Is President Trump right about Amazon? Here's a reality check
Trump claims Amazon is paying little to no state and local sales taxes in some places.
President Donald Trump stepped up his attack on Amazon on Thursday, firing off a tweet that accused the internet retail giant of having a detrimental effect on the U.S. economy.
Trump claimed the retailer was not paying its share of state and local taxes, was putting retailers out of business and was sucking much-needed resources from the United States Postal Service.
Amazon declined NBC News' request to comment on the tweet.
Amazon has long been Trump's favorite corporate punching bag on Twitter, and this is not the first time the president has laid into Amazon regarding taxes, jobs, and its use of the postal service. However, the tweet comes one day after Axios reported that Trump wants to "go after" Amazon, despite reports there are no current plans to enact new regulations or taxes against the retailer.
The news rattled investors. Amazon shares dipped 4.4 percent on Wednesday amid fears of regulation and general volatility in the tech sector brought about by Facebook's data privacy scandal.
Taking the president's tweet at face value would be incorrect. When it comes to Trump's statements about Amazon, there's a bit more to unpack.
STATE AND LOCAL TAXES
Trump claims Amazon is paying little to no state and local sales taxes in some places. He is likely referencing the fact Amazon doesn't collect state sales tax from third-party sellers in parts of the United States. In some cases, those sellers are required to collect the tax.
Additionally, Amazon collects sales tax in the 45 states that require it. However, there is a patchwork of regulations at the local level that dictate whether or not taxes are collected and if so, whether it is the job of Amazon or the third-party seller.
Sound confusing? It is. Amazon has expressed its support in the past for federal legislation to create a uniform plan for collecting sales online, but there has yet to be movement on that front.
In a memo on Thursday, Lloyd Walmsley, a Deutsche Bank analyst, said the "ship has sailed' when it comes to quibbles over Amazon collecting state sales tax, a practice the company enacted last April.
"In a way, we think charging sales tax has been a boon to Amazon because it now has extensive fulfillment facilities close to consumers such that it can lead the way in offering faster and more reliable deliveries," he wrote, according to CNBC. "Whether Congress enacts a special tax on Amazon, simply because President Trump wants it, remains to be seen."
IS THE UNITED STATES POSTAL SERVICE BEING RIPPED OFF?
Amazon ships millions of packages around the U.S. each year, but Trump's claims that the retailer is unfairly using the United States Postal Service and causing "tremendous loss" is incorrect.
Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!— Donald J. Trump (@realDonaldTrump) December 29, 2017
In a December tweet, Trump said the USPS is losing "many billions of dollars a year" and should be charging Amazon more money.
The USPS is losing money, but delivering packages has been the bright spot in its annual financial report. Last year, mail volume declined by 5 billion pieces, but the number of packages increased by 589 million -- some of which is certainly attributable to Amazon.
Amazon’s partnership is reviewed each year by the Postal Regulatory Commission, which requires the agreement be profitable for the postal service.
It's also worth noting that Amazon doesn't use the postal service the same way most people and small businesses do.
Instead of relying on the postal service to move parcels across the state or country, Amazon relies on its network of fulfillment and sortation centers to get everything ready and then deliver the parcel to the post office that is closest to the customer. The postal service then takes care of the last mile or so, making sure the order gets into the hands of the customer.
WHERE ARE ALL THE RETAIL JOBS GOING?
Then there's the question of how Amazon is affecting U.S. retail jobs. Trump has previously accused Amazon of hurting retailers. "Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!" he tweeted.
In reality, while brick and mortar retail may be struggling, Amazon and the e-commerce sector has more than made up for the job losses, according to a report from the Progressive Policy Institute.
"We found that the e-commerce sector added 355,000 jobs from 2007 to 2016 — more than enough to compensate for the 51,000 jobs lost in the general retail sector," the report said.
Additionally, wages and salary payments to e-commerce employees increased by nearly $18 billion from 2007 to 2016, with the same payments in general retail increasing by less than $1 billion, according to the report.
Amazon has created more than 200,000 jobs in the United States, said the company investor relations team. The internet giant hired nearly 130,000 people globally last year, excluding its acquisitions, chief among them, Whole Foods.
More jobs are also on the way. In January, Amazon whittled down a list of 238 proposals to host its second headquarters - called HQ2 - down to just 20 contenders. Amazon has committed to investing $5 billion on the winning proposal and creating at least 50,000 high-paying jobs at the new campus.
The cities still in the running, including Austin, Atlanta, Nashville and New York City, are pulling out all the stops to impress Amazon, including dangling tax incentives and other promises in hopes of being the winner.
Amazon added $38 billion to the economy of its hometown, Seattle, from 2010 to 2016, according to the company. With HQ2 being an equal to the first headquarters, it is likely the chosen city will also experience a major infusion into its economy.