May 05, 2018
Amazon, which fueled its enormous growth with billions in taxpayer subsidies, is trying to push the line that it is actually good for small businesses. Gene Marks, a consultant who blogs for the Post’s business section, noted the company’s claim that it actually is good for small businesses.
The basis for the claim is that 1 million small businesses use Amazon’s network to sell their goods throughout the world. The company claims it has created 900,000 jobs based on these sales.
As Marks points out, Amazon’s claims are not necessarily accurate since it has also put many businesses out of business. To get an accurate assessment of its impact, it would be necessary to ask how many of the items sold by Amazon’s small business clients would have otherwise been purchased from small business brick and mortar stores if they were not sold through Amazon. (Actually, if the question is just Amazon, most of these items likely would have been sold through some other Internet vehicle if Amazon did not exist.)
The real issue is why any Internet retailer should enjoy an effective taxpayer subsidy by not having to collect the same sales taxes as its brick and mortar competitors. Amazon now collects sales tax in every state in which it sells, although not county or local sales taxes. (Apparently, Amazon’s staff is not smart enough to work a spreadsheet with more than 50 rows.) The fact that it did not collect taxes in most states through most of its existence was an enormous subsidy to the company.
Even now, Amazon is not collecting sales taxes for its small business affiliates. We can think of this as a situation in which Amazon is splitting the taxpayer subsidy with its affiliates. At this point, Amazon should be able to survive in the market without special subsidies from taxpayers. Given the amount of money involved, we can think of Jeff Bezos as collecting food stamps on super-steroids.
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