Analysis: If Trump really wants to go after Amazon, he has options
President Donald Trump is livid with Amazon, attacking the company on Twitter and accusing it of taking advantage of the U.S. government to gain an unfair advantage over its competitors.
Trump has accused Amazon of paying "little or no taxes" to state and local governments, in an apparent reference to local municipalities' struggle to collect sales taxes on Amazon. He has also suggested Amazon is ripping off the U.S. Postal Service to the tune of "tremendous losses" - although some experts say the online retailer is actually helping the post office's bottom line. (Amazon's founder and chief executive, Jeff Bezos, owns The Washington Post.)
"I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy," Trump wrote on Twitter. "Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don't have a clue (or do they?)!"
I have stated my concerns with Amazon long before the Election. 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!
— Donald J. Trump (@realDonaldTrump)But whil> Trump tweaks the online giant on Twitter, his administration is taking action - or continuing Obama-era actions - that appear likely to boost Amazon's bottom line.
Trump's government continues to do big business with Amazon. Under former President Barack Obama, the CIA awarded Amazon a contract reportedly worth $600 million over 10 years. In December, Amazon Web Services, Amazon's cloud computing wing, announced it was creating a "Secret Region" program as part of its contract with the CIA. (The cloud storage unit will manage classified information for U.S. spy agencies.) Amazon also announced the further expansion of that program with the CIA last month.
The Pentagon may also be on track to expand the amount of federal money flowing to Amazon. In April, the Defense Department is expected to bid out a cloud contract worth billions of dollars over the next decade, and competitors have complained that only Amazon appears poised to win it.
The Pentagon initially said it awarded a nearly $1 billion contract to an Amazon Web Services partner but later backtracked after a legal challenge by Oracle. Fears still persist that Amazon has an inside track to the big government deal, and more than 1,000 comments have been sent to the Pentagon about the multibillion-dollar bid, including dozens from industry groups, according to Bloomberg.
Amazon has said it is seeking a fair and competitive process for the bid. "As we have always said, an open and competitive bidding process allows for the customer to thoroughly analyze the various providers and select the solutions that best meet their needs," a spokesperson previously told The Washington Post.
Additionally, Amazon said in its most recent financial disclosure documents that the Republican tax law signed by Trump will reduce the company's deferred tax liability, or postponed taxes that will have to be paid at a later date, by $789 million for 2017 alone. Some academics say this merely reflects an accounting change rather than a financial windfall for the company, but other experts disagree.
"Amazon is a multinational corporation and makes a lot of profit here and abroad, which will be taxed at a much lower rate under Trump's tax law," said Steve Rosenthal, a senior fellow at the Tax Policy Center, a nonpartisan think tank. "The big picture is Amazon expects to make lots of profits and the U.S. slashed its corporate tax rate both domestically and internationally."
The GOP tax law did take some steps that will increase taxes on Amazon, or at least reduce its tax breaks, eliminating a manufacturing deduction and requiring multinational companies to repatriate overseas profits. Jeffrey Hoopes, a tax expert at the University of North Carolina, warned against making premature judgments about the tax law's impact on Amazon specifically.
Some critics add that Trump has other means at his disposal to tackle Amazon's largesse, including directing the Justice Department to beef up antitrust enforcement action or pushing Congress to amend federal law governing online sales taxes.
"Under the current interpretation of antitrust laws, Amazon seems to be getting a free pass," Lina Khan, an antitrust expert at the Open Markets Institute, told NPR. " ... What they are supposed to prevent is a company that enjoys a dominant footprint in one area of the market, using that footprint to leverage its way into other markets, and so I think that's the area where Amazon potentially should be facing scrutiny."
Amazon did not immediately respond to a request for comment about potential antitrust action, but conservative think tanks have argued that trying to break up Amazon would hurt competition and discourage business investment. Top antitrust experts at Berkeley and Wharton have also expressed some skepticism about using existing statutes to break up Amazon.
Despite Trump's complaints, Amazon started paying sales taxes in 2017 in most states after setting up warehouses across the country to expedite its delivery times. But Amazon does not collect sales taxes on goods sold by third-party vendors, and several big cities in seven states still are not collecting sales taxes at the same level as from local brick-and-mortar retailers, according to a report by the Institute on Taxation and Economic Policy, a left-leaning think tank. "There is little logic in asking consumers who prefer to shop at local businesses to pay more toward funding public services than consumers who shop via their laptops or smartphones," the report said.