Trump's Amazon Attacks Are Utterly Unnecessary

The President took to Twitter in an effort to articulate his anti-Amazon position after an Axios report published Wednesday, March 28, 2018, suggested that the President "hates" and "is obsessed with" the online-and, recently, on-ground-retailer and its CEO Jeff Bezos.

Trump on Thursday accused Amazon of not paying enough taxes, exploiting the USA postal system and putting small retailers out of business, but did not present evidence to back up claims or suggest any specific actions.

Though Amazon has reached agreements with states to collect and remit sales and use taxes, Amazon's agreements don't apply to third-party merchants selling goods through its website, and many of those transactions remain untaxed.

It's also true that Amazon, as well as other online retailers, may not pay taxes in some areas, but that's because the laws there haven't kept pace with technology, according to the Institute on Taxation and Economic Policy.

The retailer and cloud computing pioneer is the latest company Trump has singled out for praise or condemnation, although the effect on stock prices of his targets is generally short-lived. The president would love to clip CEO Jeff Bezos wings. Among the challenges that the postal service faces is its duty to serve the entire country. Trump has also often criticised stories in The Washington Post, a newspaper owned by Bezos. Amazon also collects sales tax in the 45 states that require it, but regulatory red tape at a local level dictates the collection of the tax and who it is collected by.

It wasn't the first time Donald Trump has taken to Twitter to criticise the online retailer. One, by not universally collecting sales tax, Amazon and other e-retailers are maintaining an unfair advantage over traditional retailers, according to ITEP. "Towns, cities and states throughout the USA are being hurt - many jobs being lost!"

Moreover, Amazon does not need the Post Office; the Post Office needs Amazon. Amazon's popular subscription programme Prime drives a significant amount of sales for the company and third-party sellers being asked to list their products would mean strengthening the selection available for these paying customers. A 2016 report found that Amazon got at least $613 million in subsidies from local governments for its package facilities from 2005 to 2014, plus another $147 million for its data centers.

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"Amazon for many years reinvested all its profits into expansion, with the result that it paid little or no taxes because taxes are calculated based on profits", said Joseph Bishop-Henchman, executive vice president of the Tax Foundation. But its line of business for shipping and packages has been a bright spot in recent years, with revenue increasing by $2.1 billion, to $19.5 billion, in fiscal 2017.

But Amazon says the relationship is mutually beneficial.

The Postal Service declined to comment on Trump's tweet. Cloudtail reported revenues of nearly Rs 5,900 crore for the financial year ending March 2017.

There has been talk in Washington of taxing online commerce more.

It is not clear that Amazon is responsible for the United States Postal Service (USPS) losing money, although Wall Street analysts have estimated it pays USPS roughly half what it would to United Parcel Service Inc or FedEx Corp to deliver a package.

Amazon is one of the biggest companies in the world, and its financials are fair game for critics, but Trump's distortions don't add up and are worthy of Three Pinocchios.

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