Published: Mon, April 02, 2018
Markets | By Josh Butler

The President Is Hitting Amazon With Some Claims That Are Flat Wrong

The President Is Hitting Amazon With Some Claims That Are Flat Wrong

Some observers see the attack on Amazon as stemming from unfavorable coverage by Amazon CEO Jeff Bezos-owned The Washington Post of Trump during the 2016 presidential elections. "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!" he wrote on Twitter. The stock fell nearly 4 percent at the open on Thursday.

"Trump's ire towards Amazon is significantly less concerning"; it'd be "difficult for the current administration to materially change the landscape for Amazon".

Trump has repeatedly expressed his disliking for the Amazon. "So that the politicians in Washington don't tax Amazon like they should be taxed".

A spokesman for the U.S. Postal Service declined to comment.

It also said that he wanted to change Amazon's tax treatment - an issue he raised publicly past year when he called for an internet tax for online retailers, though Amazon already collects sales tax on items it sells direct to customers. That ruling said that retailers must collect sales taxes only in states in which they have a physical presence. "Like other businesses, Amazon pays taxes on corporate income, property, payroll and unemployment insurance", the review read. It is now looking to reduce its dependancy on the service by expanding its network of distribution centers.

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The company has not disclosed how much its customers pay in sales taxes, but it is considerable.

But in January, the top court announced it would consider taxes from online sales and is expected to issue a ruling before the end of the year.

This isn't the first time Trump has publicly criticized Amazon. Amazon does not have to collect taxes on third-party or marketplace sellers. Third-party vendors had sales of $32 billion on Amazon in 2017, although some of those sales were outside of North America.

While Amazon remains a very hard company to value on a free cash flow basis, due in large part to the fact that the company still has razor thin margins and remains a hard company to forecast earnings for, the company has continued to reinvest in its extremely high ROE business, one which has swallowed up global market share at an unbelievable pace. Neither Amazon nor the post office has disclosed the details of its agreement, but the Postal Service says it's mutually beneficial.

Federal law requires that the U.S. Postal Service's package service must break even, meaning deliveries must generate enough revenue to cover the costs, and packages must contribute at least 5.5 percent of total institutional costs.

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