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Trump takes aim at Amazon in barbed tweet. What are the facts?

National

By John Kruzel August 16, 2017

Donald Trump took to Twitter to once again unload on Amazon (its owner, Jeff Bezos, also owns the Washington Post) and appeared to accuse the online retail giant of avoiding taxes, killing jobs and hurting American communities.

All in under 140 characters.

"Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!" Trump tweeted Aug. 16, 2017.

Trump’s tweet makes three different claims, packed into less than 140 characters. That makes it difficult to judge its overall accuracy in one tidy Truth-O-Meter rating. Instead, we’ll offer context behind each claim individually.

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"Amazon is doing great damage to tax paying retailers"

Trump seems to be implying that Amazon pays no taxes compared to "tax paying retailers." That’s wrong. We previously dealt Trump a Pants on Fire for this claim.

Like other businesses, Amazon pays taxes on corporate income, property, payroll and unemployment insurance.

While Amazon takes advantage of tax breaks and loopholes, it pays federal corporate tax, and charges sales taxes in 46 U.S. jurisdictions. Last year, Amazon paid $412 million in federal, state, local and foreign taxes.

Amazon’s tax policy for customers has evolved through the years. When it comes to the sale of Amazon products, the company now collects taxes in all states where state sales taxes exist, plus the District of Columbia. (That includes all states except Alaska, Delaware, Montana, New Hampshire and Oregon.)

However, Amazon continues to face criticism over its policy to not collect state taxes on third-party sellers who use the Amazon platform to sell their products.

"Towns, cities and states throughout the U.S. are being hurt"

So while it’s wrong to say Amazon pays no taxes, it is true to say Amazon does not collect taxes on every transaction it’s involved in.

The reason the online retail giant can collect sales tax in some cases but not others traces back to the 1992 Supreme Court ruling in Quill Corp. vs. North Dakota. That decision effectively blocks states from forcing online retailers to pay state and local sales taxes if the company has no brick-and-mortar property or employees in the state.

And while Amazon collects sales taxes on its own sales, it’s still permitted to forgo collecting sales taxes from third-party sellers. Some estimates are that half of Amazon’s total sales go through third parties.

When you add up all the taxes states have lost due to this online retail practice by Amazon and other online retailers, it’s no small amount.

States place the total around $20 billion to $26 billion, said Max Behlke, the director of budget and tax at the National Conference of State Legislatures. (To be clear, this is all online retailers, not just Amazon.)

And because that’s money cash-strapped states can’t afford to forgo — states are putting pressure on Internet retailers to start forking it over.

That said, Behlke believes it’s unfair to single out Amazon, given the many other online retailers who follow the same practice. He also applauded Amazon’s push to have Congress pass the Marketplace Fairness Act, which would effectively force all online retailers to abide by state sales tax, and said it makes sense from a business perspective for Amazon to want to level the playing field.

Though Behlke was clear-eyed about the market forces behind the growing migration to online sales, the impact on American communities is impossible to ignore, he said.

"Internet retailing has reshaped the landscape, especially in rural towns and local communities that depend on brick-and-mortar stores to provide jobs, contribute to tax base and make our Main Streets of America vibrant," he said.

As we further point out below, the economic impact of online retail is not black-and-white.

"Many jobs being lost!"

Trump appears to be blaming Amazon for destroying jobs in the retail industry.

Retail sectors that compete most directly with online retailers like Amazon have seen steep job losses. (Note: the statistics below don’t isolate Amazon from other online sellers.)

Take electronics and appliance stores, which are considered direct competitors of online retailers. In July 2016, they employed 527,500 workers, according to data from the Bureau of Labor Statistics. But by July 2017, employment shrunk by almost 4 percent, or nearly 21,000 jobs.

Retail in sporting goods, books and music — considered direct competitors of online sellers — have also seen steep job losses over that same period.

At the same time, retailers that don't compete as directly with online commerce — sellers of motor vehicles, gas stations and building materials, for instance — have seen some of the strongest growth, said Jed Kolko, the chief economist at the jobs site Indeed.com.

"In short, the retail sectors with greater job losses are those that compete more directly with online commerce," Kolko said.

But the disruptive shift to online commerce has not had a uniformly good or bad net effect on the economy. Rather, it’s created both losers and winners.

Online merchants need workers to staff warehouses and deliver products to customers. This helps explain why employment in trucking, warehousing, storage, as well as courier and messenger jobs are all increasing.

Amazon itself announced in January a plan to hire 100,000 full-time jobs in the United States over the following 18 months, and said it plans to have more than 280,000 full-time U.S. employees by 2018.

While nobody disputes the disruptive impact of online retail, it’s harder to parse what it means for the labor market.

"It's unclear what the net effect on employment will be in the shift to online commerce," Kolko said.

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