US President Donald Trump is Wrong - Amazon Does Collect Sales Tax And Wants All Online Sellers To Do So

US President Donald Trump (L) and Microsoft CEO Satya Nadella (C) listen to Amazon CEO Jeff 

Bezos (R) during an American Technology Council roundtable at the White House in Washington, DC, on June 19, 2017. / AFP PHOTO / NICHOLAS KAMM (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)

President Donald Trump has shown himself to be slightly behind the times here, he has accused Amazon of not paying internet taxes--by which we all assume he means collects sales tax upon online purchases. That is entirely out of date, it used to be true that Amazon was entirely happy in not doing so but it has changed its mind. Not only does it now itself collect such taxes everywhere they apply it backs measures to make sure that every online seller does so as well.
The really interesting part of this is what has changed to make Amazon change its mind--and no, it's not some outburst of altruism. It's that Amazon's structure has changed, meaning that under current law it pretty much has to collect sales taxes everywhere. That being so why not support a law that makes all those who wouldn't have to under current law do so?
Trump's tweet is here:

The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!

— Donald J. Trump (@realDonaldTrump) June 28, 2017

As CNBC points out, Amazon does in fact collect sales tax in every state that it applies:

Amazon, the online retail giant, is collecting sales taxes nationwide on purchases. President Donald Trump seemingly took a swipe at the internet juggernaut suggesting otherwise on June 28.
As of April 1, Amazon began collecting sales taxes on purchases across the country, with the exception of states that don't have a sales tax: Alaska, Delaware, Oregon, Montana and New Hampshire.

So, the President's a little out of date there. But what's changed is this:

It’s also possible that Trump is referring to internet sales taxes in his tweet. For years, Amazon’s stance that it shouldn’t have to collect sales taxes for purchases in states where it doesn’t have a physical presence was a hot-button policy issue. But that’s old news. In its quest for ubiquity, Amazon has decided it needs to open distribution centers everywhere. It now collects sales tax in every state that has one.

And that's the interesting bit about the story. For it most certainly used to be true that Amazon backed the basic law of the land. You only have to collect sales taxes if you're selling in a state where you've a (usually substantial) physical presence. Thus when Amazon only had such presence in a few states it quite merrily didn't collect. As the system has rolled out so that it does have presence in near all states then collection in all of them became the policy. So far so good, just a company obeying the law. But as I've pointed out before it doesn't stop there:

So what brought the turnaround, to where Amazon is arguing that there should be sales tax on all internet sales? That "physical location" thing above. You can only get away with not charging sales tax in a state if you've no physical presence in that state. If you've got one, say a warehouse, then you do have to charge that sales tax. This is very clear in law, very clear indeed. And Amazon is building out its network of stores to the point that it now thinks that imposing the sales tax on everyone is a good idea. Presumably the calculation is that they've now got warehouses in enough states that they're going to be 
  collecting a lot of sales tax anyway. Their price advantage in many markets has gone. And worse, those who are smaller and still selling from only one or two locations, in perhaps one state or two, now have the price advantage over Amazon. So, start to argue that everyone should be collecting sales tax so that Amazon loses only the last vestiges of the advantage it once had but most of its online competitors lose the advantage they have over Amazon.

As it turns out Amazon is on exactly the opposite side of the argument than that indicated by Donald Trump. Personally I think that's actually the worse position but that's another matter.
SOURCE: FORBES

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