suggests the potential help of senior officials with a lot of influence.”
Mr. Xu was also a power broker who socialized with the Communist Party’s elite families, according to a memoir by Desmond Shum, a well-connected businessman. In his book, “Red Roulette,” published this month, Mr. Shum recounts a 2011 European wine-tasting and shopping spree in which Mr. Xu took part, along with the daughter of the Communist Party’s fourth-ranking official at the time, Jia Qinglin, and her investor husband.
The party flew to Europe on a private jet, with the men playing a popular Chinese card game called “fight the landlord.” At Pavillon Ledoyen, a Paris restaurant, the party spent more than $100,000 on a wine spree, downing magnums of Château Lafite wines, starting with a vintage 1900 and ending with a 1990. On a trip to the French Riviera, Mr. Xu considered buying a $100 million yacht owned by a Hong Kong mogul, Mr. Shum wrote.
To supercharge Evergrande’s growth, Mr. Xu often borrowed twice on each piece of land that he developed — first from the bank and then from home buyers who were sometimes willing to pay 100 percent of the value of their future home before it was built.
property grew to account for as much as one-third of China’s economic growth. Evergrande built more than a thousand developments in hundreds of cities and created more than 3.3 million jobs a year.
cool down, the damage caused by Evergrande’s voracious appetite for debt became impossible to ignore. There are nearly 800 unfinished Evergrande projects in more than 200 cities across China. Employees, contractors and home buyers have held protests to demand their money. Many fear they will become unwitting victims in China’s debt-reform campaign.
Yong Jushang, a contractor from Changsha in central China, still hasn’t been paid for the $460,000 of materials and work he provided for an Evergrande project that was completed in May. Desperate not to lose his workers and business partners, he threatened to block the roads around the development this month until the money was paid.
“It’s not a small amount for us,” Mr. Yong said. “This could bankrupt us.”
Mr. Yong and others like him are at the heart of regulators’ biggest challenge in dealing with Evergrande. If Beijing tries to make an example out of Evergrande by letting it collapse, the wealth of millions of people could vanish along with Mr. Xu’s empire.
protested on the streets and complained online about delays in construction. The central bank has put Evergrande on notice.
And China’s increasingly nationalistic commentators are calling for the company’s demise. Debt-saddled corporate giants like Evergrande were given the freedom to “open their bloody mouths and devour the wealth of our country and our people until they are too big to fall,” Li Guangman, a retired newspaper editor whose recent views have been given a platform by official state media, wrote in an essay.
Without proper intervention, Mr. Li argued, “China’s economy and society will be set on the crater of the volcano where all may be ignited any time.”
Michael Forsythe reported from New York. Matt Phillips contributed reporting from New York.
“Economists are not known for looking at the glass half full,” said Ms. Coronado.
(It is an enduring observation about her profession. Thomas Carlyle in the 19th century labeled the entire economics profession “the dismal science,” and given its ring of truth, the dreary title stuck.)
Besides inflation, economists are worrying about possible asset bubbles. Central bank officials including Robert S. Kaplan, head of the Dallas Fed, and James Bullard, head of the St. Louis branch, have warned that policymakers should be keeping a careful eye on rising real estate prices. And as Delta surges, analysts of all stripes are watching closely to ensure that it does not slow shopping, traveling and dining out — while worrying that it will.
The gray cloud that seems to hang over the profession might have a silver lining. It could be the case that by monitoring the risks around high inflation and watching for impending doom, the profession is setting up America for a more sustainable expansion down the road — one where government spending policy is more carefully crafted not to tax overextended industries, and where investors believe the Fed will act if needed, keeping exuberance in check.
Mr. Dutta, an eternal optimist who has a habit of releasing all-caps tirades against his profession’s endemic pessimism, thinks people could be a little bit more excited without overdoing it.
“THIS IS A CONSUMER SLOWDOWN??” he wrote in a recent note, pointing out that credit card spending data is holding up. He celebrated the last employment report, a robust reading, by titling it “JULY FIREWORKS.”
He points out that many people think the economy would be even stronger right now if supply bottlenecks weren’t holding back production and preventing spending. At least some of that spending will presumably eventually take place when those holdups clear, setting up for stronger future growth. Plus, he points out that people are making decisions that they would not if they had a glum future in mind: Families are buying houses, which he calls the “the most irreversible-decision asset.” Businesses are buying equipment.
He talks with an air of exasperation, like someone who has been right before. That is, in part, because he recently has been: Mr. Dutta, who has a bachelor’s from New York University but who lacks the fancy doctorates many of his counterparts claim, correctly argued that the economy would not slump headed into 2021, at a time when some Wall Street economists were looking for flat or even negative growth readings as infections surged.
When New York City announced on Tuesday that it would soon require people to show proof of at least one coronavirus vaccine shot to enter businesses, Mayor Bill de Blasio said the system was “simple — just show it and you’re in.”
Less simple was the privacy debate that the city reignited.
Vaccine passports, which show proof of vaccination, often in electronic form such as an app, are the bedrock of Mr. de Blasio’s plan. For months, these records — also known as health passes or digital health certificates — have been under discussion around the world as a tool to allow vaccinated people, who are less at risk from the virus, to gather safely. New York will be the first U.S. city to include these passes in a vaccine mandate, potentially setting off similar actions elsewhere.
But the mainstreaming of these credentials could also usher in an era of increased digital surveillance, privacy researchers said. That’s because vaccine passes may enable location tracking, even as there are few rules about how people’s digital vaccine data should be stored and how it can be shared. While existing privacy laws limit the sharing of information among medical providers, there is no such rule for when people upload their own data onto an app.
sends a person’s location, city name and an identifying code number to a server as soon as the user grants the software access to personal data.
passed a law limiting such use only to “serious” criminal investigations.
“One of the things that we don’t want is that we normalize surveillance in an emergency and we can’t get rid of it,” said Jon Callas, the director of technology projects at the Electronic Frontier Foundation, a digital rights group.
While such incidents are not occurring in the United States, researchers said, they already see potential for overreach. Several pointed to New York City, where proof of vaccination requirements will start on Aug. 16 and be enforced starting on Sept. 13.
For proof, people can use their paper vaccination cards, the NYC Covid Safe app or another app, the Excelsior Pass. The Excelsior Pass was developed by IBM under an estimated $17 million contract with New York State.
To obtain the pass, people upload their personal information. Under the standard version of the pass, businesses and third parties see only whether the pass is valid, along with the person’s name and date of birth.
On Wednesday, the state announced the “Excelsior Pass Plus,” which displays not only whether an individual is vaccinated, but includes more information about when and where they got their shot. Businesses scanning the Pass Plus “may be able to save or store the information contained,” according to New York State.
Phase 2,” which could involve expanding the app’s use and adding more information like personal details and other health records that could be checked by businesses upon entry.
IBM has said that it uses blockchain technology and encryption to protect user data, but did not say how. The company and New York State did not respond to requests for comment.
Mr. de Blasio told WNYC in April that he understands the privacy concerns around the Excelsior Pass, but thinks it will still “play an important role.”
For now, some states and cities are proceeding cautiously. More than a dozen states, including Arizona, Florida and Texas, have in recent months announced some type of ban on vaccine passports. The mayors of San Francisco, Los Angeles and Seattle have also said they were holding off on passport programs.
Some business groups and companies that have adopted vaccine passes said the privacy concerns were valid but addressable.
Airlines for America, an industry trade group, said it supported vaccine passes and was pushing the federal government to establish privacy standards. The San Francisco Chamber of Commerce, which is helping its members work with Clear, said using the tools to ensure only vaccinated people entered stores was preferable to having businesses shut down again as virus cases climb.
“People’s privacy is valuable,” said Rodney Fong, the chamber’s president, but “when we’re talking about saving lives, the privacy piece becomes a little less important.”
IBM insists that its revised A.I. strategy — a pared-down, less world-changing ambition — is working. The job of reviving growth was handed to Arvind Krishna, a computer scientist who became chief executive last year, after leading the recent overhaul of IBM’s cloud and A.I. businesses.
But the grand visions of the past are gone. Today, instead of being a shorthand for technological prowess, Watson stands out as a sobering example of the pitfalls of technological hype and hubris around A.I.
The march of artificial intelligence through the mainstream economy, it turns out, will be more step-by-step evolution than cataclysmic revolution.
A New Wave to Ride
Time and again during its 110-year history, IBM has ushered in new technology and sold it to corporations. The company so dominated the market for mainframe computers that it was the target of a federal antitrust case. PC sales really took off after IBM entered the market in 1981, endorsing the small machines as essential tools in corporate offices. In the 1990s, IBM helped its traditional corporate customers adapt to the internet.
IBM executives came to see A.I. as the next wave to ride.
Mr. Ferrucci first pitched the idea of Watson to his bosses at IBM’s research labs in 2006. He thought building a computer to tackle a question-answer game could push science ahead in the A.I. field known as natural language processing, in which scientists program computers to recognize and analyze words. Another research goal was to advance techniques for automated question answering.
After overcoming initial skepticism, Mr. Ferrucci assembled a team of scientists — eventually more than two dozen — who worked out of the company’s lab in Yorktown Heights, N.Y., about 20 miles north of IBM’s headquarters in Armonk.
The Watson they built was a room-size supercomputer with thousands of processors running millions of lines of code. Its storage disks were filled with digitized reference works, Wikipedia entries and electronic books. Computing intelligence is a brute force affair, and the hulking machine required 85,000 watts of power. The human brain, by contrast, runs on the equivalent of 20 watts.
Mr. Buser declined to comment on February’s changes.
Amazon also unveiled a cloud service, Luna, in September. It is so far available only to invitees, who pay $6 a month to play the 85 games on the platform. The games can be streamed from the cloud to phones, computers and Amazon’s Fire TV.
Like Google, Amazon has struggled to assemble a vast library of appealing games, though it does offer games from the French publisher Ubisoft for an added fee. Amazon has also had trouble developing its own games, which Mr. van Dreunen said showed that the creative artistry necessary to make enticing games was at odds with the more corporate style of the tech giants.
“They may have an interesting technological solution, but it totally lacks personality,” he said.
Amazon said it remained dedicated to game development: It opened a game studio in Montreal in March and, after a long delay, is releasing a game called New World this summer.
Even console makers have jumped into cloud gaming. Microsoft, which makes the Xbox console, released a cloud offering, xCloud or Xbox Cloud Gaming, last fall. For a $15 monthly subscription, users can play more than 200 games on various devices.
Sony also has a cloud gaming service, PlayStation Now, where games can be streamed to PlayStation consoles and computers.
Satya Nadella, Microsoft’s chief executive, said in an interview last month that he did not think it was possible to be a gaming company “with any level of big ambition” without cloud gaming. Sony declined to comment.
Other companies have waded in, too. Nvidia, the chip maker that produces gaming hardware, has a $10-a-month cloud program, GeForce Now.
Australians will have some of the best views of the “super blood moon” this week, but passengers on a one-time flight departing from Sydney will have an even better one.
The Australian airline Qantas will operate a three-hour flight on Wednesday (Tuesday evening in the United States) for about 100 passengers to see the moon enter the Earth’s shadow and turn a blood red color during a total lunar eclipse.
An astronomer from the Commonwealth Scientific and Industrial Research Organisation, Australia’s national science and research agency, worked with the flight’s pilots to “design the optimal flight path,” a statement from the airline said. The astronomer, Vanessa Moss, will also be aboard the plane to educate passengers on the lunar event.
The flight will climb to a cruising altitude of 43,000 feet, “above any potential cloud cover and atmosphere pollution,” the statement said — the maximum altitude for the plane, a Boeing 787 Dreamliner. “Cosmic cocktails and supermoon cakes” will be served.
sold out in less than half an hour.
The flight will depart from and return to Sydney Airport, beginning with a scenic route over Sydney Harbour. Australia’s travel restrictions have been among the world’s harshest, with the government largely prohibiting international travel into or out of the country, even for its own citizens.
Other “flights to nowhere” have departed throughout the pandemic as airlines scrambled to manage the sharp decline in travel. In October, a Qantas flight flew over Australia’s Northern Territory, Queensland and New South Wales, departing from and landing in Sydney. Tickets for the flight sold out in 10 minutes.
Climate activists have criticized the flights as unnecessary and harmful to the environment. Qantas noted that it would offset carbon emissions for its supermoon flight to a net zero.
For those who won’t be on the supermoon flight, the lunar event will be visible mostly from Australia, East Asia, islands in the Pacific and the Western Americas.
The moon will be closest to Earth at 11:50 a.m. Australian Eastern Standard Time, but on the West Coast of the United States, the views will start at 1:47 a.m. Pacific time on Wednesday.
Before the widespread availability of this kind of computing, organizations built expensive prototypes to test their designs. “We actually went and built a full-scale prototype, and ran it to the end of life before we deployed it in the field,” said Brandon Haugh, a core-design engineer, referring to a nuclear reactor he worked on with the U.S. Navy. “That was a 20-year, multibillion dollar test.”
Today, Mr. Haugh is the director of modeling and simulation at the California-based nuclear engineering start-up Kairos Power, where he hones the design for affordable and safe reactors that Kairos hopes will help speed the world’s transition to clean energy.
Nuclear energy has long been regarded as one of the best options for zero-carbon electricity production — except for its prohibitive cost. But Kairos Power’s advanced reactors are being designed to produce power at costs that are competitive with natural gas.
“The democratization of high-performance computing has now come all the way down to the start-up, enabling companies like ours to rapidly iterate and move from concept to field deployment in record time,” Mr. Haugh said.
But high-performance computing in the cloud also has created new challenges.
In the last few years, there has been a proliferation of custom computer chips purposely built for specific types of mathematical problems. Similarly, there are now different types of memory and networking configurations within high-performance computing. And the different cloud providers have different specializations; one may be better at computational fluid dynamics while another is better at structural analysis.
The challenge, then, is picking the right configuration and getting the capacity when you need it — because demand has risen sharply. And while scientists and engineers are experts in their domains, they aren’t necessarily in server configurations, processors and the like.
This has given rise to a new kind of specialization — experts in high-performance cloud computing — and new cross-cloud platforms that act as one-stop shops where companies can pick the right combination of software and hardware. Rescale, which works closely with all the major cloud providers, is the dominant company in this field. It matches computing problems for businesses, like Firefly and Kairos, with the right cloud provider to deliver computing that scientists and engineers can use to solve problems faster or at lowest possible cost.
Bill and Melinda Gates are divorcing after 27 years of marriage, raising questions about the fate of their vast fortune. Their split could yield the biggest divorce settlement on record, according to Forbes’s calculations, surpassing the $35 billion breakup of Amazon’s Jeff Bezos and MacKenzie Scott. Given the likely sums involved, what happens with the Gateses’ extensive investments and charity work will be monitored at the highest levels of government, business and the nonprofit sector.
What’s at stake: Mr. Gates is the fourth-richest person in the world, according to Forbes, with wealth estimated at $124 billion. The family is the largest owner of farmland in the U.S. His personal investment firm, Cascade Investment, owns big stakes in assets like the Four Seasons, the Canadian National Railway and the AutoNation chain of car dealerships.
The Gateses are believed to have a prenuptial agreement, but its details aren’t publicly known. The divorce petition notes that there is a separation contract in place.
The two have faced relationship struggles in recent years, Andrew, David Gelles and Nick Kulish report in The Times. Mr. Gates stepped down from the boards of Microsoft and Berkshire Hathaway in part to spend more time with his family.
What will happen to the Gates Foundation? The $50 billion nonprofit is one of the biggest philanthropies in the world, giving away about $5 billion each year to causes like global public health and childhood education. Most recently, it was instrumental in forming Covax, the global coronavirus vaccination program. For now, the foundation says little will change in how it is run day to day, but people in its orbit worry that an acrimonious split by its founders could cloud the nonprofit’s plans. “Together they have assured me of their continued commitment to the foundation that they have worked so hard to build together,” the foundation’s chief executive, Mark Suzman, told employees in an email.
When the Gateses created the Giving Pledge, an effort to get wealthy people to donate a majority of their money to charitable causes, they said they would commit to donate “the vast majority of our assets” to the foundation. Much of that money has not yet been donated.
Ms. Gates could separately become a big philanthropic force. She has already used her own investment office, Pivotal Ventures, to donate money to causes like women’s economic empowerment, and could use any settlement to amplify her giving to preferred groups. “You could imagine Melinda Gates being a much more progressive giver on her own,” said David Callahan, the founder of Inside Philanthropy. “She’s going to be a major force in philanthropy for decades to come.”
HERE’S WHAT’S HAPPENING
The Tristate area will reopen sooner than expected. The governors of New York, New Jersey and Connecticut said they would ease most Covid-19 capacity limits on businesses starting on May 19, thanks to declining coronavirus case numbers.
MEXICO CITY — The capital had been bracing for the disaster for years.
Ever since it opened nearly a decade ago, the newest Mexico City subway line — a heralded expansion of the second largest subway system in the Americas — had been plagued with structural weaknesses that led engineers to warn of potential accidents. Yet other than a brief, partial shutdown of the line in 2014, the warnings went unheeded by successive governments.
On Monday night, the mounting problems turned fatal: A subway train on the Golden Line plunged about 50 feet after an overpass collapsed underneath it, killing at least 24 people and injuring dozens more.
The accident — and the government’s failure to act sooner to fix known problems with the line — immediately set off a political firestorm for three of the most powerful people in Mexico: the president and the two people widely believed to be front-runners to succeed him as leaders of the governing party and possibly, the country.
told reporters through sobs. “I can’t find him anywhere.”
Hours later, her 13-year-old son, Brandon Giovani Hernández Tapia, was still missing.
told reporters gathered at the crash site on Tuesday. “The metro wasn’t built on its own — this flaw has been there for a long time and no one did anything.”
A total of 79 injured people had been taken to hospitals, three of whom later died, according to Claudia Sheinbaum, the mayor of Mexico City. Among those hospitalized were three minors.
Mexico City’s water problems and its subway system, a key mode of transportation for the sprawling capital’s population of nearly 22 million.
In the aftermath of Monday’s disaster, two of Mr. López Obrador’s closest allies came under immediate scrutiny: Ms. Sheinbaum, the capital’s mayor, and Marcelo Ebrard, the foreign minister who was mayor when the new subway line opened. Both are presumed to be top contenders to run for the presidency when Mr. López Obrador, limited to one term, steps down in 2024.
The new line, which serves the working-class neighborhoods in the capital’s southeast, was built by Mr. Ebrard, who was mayor of Mexico from 2006 to 2012. He was accused by critics of rushing to finish construction before his term concluded in an effort to bolster his political legacy. Troubles emerged immediately.
In just the first month after the line was inaugurated, there were 60 mechanical failures on trains or on tracks, according to local media. Trains had to slow down over elevated stretches of track, because engineers feared derailments. About a year later, the city was forced to temporarily shut down part of the $2 billion line for repairs.
transport authorities reported “a structural fault” in one of the metro line’s supporting columns, which had affected its ability to support heavy weight.
In 2018, senators from the opposition Institutional Revolutionary Party called for Mexico City authorities to inform Congress about irregularities in the funding of the subway line’s expansion. In an official party document, the opposition lawmakers called the Golden Line a “symbol of corruption and the misuse of public resources that prevailed during that administration.”
The lawmakers cited a congressional inquiry into the faulty line which found that “the modifications to the basic engineering, to the original layout with the change of underground stations to elevated stations, severely affected the technical operating conditions” of the subway line.
Residents living near the scene of the accident said government workers had fixed the column shortly after the earthquake. But they expressed doubt about the quality of the reconstruction, after seeing how many shutdowns and maintenance issues the line had over the years.
Hernando Manon, 42, was walking home from work Monday night when he felt a tremor and heard a loud crash a few hundred yards up the street.
“There was a rumbling and then sparks. The lights went out, and we didn’t know what happened. Then we heard the sirens,” Mr. Manon said, standing just a few hundred yards from the site of the accident. “As we approached, we realized that the subway had collapsed.”
Families rushed to the scene, he said, hoping to find their loved ones and yelling at the police demanding to be let through the cordon they had erected around the wreckage.
2018-2030 Master Plan for the subway system detailed major backlogs to the maintenance of tracks and trains and warned that trains could be derailed on the Golden Line unless major repairs were undertaken. It is unclear whether those needed repairs were ever carried out.
Since becoming mayor of the capital in 2018, Ms. Sheinbaum, who is closely aligned with the president’s pursuit of austerity, has presided over cuts to spending on the subway system.
For a year, the city did not appoint a director of infrastructure maintenance for the subway system. Ms. Sheinbaum only filled the role last week.
two subway trains collided in Mexico City. Then in January, a fire ripped through the subway’s headquarters in downtown Mexico City, killing a police officer and sending 30 others to hospital.
At a news conference on Tuesday, both Ms. Sheinbaum and Mr. Ebrard faced harsh questioning from reporters. Publicly, at least, the two political heavyweights presented a united front.
“We are in agreement to get to the bottom of this and work together to find the truth and know what caused this incident,” Ms. Sheinbaum said.
“If you have nothing to hide, you have nothing to fear,” Mr. Ebrard said. “Like anyone else, I am subject to whatever the authorities determine, but even more so as a high-level official, as someone who promoted the construction of the line.”
Amazon had a record-breaking year in Europe in 2020, as the online giant took in revenue of 44 billion euros while people were shopping from home during the pandemic. But the company ended up paying no corporate tax to Luxembourg, where the company has its European headquarters.
The company’s European retail division reported a loss of €1.2 billion ($1.4 billion) to Luxembourg authorities, according to a recent financial filing, making it exempt from corporate taxes. The loss, which was due in part to discounts, advertising and the cost of hiring new employees, also meant the company received €56 million in tax credits that it could use to offset future tax bills when it makes a profit, according to the filing, released in March.
Amazon was in compliance with Luxembourg’s regulations,and it pays taxes to other European countries on profits it makes on its retail operations and other parts of the business, like its fulfillment centers and its cloud computing services.
But the filing is likely to provide fresh ammunition for European policymakers who have long tried to force American tech giants to pay more taxes. And the Biden administration is pushing for changes in global tax policy as part of an effort to raise taxes on large corporations, which have long used complicated maneuvers to avoid or reduce their tax obligations, including by shifting profits to lower-tax countries, like Luxembourg, Ireland, Bermuda and the Cayman Islands.
first three months of this year, the entire company’s profitsoared to $8.1 billion, an increase of 220 percent from the same period last year. Amazon’s first-quarter filings, released last week, also showed that it made $108.5 billion in sales, up 44 percent, as more customers made purchases online because of the pandemic.
The company’s filing with Luxembourg was reported earlier by The Guardian.
A spokesman for Amazon, Conor Sweeney, said the company paid all taxes required in every country in which it operated.
“Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business,” he said.
250 million in unpaid taxes from 2006 through 2014 from Amazon. Amazon and Luxembourg appealed that order, and a judgment in Europe’s second-highest court is expected next week.
Margaret Hodge, a British lawmaker, said Amazon had deliberately created financial structures to avoid tax. “It’s obscene that they feel that they can make money around the world and that they don’t have an obligation to contribute to what I call the common pot for the common good,” she said.
Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, said Amazon’s Luxembourg filing showed why there was such urgency, not only in the European Union but also in the United States, to require a global minimum tax.
“This is a stark reminder of the high financial stakes of inaction,” he said.