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I can honestly say I’ve spent less than $50 at Amazon in my life. Yes, I’m that guy. How many can say that? I bought a Packer helmet decal and a couple of Allman Brothers albums on-line 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. And don't get me started on my mother.
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 that 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 sales on-line expertise to become a world-wide technology company hawking e-commerce, artificial intelligence, digital streaming, and cloud computing…whatever those are. Consider that a common book retailer has now become one of the Big Four technology companies, on par with Face Book, Apple, and Google.
Using the "Wal-Mart 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 on-line. They produce nothing except technology. Not only can they sell a widget cheaper, neither the consumer or Amazon paid any sales tax, as compared to someone driving to Wal-Mart 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 world-wide 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 that 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 that Jeff Bezos has become the wealthiest man in the history of Earth. The Bloomberg Billionaires index estimated Mr. 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 CPA’s to wade through how all this works, but suffice to say, it’s completely legal.
As Amazon gobbles up more businesses that put their tax-paying competitors out on the street, and continues with developing more proprietary platforms, they will continue to show more operating losses. When they enter a new business or service, they then throw money at it for as long as it takes to get the business off the ground and running, showing even more losses. And since they have an endless source of revenue, they 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 US Postal service on our dime, their record of employee mistreatment at various distribution centers, loss of charitable donations by the businesses Amazon vanquished, or the state tax incentives they receive wherever they build DCs.
We shouldn’t begrudge Mr. Bezos for making as much money as he can personally. That’s the capitalism model, which has made our country the envy of the world. It was his sweat equity that made him so wealthy and he personally pays taxes. But we simply cannot allow Amazon, the most valuable public company in the world to continue to do business without paying taxes, regardless of how the tax code has to be changed.
Even capitalism needs to be subjected to anti-trust laws so it functions properly. As it exists now, Amazon is worse than Rockefeller and Carnegie were in the “bad old days.” Amazon has many distinctive lines of business, which could be easily broken up and separated to allow real competition…and to pay its due taxes.