President Trump has made it known that he’s no fan of Amazon, one of America’s biggest retailers. While he has expressed his disdain for Amazon in the past before he was elected President, his dislike of the company recently made headlines when he bashed them on twitter. The President’s main complaints about Amazon seem to be about how they use the Postal Service and how they pay taxes.
At the end of March, Trump sent his first tweet as president about the company, saying, “I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”
The President tweeted about the company again a several days later, saying, “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!”
Jeff Bezos, the owner and head of Amazon, has so far declined to comment on the President’s attacks on his company. As for the validity of the President’s claims about Amazon, experts have said that they are mostly untrue.
The part of his claims that is partially true is his comment saying that Amazon “pay[s] little or no taxes to state & local governments.” This statement is true in the sense that Amazon has paid a smaller tax rate than many other retailers. The Institute on Taxation and Economic Policy has said that Amazon has had an effective rate of 11.4% over the past five years, compared to the 35% to 40% rate paid by their more traditional peers.
Amazon has paid less tax than their competitors through a variety of legal tactics, including angling for tax breaks from states, reporting minimal profits, and taking advantage of the loopholes in tax laws that were written before internet retail began.
While Amazon does seem to be paying a lower tax rate than other retailers, President Trump has also been adamant that Amazon does not pay any sales tax. This is something that was mostly true when Amazon began but is largely untrue now.
Tax law states that online retailers must collect sales tax for those states that they have a physical presence in. In the early days of Amazon, they didn’t have a physical presence in many states and therefore didn’t collect sales tax in many states. Now, however, Amazon has physical presences in many states (including their many fulfillment centers) and does pay sales tax on many of their sales.
President Trump’s other claim about Amazon, that the company takes advantage of the U.S. Postal Service and relies on taxpayers to pay for their shipping costs, has been widely hailed as untrue. This is untrue firstly because the Postal Service is not taxpayer funded, and is instead funded by their sale of postage, products, and services. Secondly, Amazon likely makes the Postal Service quite a bit of money due to how often they use the service.
Many people have speculated that the President’s dislike for Amazon might be personal. It’s been rumored that President Trump has become increasingly unhappy with how his administration has been portrayed in The Washington Post, which Amazon’s Bezos owns.
Whether or not President Trump’s attacks on Amazon will change tax law remains to be seen. Trump has said that he wants for online retailers to be required to pay sales tax, even for states that they lack a physical presence in. If this were to become law, however, it might actually benefit Amazon, as they already pay sales tax for most states and many of their smaller competitors do not.
So far, all that’s come out of Trump’s tax war on Amazon is fluctuations in Amazon’s stock prices and speculation about the reason behind Trump’s attacks. But if President Trump moves from speaking angrily about Amazon to creating laws specifically to target them, it’s sure to be major news.