Monday, August 14, 2017

Idiotic to say Amazon is a "no-tax" Monopoly

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(8/14/2017) --- There is plenty to get entertained by within the Twisterphere, mostly because it is now used as the official channel of communication of the White House. I wish I was joking; but, we can see the musings of the President within such a close-range and we don't even have to turn the T.V. we can see everything under 140 characters or less.

Let's analyze something Amazon had more than US$136 billion dollars in sale last year; yes, that is a lot of money and is also an indicator as a consolidated brand that specializes in e-commerce; but Amazon is not and I repeat is not a monopoly. Let's analyze something really quick, a monopoly happens when a company exists to dominate a market, that it can reduce competition and rise the prices of the goods for more than a brief period of time (i.e. think a supermarket that is central in Georgia and Florida; even if there is some competition as Florida antitrust laws say that there has to be more than five competitors but still that supermarket is the one who dominates the market in terms of quantity and locations, as well placing high level prices on the items which can be found anywhere else for a lesser amount).

There is no need to worry because usually antitrust violation comes within consumer harm and not harm to the competitors... seriously that doesn't make any sense because if you hurt competition you are hurting the customers by not offering variety of services and most complains about Amazon are usually set by the own competition. Yet it shouldn't be complicated, as monopoly laws only take places when a company controls 75% of a any X market, much as when Microsoft was the dominant business of computers in the early 2000 by owning a 90% of the market; but Amazon has always been clear of that term.

Of course our President is more than wrong to say "Amazon is not subject to tax" but as any other business Amazon pays taxes on a corporate income, property, payroll and unemployment insurances. Last year Amazon paid US$412 millions in federal, state, local and foreign last year but still Amazon is not except of criticism that they took advantage of legal loopholes and tax breaks, such as placing their tax burden was 35% on the official corporate tax rate, Amazon just paid a 9.3% of federal income tax.

One aspect that is interesting to mention is that at this moment Trump has't appointed  someone to guide the Federal Trade Commission, and he is still has a high number of vacant positions in his administration; which the Trade Commission must review the acquisition before the deal completion of this planned acquisition.

For a more detailed point of view, click here (3) and you will be redirect to Market Watch which they explain more properly the next steps of the acquisition and how Amazon plans to go into the grocery business.

Reference:

  1. Politifact.com - http://www.politifact.com/truth-o-meter/statements/2017/jul/26/donald-trump/amazon-no-tax-monopoly-donald-trump-said/
  2. ABC - http://abcnews.go.com/Politics/trumps-empty-administration-whats-high-number-vacant-government/story?id=47851403
  3. Market Watch - http://www.marketwatch.com/story/amazon-to-issue-up-to-16-billion-in-debt-to-fund-whole-foods-acquisition-2017-08-14

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