War with Amazon – Red Dirt Liberty Report
This past Thursday, President Donald Trump continued his ongoing war with Amazon, stating in a tweet that Amazon takes advantage of the postal system, doesn’t pay enough in taxes, and acts as a monopoly. He did as he has since the early part of his campaign and also called out Bezos personally. There are some kernels of truth in his statements, but not entirely.
It is true that the US postal system undercharges for delivery (at least in some senses). Their revenue has not met costs for a very long time. They do need to cut many expenditures, like any business, but they are so reliant on government to continuously bail them out and the massive bureaucracies that are systemic of government (it’s still an official part of the US government) that managing costs efficiently is nearly impossible. Government entities have a lot more layers of red tape and bureaucratic mess than private companies. It’s just the nature of things. If it’s public money, people care less about how they spend it.
Buried within Trump’s comments were allusions to suggesting privatization of the postal system. There could be no better solution to the annual bailing out of the USPS than for it to operate as a private business all on its own. But, Jeff Bezos didn’t make it that way. To place blame on him or on Amazon is silly.
Does Amazon pay enough in taxes? It’s odd that Trump would call this one out, considering his arguments for how badly we needed to lower corporate income taxes. One can only imagine – and I think this is the case – that he is referring to local and state sales taxes. What’s really being called out here is not Amazon. Amazon has worked with most states to voluntarily charge and collect sales taxes with its own sales. What Amazon does not do is collect sales taxes on behalf of all its sales through independent businesses that use its platform for online sales.
Most people have never owned a small retail business, and I would include Trump in this category. He’s been involved in a lot of different businesses, but not likely retail. The vast majority of people have no idea what it’s like to file sales tax returns. In most states, the returns are performed on a single sheet of paper, and it’s somewhat straight forward. However, if you operate a small business that sells all over the country, and Amazon starts requiring you to collect and pay sales taxes, you now must file 50 sales tax returns every month all across the country. It’s an incredible burden – one that could cripple many small businesses. Most people who use Amazon’s platform for sales are individuals with low sales revenues and very limited resources to tackle such nastiness.
I’ve argued it before that sales taxes are a bad idea. They enslave business owners, who are not in business to collect taxes to do your work on your behalf at their own expense. It’s forced labor that’s unfair and just plain wrong. States and local governments need to find another way. Firstly, they should eliminate all the massive programs that are not the proper function of a government, and then they should find an alternate means of revenue that doesn’t force small business owners to provide their labor for free. The future of retail is on the internet, and within 5 to 10 years, the majority of retails sales will come from the internet. Forcing Amazon sellers and other platforms of online sellers to collect sales taxes could seriously damage large portions of the economy and have a massive negative impact on the future US economy.
Is Amazon a monopoly, as Trump claims? There are an enormous number of retailers functioning online. Amazon doesn’t even have a majority slice of online sales. It’s without doubt that they are a behemoth, but hardly a monopoly. In 2017, Amazon’s entire sales (of its own products and its independent sellers) was just 4% of all US retail sales, and approximately 43% of all online sales. That’s a yuuuuge number, but it’s extremely hard to make a case that those are monopoly sorts of numbers. I have been a retailer. I was in the retail business most of my life and I can attest that online sales are a major disruptor of traditional small retail business. However, the economy and how businesses function are ever changing and evolving. Maybe it’s a little bit scary, but we cannot hold back the rains of progress. Nor should we. Small business can adapt. It’s a natural course for a free enterprise system to function, and it’s the sort of thing that ultimately makes us all far better off.
I am not sure why Trump has a personal vendetta against Jeff Bezos or his company. He’s been crowing about them and calling them out since he announced his bid for presidency. What must it feel like to have your business (and as an individual) be a direct target of POTUS? It’s not a fair or reasonable objective for such a position of power. Singling out companies and individuals for whatever vendettas exist is bad for everyone. It’s a tremendous abuse of power. I’m not writing these things as an advocate or lover of Amazon, but rather I’m writing about it because if one company is vulnerable to the whims of POTUS, then all are. And, if one individual can be a personal target for unknown personal vendettas, then anyone can.
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