President accuses company of ‘doing great damage to tax paying retailers’, leading to ‘many jobs being lost’ – despite own failure to release tax returns

This article is more than 3 years old

This article is more than 3 years old

Donald Trump wiped over $5bn off Amazon’s stock market valuation on Wednesday with a tweet accusing the company of “doing great damage to tax paying retailers”.

Trump tweeted that “towns, cities and states throughout the U.S. are being hurt - many jobs being lost!”

Donald J. Trump (@realDonaldTrump) Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!

Trump himself has been criticized for breaking with precedent and not releasing his tax returns, and when asked during a presidential debate about disclosures that he could have paid no federal tax for 18 years, he remarked: “That makes me smart.”

The president has often criticized Amazon and its CEO, Jeff Bezos, who also owns the Washington Post. The paper has published a number of highly damaging scoops about Trump since he took office.

Many traditional retailers are closing stores and blaming Amazon for a shift to buying goods online. The company has been hiring thousands of warehouse workers on the spot at job fairs across the country, and has announced goal of adding 100,000 full-time workers by the middle of next year.

Trump has in the past tweeted that Amazon was not paying “Internet taxes”.

Amazon.com collects state sales taxes in all 45 states with a sales tax and the District of Columbia, according to the company’s website. State governments have sought to capture sales taxes lost to internet retailers, though they have struggled with a 1992 supreme court ruling that retailers must have a physical presence in a state before officials can make them collect sales tax.

The issue arose recently in South Carolina, which has pursued legal action to recoup tax revenue it says it’s owed. This summer, the state department of revenue filed a case with the administrative law court, alleging that Amazon had failed to collect taxes on third-party merchant sales.

Third-party merchant sales involve items that can be bought on Amazon.com, but the company acts solely as a middleman between buyers and sellers. Amazon processes the payments and offers other support to the parties involved.

The state claims that Amazon owes the state $12.5m in taxes, penalties and interest from first quarter of last year alone, according to the complaint obtained by the Associated Press.

Amazon had a five-year moratorium on taxes, the state wrote in the complaint, giving the company “fair warning that its sales of tangible personal property in South Carolina subjected it to South Carolina’s taxing jurisdiction”.

The state’s case is in the early stages, and a court date has not been set.

For years, the Seattle company fought against collecting sales taxes from its customers. According to the National Conference of State Legislatures, South Carolina was among 10 states that initially gave Amazon a temporary tax reprieve in exchange for jobs and investment, voting in 2011 to give the company until the beginning of 2016 before the state levied taxes.

According to the conference, that deal made South Carolina the last state to collect among those where officials cut similar deals with Amazon. The company promised to create at least 2,000 full-time jobs and invest $125m by 31 December 2013. It opened two distribution centers in the state.

Max Behlke, who has been tracking this issue for the conference, told the Associated Press on Wednesday that dozens of states had been grappling with how to collect taxes from entities like Amazon, with several heading to court over it in recent years. As for the South Carolina case, Behlke said: “If the court ends up ruling in favor of the state, then I can almost guarantee you that we’re going to see other state tax departments handling it similarly, too.”

Amazon did not immediately respond to an emailed request for comment.

The Associated Press contributed to this report