Donald Trump jumps on anti-tech bandwagon, gets everything wrong

US president guns for Amazon in factually challenged tweet

Trump

Opinion Combining his three favorite pastimes – trying to steal the news cycle, getting all his facts wrong, and spreading brain farts on Twitter – Donald Trump went on anti-Amazon tirade on Thursday.

While Facebook continues to be hauled over the coals for its loose relationship with the truth, and Google looks down with its hands stuffed in its pockets hoping no one notices it, it has fallen to the man who became president of the United States to make the case against the ecommerce giant.

"I have stated my concerns with Amazon long before the Election," began the man who allegedly asked a porn star to spank him with a magazine that featured a picture of himself on the front cover.

"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 tweet would appear to be an effort to ride the wave of anti-tech coverage in the news recently, although Trump avoided any mention of the main focus of that ire, Facebook.

No doubt that was because the entire scandal is about how a company that his campaign paid had possibly used dubiously acquired personal data to feed to people's prejudices and encourage them to vote for a man with no real experience and countless character flaws as president.

But, as with most of the president's electronic outbursts, he managed to get everything wrong.

"Unlike others, they pay little or no taxes to state & local governments," he railed just hours before he gave a speech on his new infrastructure plan in Ohio, during which he largely failed to mention his infrastructure plan.

He is, of course, wrong. And not for the first time on this very topic. In August, he tweeted a similar message: "Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!" He also noted that Amazon was not paying "internet taxes."

Amazon does in fact pay tax – quite a lot in fact.

How much?

In 2016, it paid $412m; in 2015, $273m; in 2014, $177m. As the company grows and brings in more revenue, it pays, well, more in taxes. There are companies that make far larger profits - like General Motors and United Airlines - but pay next to nothing in US income taxes.

Not that Amazon pays a large sum as a percentage of profits. According to an extensive market analysis of the company last year, Amazon pays an overall 13 per cent in federal, state and local taxes. This is much lower than the average large company – which pays around 27 per cent – so you can imagine why Trump is furious.

If, that is, you ignore his persistent calls for a 15 per cent corporate tax rate.

And his response to his own unusual tax arrangements during a presidential debate with Democratic candidate Hillary Clinton when she alleged that he had paid absolutely nothing in federal taxes for several years.

"Maybe he doesn't want the American people to know that he's paid nothing in federal taxes, because the only years that anybody's ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license, and they showed he didn't pay any federal income tax," Clinton alleged.

"That makes me smart," responded Trump, before warning that any money he did pay in tax would be "squandered" by the government.

But back to Amazon: Trump is probably referring to the fact that the retail giant did not pay state sales tax for years under a long-standing agreement put in by the Clinton Administration and affirmed by the Supreme Court to not charge internet companies local taxes in an effort to boost ecommerce.

If he is, he is also wrong.

Sales tax

While Amazon did indeed use its online nature to avoid paying tax – and so charge lower prices – that changed back in 2012 when it started paying sales tax in California. By 2017, it was paying local taxes in 29 states. And today, Amazon collects sales tax in every single state that has one.

What about the second part of Trump's brain fart today: "[Amazon uses] our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!"

This is something, according to reports, that Trump has been saying over and over while in office and yet somehow has failed to grok his advisors' response that he is completely wrong.

In fact, the US Postal Service was in dangerous decline and making huge losses only a few years ago as people chose private delivery services like UPS and FedEx because they were faster and more efficient.

People have also been using the mail far less since the advent of the internet – when was the last time you sent a letter or a check in the post?

However, it has been Amazon that has massively changed that situation, with people moving away from visiting stores and increasingly buying their goods online, having them delivered to their door.

In recent years, Amazon has built on top of this approach and expanded with programs like Subscribe & Save which give consumers discounts if they buy five or more household goods each month, and its food delivery service.

While postal workers do not like the fact that they often have to lug large boxes around for the same flat rate as much smaller ones, that is a rule that the federal government, not Amazon, set. In fact, you can argue that if anything Amazon has been the savior of the US Postal Service, at least in terms of work and revenue.

Bad behavior

Of course, that is not to say that Amazon is a nice company. It does its absolute best to find every loophole and pressure point to dominate more and more of the market and pay as little tax as possible.

The European Commission wants Amazon to to repay €250m in illegal and unfair state aid from Luxembourg. The UK government is furious with its efforts to avoid paying tax. The Italians want €100m. The French want €10m.

But Trump isn't talking about these issues and, as we pointed out, his own views on tax align exactly with Amazon's.

And as for his last point: "[Amazon is] putting many thousands of retailers out of business!"

Well, you could try to draw a connection between people buying more of their goods online rather than in stores and then blame Amazon for making it possible. But in reality it is, of course, consumers that are deciding to do so.

Change

You could also point out that large box retailers were themselves responsible for the virtual disappearance of small chain shops on Main Street because they used their massive economies of scale to undercut them, while at the same using society's shift toward motorcars to open up large stores outside of town where the rent was much cheaper.

As it is, Amazon – along with other online services like Etsy – has actually caused a resurgence in the number of very small businesses who focus on very specific products, often filling in niche markets that were ignored by large retailers because of their lower demand and small margins.

To be fair to Trump, he did manage to get one thing right in his tweet. "I have stated my concerns with Amazon long before the Election," he wrote – and that's true, he has.

Unfortunately, considering that we are talking about the Commander in Chief of the most powerful nation on the planet here, he has been wrong every time.

So why does Trump hate Amazon? You only have to ask Trump. "The Washington Post, which loses a fortune, is owned by Jeff Bezos for purposes of keeping taxes down at his no profit company, Amazon," he tweeted in December.

Also: "The Washington Post loses money (a deduction) and gives owner Jeff Bezos power to screw public on low taxation of Amazon! Big tax shelter."

Also: "If Amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The Washington Post scam is saving it!"

So the real question is: what does Trump have against The Washington Post? And the answer is: journalism. ®




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