President Donald Trump has been calling the Amazon company a “scam’ claiming that it pays little or no sales taxes. The claims may not be accurate, but any efforts to curb the Online Giant will likely backfire, giving Amazon another win. According to the recent report, Trump is highly obsessed with Amazon and is looking for ways to take Amazon down.The Amazon vs Donald Trump tax war would be interesting to watch.
How is the war following up?
Trump believes that Amazon is harming the postal system despite multiple aids informing him that Amazon is making a lot of money for the post offices. Trump tweeted that Amazon has been doing great damage to tax-paying retailers and stated that many of the people lost their job because of Amazon. Trump’s claims regarding the effects of Amazon’s ability to avoid sales taxes are partially true but expanding sales tax collection requirements to more online retailers will benefit Amazon. Also, Trump strongly opposed Amazon as fellow real-estate developers have complained to Trump that the company is helping to kill the local retailers and malls. Amazon vs Donald Trump is the roaring topic of this season, anyway.
Trump has spoken harshly about the Amazon and Bezos since Trump became the presidential candidate in 2015. Trump expressed his opposition to the Amazon’s business strategies in the past, hence there is no surprise that the war between the two has continued into Trump’s first term. Because of series of tweets from Trump, Amazon lost 5.4 percent of its value in the stock. This drop in the stock value was a shock to many stock brokers and it showcased the power of the Trump’s words among the American people. This drop in the stock value is one of the major concern for Amazon shoppers and sellers as all the major Online companies took the hit following the negative remarks from the president.
Amazon Vs Donald Trump: President Trump’s Further Steps
Trump believes that Amazon makes a huge profit on its Shipping deals. He thinks that Amazon is getting a huge income from Shipping. According to the report, Trump wants Amazon to pay more for shipping and, he doesn’t want to allow Amazon Web Services to get a $10 billion contract which is up for the bid. He wants the Republican state attorneys general to investigate the company’s business practices. Trump planned to take Amazon down by using anti-monopoly laws and regulations.
These statements from Trump have simply been thoughts expressed out loud. If he could provide a valuable justification for his opinions, it could determine the future of Amazon. Bezos would try to smoothen the relationship with Trump to avoid potential damage to the company. The main thing that Trump states are that Amazon fails pays only a little or no taxes to state and to the local state governments and are putting thousands of retailers out of business.
Initially, Amazon generally did not collect taxes from its customers because it lacked the physical presence in most states. This provided the pricing advantage for Amazon over traditional retailers and contributes to its growth and contributed to its growth and to the failure of some retailers. The reduction revenue of a state from online sellers is estimated to be $26 billion annually. The position of Amazon in the Online Market will likely be enhanced depending upon the pending court decision which might result in the expansion of sales tax collection.
Amazon’s say on this
Amazon has a physical presence in many states and obligations to pay sales taxes. Amazon currently collects and pays sales taxes on the sales that are made by Amazon directly, as opposed to its third-party sellers, to all forty-five states with a state-wide sales tax. Amazon encourages Marketplace Fairness Act that requires remote sellers to collect sales tax. Many third-party sellers on Amazon do not collect the sales taxes from the customers, as it is not mandatory to collect taxes for the sellers without physical presence.
A decision from the Supreme court would allow the government of the state to collect the sales the tax from the sellers without physical presence, which includes all the third-party sellers of Amazon. If the court does not allow to collect the sales tax from the sellers without physical presence then, the number of third-party sellers will increase which will benefit Amazon. Retailers who are not selling currently through Amazon might find that the sales tax collection option an important factor to become a third-party seller. Thus, the Amazon’s revenue will continue to grow considerably.
Actions that followed
Third-party sellers accounted for income of $32 billion which is 17 percent of Amazon’s net sales. The growth in third-party fees year by year is about 38 percent, which is twice the more than that from the Amazon’s online stores. The expansion of sales tax collection requirements will boost up Amazon’s growth. Amazon also benefits to the extent, as the expanded sales tax requirements make the final price for the products that are sold by the third-party sellers, or from other online sellers. These Prices are closer to the price of products sold by the Amazon directly since both are subject to sales tax. This benefits Amazon because the sales that are currently made through third-party sellers and through the websites might directly shift to Amazon.
Also, the imposition of sales tax on remote sellers which includes third-party sellers might help the local retailers by making them competent enough with online stores. Amazon has already taken advantage of the sales tax collection system, by coupling the Amazon’s low-cost sales tax collection system with extensive, efficient and distributed networks. This gives Amazon a huge advantage as the pre-eminent online retail platform.