Amazon shares slump as Trump goes after the retail giant over ta - WRCBtv.com | Chattanooga News, Weather & Sports

Amazon shares slump as Trump goes after the retail giant over taxes

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Photo courtesy of NBC News. Photo courtesy of NBC News.

by Michael Sheetz

President Donald Trump lashed out at Amazon in a tweet Thursday, a day after the company's stock tanked following a report that said he wants to "go after" the e-commerce giant for alleged antitrust violations.

"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!" Trump wrote on Twitter.

Amazon shares were up as much as 1.6 percent in premarket before the president's tweet. The stock fell 2.6 percent after the market opened.

Read more: Here's the controversial tax practice by Amazon that's got Trump so upset

White House press secretary Sarah Huckabee Sanders told reporters Wednesday there were "no announcements and no specific policies or actions that we're currently pushing forward" regarding Amazon. The Supreme Court will hear arguments this year over whether all states can require online to collect sales tax from consumers.

Several states say online retailers should have to collect sales tax, even in those where the companies don't have a physical presence. The Supreme Court ruled in 1992 that states couldn't collect sales taxes gathered by mail-order catalog companies unless the firms had a physical presence in a state. South Dakota and several other states argue that things have changed in the era of Amazon.

Indeed, Amazon does collect sales tax from consumers in 45 states and the District of Columbia. Analysts at Wall Street firm Stifel said Thursday that it appears Trump was referring to taxes on sales by third-party retailers on the website, which account for about 50 percent of volume on Amazon.

Amazon might actually benefit from the move Trump is suggesting, Stifel added, since it would raise prices on third-party merchandise relative to the online giant's inventory, potentially hurting small businesses.

An Axios report Wednesday said Trump wants to "go after" the e-commerce giant, citing five sources who have talked about Amazon with the president.

That report also noted Trump's view of the post office is one which "has been explained to him in multiple meetings" as "inaccurate." The U.S. Postal Service is not owned or operated by the government. Rather, it is an "establishment of the executive branch," meaning the service is controlled by presidential appointees and acts as a government agency.

Observers also point to Amazon's business as one of the things keeping the USPS afloat, although critics argue that the Postal Service could have negotiated a better deal with the online retail giant. Analysts have said that Amazon's own delivery service poses more of a threat to the USPS than it does to private delivery companies FedEx and UPS.

The Postal Service added Sunday deliveries in 2013 as demand for packages continued to grow. The USPS teamed up with Amazon to roll out the service to New York, Los Angeles, Dallas, Houston, New Orleans and Phoenix, making it possible for the retailer's customers to receive packages seven days a week.

The Postal Service's financial crisis has persisted over the past 11 years. Since 2007, it has accrued more than $63 billion in cumulative net losses. Package deliver is one of the bright spots for the service, however. In fiscal year 2017, revenue from package deliveries increased $2.1 billion, up nearly 12 percent from the previous year.

First class mail, the Postal Service's top revenue stream, continues to decline each year, while high labor costs and ballooning pensions add billions in expenses. Congress mandates that the USPS pre-fund pensions.

Trump has blasted Amazon on social media in the past, saying the e-commerce company is hurting the retail industry and causing U.S. job losses.

Trump also repeatedly bashed the "Amazon Washington Post" on Twitter. Amazon CEO Jeff Bezos owns The Washington Post, but the news organization is a separate entity from Amazon.

Treasury Secretary Steven Mnuchin hinted in July the administration may soon take "a position" on Amazon's tax collection policy.

Amazon's stock dropped more than 4 percent in Wednesday trading, closing down at $1,431.42 per share and wiping out more than $31 billion in shareholder value.

– CNBC's Tae Kim contributed to this report.

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