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CNBC: "Trump's attack on Amazon has some basis in truth"

08/18/2017 News Release Image

CNBC: "Trump's attack on Amazon has some basis in truth"

President Donald Trump attacked Amazon again on Wednesday, saying the e-commerce giant is responsible for killing jobs and damaging "tax paying retailers."

While 140 characters can't capture the nuance of Amazon's complex tax situation, Trump's claims aren't entirely baseless and could potentially gain support from a number of states.

Amazon currently collects sales tax in every state where it's required for the products the company actually sells. But more than half of items purchased on Amazon come from third-party merchants, who use various parts of Amazon's storage, payments and logistics systems and generally aren't required to collect sales tax.

That tax-free zone gives Amazon sellers a significant edge over physical retailers, who are already struggling to stay afloat.

"It is an unfair advantage that's killing retailers, especially small businesses and specialty retailers," said Paul Rafelson, a state and local tax attorney and adjunct law professor at Pace University in New York.

Online merchants don't have to collect sales tax if they don't have a physical presence in a particular state. It gets tricky for sellers on Amazon's marketplace.

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