I honestly can say I’ve spent less than $50 on Amazon in my life. Yes, I’m that guy. How many can say that? I bought a Packers helmet decal and a couple of Allman Brothers albums online one boring rainy afternoon.
Having said that, Amazon boxes still find their way to our doorstep. When Christmas is approaching, I sometimes wonder if they clone themselves right there on our stoop. I don’t dare let the grandchildren watch. Can anyone really control a spouse’s spending habits on the internet? Experts have tried at my home, but alas, to no avail. I think she’s spent money I haven’t made yet.
I used this bit of levity to bring attention to what is, in my view, a very serious problem facing America today. Keep in mind, I’m a die-hard laissez-faire capitalist who never thought he would be in the position to come off like Bernie Sanders. But the fact is, Amazon is not a good corporate partner for our country and needs more regulation. (Just typing that sentence made my fingers bleed.)
The problem is founder Jeff Bezos and company have figured out how to beat our system, costing America untold millions, if not billions, of dollars yearly. Founded in 1994 selling books online, it soon expanded to electronics, software, video games, apparel, furniture, toys and just about anything else one can imagine. It used its online sales expertise to become a worldwide technology company hawking e-commerce, artificial intelligence, digital streaming and cloud computing … whatever those are. Consider a common book retailer now has become one of the Big Four technology companies, on par with Facebook, Apple and Google.
Using the “Walmart model” on the internet, Amazon has been able to usurp well-established companies, driving them out of business through technological innovation on a mass scale, selling products of other manufacturers online. They produce nothing except technology. Not only can they sell a widget cheaper, neither the consumer nor Amazon paid any sales tax, as compared to someone driving to Walmart for the same widget.
Most states are catching up in their tax collection, but until 2017, tax gathering mostly went unchecked. And this is just a drop in the bucket.
The list of worldwide Amazon-owned companies is extensive, some you have heard of; most you haven’t. They own businesses under a variety of different names, often obscure companies one would not realize could be considered a monetary transaction. Examples might be a social cataloging company called Shelfari or the live-streaming game platform company called Twitch. Other well-known firms, such as Toy-R-Us and Borders, entered into “merchant partnerships” with Amazon, only to see themselves eventually unable to compete. Guess who wound up with that business? Now, other manufacturers hawk their products directly on the Amazon platform, of which Amazon takes a cut as the middle-man.
While this sounds like a great American success story, consider Bezos has become the wealthiest man in the history of Earth. The Bloomberg Billionaires index estimated Bezos makes a salary of $275 million … per day. This would surely give someone a reason to get up in the morning.
But here is the incredible part; Amazon, the company Bezos founded and runs, pays no federal taxes. In fact, they might have gotten a $129 million refund. For fiscal 2017, Amazon had sales of $178 billion and brought home $3 billion. They are able to do this by using our own onerous tax system allowing for various losses and deductions with all the companies Amazon owns and operates. One would need to be a team of sharp CPAs to wade through how all this works, but suffice to say, it’s completely legal.
As Amazon gobbles up more businesses that put its tax-paying competitors out on the streets, and continues with developing more proprietary platforms, it will continue to show more operating losses. When it enters a new business or service, it then throws money at it for as long as it takes to get the business off the ground and running, showing even more losses. And since it has an endless source of revenue, Amazon can continue running at a loss, forcing competitors out of business while avoiding paying Federal taxes.
I have not even tapped into their exploitation of the U.S. Postal Service on our dime, their record of employee mistreatment at various distribution centers, or the state tax incentives they receive wherever they build DCs.
I don’t begrudge Bezos for making money personally, but we simply cannot allow Amazon to continue to do business without paying taxes.
P.S. — I was only joking about the wife’s spending habits. I think.