Fact check: Trump's claims about Amazon's cost to taxpayers

by Susie Olson April 2, 2018, 0:45
Fact check: Trump's claims about Amazon's cost to taxpayers

The stock, which fell as low as $1,386.17, was last down 4.2 percent at $1,434.54.

One explanation: According to Axios, Trump hates Amazon (and the "Amazon Washington Post"), and Bezos, but never brings up Facebook or Zuckerberg. However, Amazon and other big e-commerce companies now routinely collect state sales taxes.

While it's not clear what prompted this specific comment, Trump has demonstrated time and again that once he zeros in on a target, he is unlikely to ever remove it from his sights, and Amazon seems to be a favor subject. The postal service's contract with Amazon must be approved by regulators and must generate a profit for the service.

The other prong to Trump's criticism concerns the U.S. Postal Service.

"If you think about the movement into e-commerce and away from bricks and mortars, it's the fellows that own the shopping malls that are bearing the brunt of a lot of this challenge", De Silva said. "It's creating jobs in logistics and warehousing".

The president's critiques also echo criticism of Amazon's tax practices.

"I think somehow he's convinced himself that they don't collect sales tax", Pachter said, adding that "When Trump came into office, they were already collecting sales tax" in every state that has one. "Right now, there is no internet sales tax, and, as a result, companies like Amazon can buy and sell goods without having to pay basic retail taxes".

This online attack comes following an Axios report, which quoted a White House insider who described Trump's apparent obsession with the company. "In the case of product sales across state lines, sales taxes are collected only if that business has a significant presence, like a factory or warehouse, in that state". "And that's about half of their sales", he said.

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In other words, the discounts a company like Amazon receives from USPS can't exceed the money the postal service saves when that company helps out with some of the logistical work required to ship packages.

Some states fought against this and eventually won in court, so Amazon now collects state taxes on behalf of third-party sellers and remits them to local governments, where applicable.

Investors largely waved off concerns about that on Thursday. During his presidential election campaign days, Trump had said, The Washington Post had a team of some 20 reporters to write stories against him. Although the service is certainly losing money, the delivery of packages increased by 589m in 2017, which can be partially accredited to Amazon. But is Amazon paying little or no taxes to states and local governments?

The U.S. Postal Service has been roiled by the same gale-force technology winds, as Americans abandoned mail for email and other electronic communication.

The service has a decade-long string of fiscal net losses, which has led to more than $120 billion in unfunded liabilities, mostly retirement health and pension benefits.

Some retail competitors believe the third-party vendor policy gives the retail giant an unfair advantage, which may very well be true - Amazon reported a provisional tax expense of roughly $200m in USA state taxes previous year, pennies against their $177.9B annual sales. The most recent year's losses of $2.7 billion are down from more than $5 billion in each of the prior two fiscal years.

Michael Pachter, a former tax attorney who is now a financial analyst with Wedbush Securities, said Trump's information about Amazon's tax status is likely outdated.


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