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Trump blasts Amazon for hurting the postal service. Is that true?

02 April 2018

Amazon's annual report shows the company set aside $769 million U.S. to pay various income taxes for fiscal 2017, but by taking advantage of a variety of tax breaks tied to executive compensation and deferring tax liabilities for as long as possible, the actual amount it paid in federal taxes is a fraction of that.

A day after reports suggested Donald Trump has it in for Amazon, the US president added gasoline to the fire on Thursday, tweeting that the company is dodging its tax obligations.

Trump's criticism also comes as Amazon looks for a location for its second headquarters, asking cities and states around the country to pitch tax incentives as bait for its promised 50,000 jobs and $5 billion in investment.

Cloudtail, appointed a senior Amazon executive Sumit Sahay as its CEO previous year, is the most important seller for Amazon in India and the company relies heavily on it to push top selling categories.

States could gain anywhere from US$8.5 billion to $13.4 billion in additional revenue if they were allowed to mandate sales tax collection from all remote sellers, including B2B and B2C companies, according to a Government Accountability Office study released last fall. "We have no announcements and no specific policies or actions that we're now pushing forward or considering taking", she said. The postal service's contract with Amazon must be approved by regulators and must generate a profit for the service.

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A Supreme Court ruling favouring South Dakota could funnel up to $13 billion (£9.3 billion) annually of new tax revenues into the coffers of affected US states, according to a 2017 federal government report.

Founded in 1994, Amazon did not begin to charge sales taxes to its customers until around 2011, in a few states. The company did indeed fight for years against collecting sales taxes on behalf of third-party resellers who use its system.

It's true that traditional, high street retailers are suffering in the age of online shopping, but Amazon alone can not be blamed for this.

"Volume also experienced end-to-end growth as consumers continued to utilize online shopping, which provided a surge in package volume with a record number of packages delivered during the calendar year 2016 and 2015 holiday seasons".

Donald Trump attacks coincided with calls from outside groups who insist on inspections because Amazon has grown too much and should be investigated for non-competitive practices. Amazon's stock, which is up more than 65 percent in the last 12 months, rose 1 percent to close at $1,447.34 Thursday. He accused Amazon of not paying enough taxes, using the US Postal Service as its "delivery boy" and putting thousands of retailers out of business.

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Trump does not have any new policies planned that would affect Amazon, a White House official said on Thursday, adding that Trump was prompted to speak out on the subject in reaction to news reports this week.

One possible change could affect the growing number of third-party retailers that sell through Amazon.

"Common sense suggests USPS needs Amazon more than Amazon needs USPS", Stifel analysts wrote in a research report this week.

Details of Amazon's payments to USPS are not publicly known. In 2017, the loss was $2.74 billion. But there are other factors, such as high debt, and Amazon is not exclusively responsible.

The company - or more specifically its CEO Jeff Bezos - is a frequent target of the president. On Feb. 15, speaking at a hearing before the House Ways and Means Committee, Mnuchin said he had spoken personally with Trump about online taxation, and that the president "does feel strongly" that sales tax should be applied to internet purchases.

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Amazon's founder, CEO Jeff Bezos, is also the owner of The Washington Post, one of the top newspapers in the United States and a major thorn in the president's side since his administration came to power. "It's really about policy".

Trump blasts Amazon for hurting the postal service. Is that true?