President Trump goes after a favorite target, Amazon

Monday, 02 Apr, 2018

The president's jab comes as the solicitor general, who represents the federal government before the U.S. Supreme Court, is siding with South Dakota's attempt to overturn the high court's 1992 decision barring states from taxing out-of-state sellers who lack an in-state physical presence.

In July previous year, Donald Trump tweeted that many articles about him in the Post were "fake news" and in another tweet he asked if the Washington Post was being used as a "lobbyist weapon" against Congress. For instance, the grocery and daily consumables business where delivery is time critical, Cloudtail is driving the business for Amazon India and Amazon Now, which is focussed on delivery of grocery items.

That's translated to more packages and package-related revenue, in part thanks to Amazon.

It is true the Postal Service has consistently reported net losses for a decade; the last time it reported net income from its operations was the 2006 fiscal year. Package volume expanded by 111 million pieces, or 7%, during the first quarter, and the agency said it "continues to grow its package business". In the 2017 fiscal year, the agency reported a net loss of $2.7 billion; the previous three years, it incurred losses of almost twice that amount.

Tax policies need to catch up to Amazon, and President Trump would support tax changes aimed at leveling the playing field, which now favors the online retailer, Trump's spokesman Raj Shah said on Fox News. On Feb. 15, speaking at a hearing before the House Ways and Means Committee, Mnuchin said he had spoken personally with Trump about online taxation, and that the president "does feel strongly" that sales tax should be applied to internet purchases. Or is it something to do with the CEO and founder of Amazon, billionaire Jeff Bezos? Inc. did not respond to a request for comment. And he could thwart Amazon's aspirations to win a multibillion dollar Pentagon contract for cloud services.

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.

But with that network in its early stages, it's a paying customer of the post office.

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. Shares (AMZN) dropped 4%, but they rebounded Thursday. He accused Amazon of not paying enough taxes, using the US Postal Service as its "delivery boy" and putting thousands of retailers out of business. Amazon does not collect state sales tax from third-party sellers in parts of the U.S., in some cases those sellers are required to collect the tax. The same document notes that the company set aside $211 million to pay state taxes on its own revenues a year ago. Now the company charges sales taxes in the 45 states that have them and the District of Columbia.

Amazon has undoubtedly contributed to the closure of many brick-and-mortar stores and the bankruptcy of some chains as more people shop online instead of in malls.

The White House is looking at the idea of an internet sales tax.

Such a ruling would pave the way for states to expand tax collection for online sales across the board.

Cloudtail, the largest seller entity on Amazon, is asking third party sellers to list their products through it and align with the entity, merchants aware of the matter said.

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 U.S. state taxes past year, pennies against their $177.9B annual sales.

But White House spokesperson Sarah Sanders said no specific policies were on the table in regards to Amazon. Separate figures in the report show it was expecting to pay $100 million to $200 million in taxes at the USA state level in 2017.

Trump has a long history of animosity toward Amazon Chief Executive Officer Jeff Bezos, who also owns the Washington Post, and the president previously has aired these complaints.