Just the Facts
President Trump's Issues with Amazon - Taxes
By No Labels
April 7, 2018 | Blog
The president has taken to Twitter in recent days to address his concerns over one of the country’s most lucrative businesses, Amazon. President Trump has tweeted several times in recent days about the megacompany’s business practices.
The President contends that Amazon, as a megainternet retailer, does not pay its fair share of taxes. It is true that internet retailers have an advantage over brick-and-mortar businesses. Internet retailers are only subject to sales tax when they have a physical presence in the charging state. While this is a general advantage for internet companies, Amazon has grown so large that it has warehouses and other facilities in every state where there is a sales tax.
When Amazon began, and fought for dominance in the retail market, this was not the rule. Amazon benefited greatly in its early days by not being required to pay sales tax. This gave Amazon a distinct advantage as they fought to compete with more established retailers.
It is important to add, this is not a new controversy. In fact, this question predates the existence of the internet. Before internet retailers, catalogue retailers fought consistent efforts on the part of state and local governments to tax their businesses.
Currently, Amazon collects sales tax and passes it on to state governments in every state which imposes them. While Amazon does collect sales tax, the company also facilitates the sale of third-party goods. Often these third-party sellers are not subject to sales tax because unlike Amazon, most do not maintain a physical presence in states where they do business.
This policy will be reviewed this month by the Supreme Court when the Court hears South Dakota v. Wayfair, Inc. The decision in this case will determine whether the physical presence mandate will be upheld or abandoned.
Interestingly, larger internet retailers, like Amazon, Walmart, and Target, support abandoning the physical presence requirement. This would limit competition from smaller retailers who are not burdened with sales tax like their megainternet retailer counterparts.