By Brad Tuttle
August 17, 2017

On Wednesday morning, President Donald Trump refreshed his longstanding feud with Amazon.com and Jeff Bezos by criticizing the e-retail giant on Twitter.

Political observers say that many of Trump’s combative Tweets are sent out mainly for the purpose of distraction, and the timing for this latest message, hours after a disastrous Tuesday news conference, supports that notion.

Still, it’s not hard to see why Trump would pick the Amazon as a foil: When Trump attacks Amazon, he’s attacking a lot more than a company that sells books and paper towels. Here is what you need to know.

It’s not just about retail.

A big part of Trump’s obsession has nothing to do with Amazon, but rather Trump’s bête noire, the media. Bezos owns the Washington Post, one of the many news outlets Trump says has been unfair to him, and while the Trump Tweet sent this week didn’t mention the paper, previous messages have called out the paper by name.

That round of Amazon and Washington Post attacks happened just after the Post embarrassed the president, revealing that a fake TIME magazine cover featuring Trump was hung in at least five Trump clubs around the world. But Trump’s Twitter war with the Post/Amazon/Bezos stretches back much further. It dates back at least to 2015, when Trump took this crack at the man who is now the second richest person on earth.

Trump followed that up in May 2016 by accusing Bezos of “using the Washington Post for power so that the politicians in Washington don’t tax Amazon like they should be taxed.”

Trump has called the mainstream media his “enemies,” and he seems to bear a special hatred for the Post. In the summer of 2016, he even revoked the press credentials of journalists from the “phony and dishonest Washington Post” because of the “incredibly inaccurate coverage and reporting of the record setting Trump campaign.”

Amazon has long been accused of stiffing Uncle Sam.

So what, if any, substance is there to Trump’s attacks on Amazon?

Several of Trump’s messages strongly imply that Amazon doesn’t pay taxes. As fact-checking web site Politifact points out, this is untrue: “Like other businesses, Amazon pays taxes on corporate income, property, payroll and unemployment insurance.”

Still, Trump isn’t pulling the notion out of thin air. For many years, brick-and-mortar retailers complained that Amazon and other e-commerce sites rose to prominence in part because they enjoyed an unfair business advantage over local stores as a result of a legal loophole which allows these websites, in certain circumstances, to avoid collecting state and local sales tax on most purchases.

As of this year, however, that advantage is largely a thing of the past, at least for Amazon. The site now collects sales tax for purchases made directly from Amazon in all states that have a sales tax. One exception remains. Items sold from third-party sellers on Amazon—which may account for half of all sales on the site—are frequently not subject to sales tax.

Several states are trying to enact legislation to tax all Internet sales, including those conducted on Amazon’s marketplace, etsy, and eBay, but thus far the loophole remains largely intact. Despite his criticism or Amazon, Trump has never endorsed the idea that all such Internet sales should be taxed, it must be noted.

Trump is no fan of taxes either.

While plenty of criticism has been leveled at Amazon’s tax practices over the years, coming from Trump, it’s a little bit rich. After all, Trump was elected on the premise that he is a brilliant businessman. And what do smart business people do, according to Trump? They pay as little in taxes as possible.

“I fight like hell to pay as little as possible, for two reasons,” Trump said when asked about taxes during the 2016 campaign. “Number one, I am a businessman, and that’s the way you are supposed to do it. And you put the money back in your company and employees and all of that. But the other reason is that I hate the way our government spends our taxes.”

In one of his debates with Democratic candidate Hillary Clinton, Trump was accused of not paying federal income taxes. “That makes me smart,” Trump replied.

Amazon is almost certainly killing some jobs.

Trump’s other contention, that American towns are “being hurt” and “many jobs being lost” because of Amazon is also arguably true, but far more complicated than Trump lets on.

There’s no doubt that the retail world is reeling, and the larger shift to Amazon and online shopping is a big part of the equation. Dozens of major retailers are at risk of bankruptcy or have already entered bankruptcy protection, and stores like Macy’s, Sears, and Payless have been closing hundreds of locations around the country. Over the last five years, some 250,000 jobs have disappeared just at the nation’s department stores.

Roughly half of all online sales purchases now originate at Amazon, and the site reportedly captured an astonishing 43% of all online sales revenues last year. After Amazon announced its acquisition of Whole Foods this summer, legal expert Lina Khan wrote in the New York Times that antitrust enforcers must crack down on the company, which has “marched toward monopoly” in a way perhaps not seen since America’s railroads controlled production and supply lines in the 1800s.

So there are undoubtedly concerns that Amazon could be accruing too much power, reshaping the retail world and upending the nation’s shopping centers and countless small businesses along the way. If President Trump is truly worried about Amazon being a monopoly, he could pressure federal authorities to wage an antitrust battle against Amazon like Khan suggests. If he is truly worried about disappearing retail jobs, he could steer job-creating initiatives in that direction rather than focusing them on employment at manufacturing plants, which plays better with his political base.

But Amazon is also creating jobs—and Trump wants credit for those.

Speaking of jobs, Amazon itself has been hiring tens of thousands of workers as it’s been expanding. The company announced in January that it would be creating 100,000 new full-time jobs over an 18-month span.

Then-president-elect Trump—who, again, has a long history of bashing Amazon and Jeff Bezos, and has criticized Amazon for killing jobs and hurting cities—took some of the credit for the company’s decision to hire more workers.

“The announcement was made after the president-elect met with the heads of several other tech companies and urged to keep their jobs and production inside the United States,” White House press secretary Sean Spicer said at the time. “As you know Jeff Bezos was an integral part of that.”

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST