After President Donald Trump
on Wednesday morning of hurting local retailers and jobs by not paying taxes, the company’s shares dipped in premarket trading.
is doing great damage to tax paying retailers. Towns, cities and states throughout the US
are being hurt — many jobs being lost!” he tweeted on Wednesday morning, echoing his earlier characterisations of the company as a “no-tax monopoly” that does not pay “internet taxes.
Trump’s suggestion that Amazon
does not pay taxes
is false. The company, in its latest annual report to the Securities and Exchange Commission, said that it paid $177 million in income taxes
in 2014, $273 million in 2015 and $412 million last year.
S&P Global Market Intelligence found that Amazon
paid an average tax rate covering federal, state, local and foreign taxes
of 13 per cent from 2007 to 2015, according to analysis provided to The New York Times
. That is a smaller share than the Standard & Poor’s 500-stock average of 26.9 percent, and the federal corporate tax rate of 35 percent, but on par with Trump’s proposed 15 percent rate.
If Trump’s point was that Amazon
did not collect sales taxes
— which are owed by the purchaser and collected by the retailer — it is true that the company once avoided doing so.
“If this was five years ago, the tweet would be making a very compelling point,” said Carl Davis, the research director of the left-leaning Institute on Taxation and Economic Policy. Historically, “there is no doubt that Amazon
used its ability to not collect sales tax to gain a competitive advantage.”
But that criticism is outdated.
The Supreme Court ruled in 1992 that a state can require retailers to collect a sales tax only if they have a physical presence in that state, so an out-of-state e-commerce company with no store or distribution center in that state has no obligation to do so. Several states have enacted broad laws, colloquially called “Amazon
laws,” that attempt to counteract this disparity between e-commerce and brick-and-mortar businesses.
As recently as 2012, Amazon
was collecting a sales tax in only five states, according Davis. He also noted that Amazon
“cut ties with in-state businesses to avoid collecting sales tax” in several states between 2009 and 2014.
During this time period, liberal think tanks and analysts made the same point as Trump about Amazon’s effect on localities.
“Amazon’s refusal to collect sales tax in most states hurts state and local governments’ ability to finance education, health care and other services,” the left-leaning Center on Budget and Policy Priorities said in 2010.
The company began to collect sales taxes
in 2012 in California, where it began to build warehouses, as well as in Texas, Pennsylvania and other states, The Times reported. By the end of 2016, Amazon’s tax collection had expanded to 29 states, according to Davis.
And as of this April, Amazon
has collected sales taxes
in all states that have one. (Five states — Alaska, Delaware, Montana, New Hampshire and Oregon — do not) Amazon
does not, however, require third-party sellers on its marketplace to collect sales taxes, but offers the service to them. “Other large e-retailers, most notably eBay, generally do not collect sales tax still,” said Joseph Henchman, the executive vice president of the free-market-oriented Tax Foundation. Amazon, on the other hand, “ultimately changed their position.”
©2017 The New York Times News Service