All it took was 137 characters at 6:12 a.m. for Amazon’s valuation to drop more than $5 billion on Wednesday.
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!
— Donald J. Trump (@realDonaldTrump) August 16, 2017
It wasn’t much of a dent for Amazon, which is still worth a whopping $474 billion. (The company’s stock fell by $4.56, or less than 0.5%.) Overall, its stock price has soared since Trump entered office. And this was far from the first time Trump has accused the company of tax avoidance (he’s previously said CEO Jeff Bezos operates a “no-tax monopoly” that fails to pay “internet taxes.”).
Putting aside the irony that the president has declined to release his own tax returns, this whole event is notable for a few reasons.
First, the implication is not quite accurate: As we’ve noted before, Amazon now pays sales taxes in every state in which it operates for the products it sells directly. In its latest annual report to the SEC, it said it paid $177 million in income taxes in 2014, $273 million in 2015, and $412 million in 2016. As to the company’s negative impact on retail jobs (and other companies’ stocks for that matter) it has recently begun hiring for more than 50,000 positions across the U.S.
Two, the Trump tweet comes as Amazon is fielding a challenge to its third-party merchant taxes policy, which leaves tax collection up to the merchants. A complaint filed this summer by South Carolina’s Department of Revenue alleges that Amazon didn’t collect taxes on sales made by third-party vendors to the tune of more than $12 million in taxes and penalties for the first quarter of 2016. (In total, it’s estimated that $23 billion in state taxes go uncollected.) A Supreme Court ruling says a retailer must have a physical presence in a state for that state to collect taxes. A ruling in South Carolina’s direction could pave the way for more rulings in other states. In other words: Trump’s tweet isn’t entirely bogus.