Donald Trump has made a habit of lashing out at Amazon throughout his campaign and presidency. He’s criticized the company for skirting taxes, slammed its CEO Jeff Bezos for using the newspaper he owns to push Amazon’s agenda, and occasionally accused Amazon of taking advantage of the U.S. Postal Service.
Trump re-opened debate on two of those issues in a tweet Thursday. He claimed Amazon pays little to no taxes to local governments and accused the company of using USPS as its personal “Delivery Boy (causing tremendous loss to the U.S.)”
Amazon’s creative methods of reducing its taxes are well documented. The company didn’t pay federal income tax in 2017 and in the past, did not pay sales taxes in many states. Today, Amazon does pay in all states that have sales taxes.
But Trump’s claim about the Postal Service is dubious at best. USPS is certainly in financial trouble but its package delivery business is actually a bright spot in an otherwise dreary picture.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
The USPS reported a decrease of $1.8 billion in revenue in 2017 compared to the previous year, a drop driven largely by a decline in regular mail, like letters and postcards. Mail volume decreased by 3.6 percent.
However, package volumes grew by 11.4 percent, according to USPS. Documents show that package revenue contributed a net total of more than $7.1 billion to the U.S. Postal Service’s bottom line during fiscal year 2017.
“The growth in our Shipping and Packages business provided some help to the financial picture of the Postal Service as revenue increased $2.1 billion, or 11.8 percent,” USPS said in a press release.
In another financial report last year, USPS said growth in its package business was “a result of our successful efforts to compete in the ground shipping services and ‘last mile’ e-commerce fulfillment markets, including Sunday delivery.”
However, the postal service does negotiate deals, which it calls “workshare discounts” with corporations that do some of the logistical heavy lifting, like sorting, before handing over its parcels to be shipped. It’s likely that Amazon has a pretty good deal, based on the company’s negotiating power, logistical resources, and the landmark agreement Amazon and USPS reached to deliver packages on Sundays back in 2013.
Terms of USPS’s workshare discounts are not publicly available but an independent agency reviews them to ensure that “ensure that workshare discounts do not exceed the costs the Postal Service avoids as a result of the worksharing activity.”
In other words, the discounts a company like Amazon receives from USPS can’t exceed the money the postal service saves when that company helps out with some of the logistical work required to ship packages.
Given that independent review, it’s highly questionable that Amazon’s deal with USPS actually causes “tremendous loss to the U.S.” as Trump claims, but it is conceivable that the U.S. Postal Service could be making more money from Amazon if it were to charge more. Then again, if that were the case, Amazon could take that portion of its business elsewhere, including its own growing shipping operations.
Amazon so far hasn’t taken the bait, declining to comment publicly on Trump’s latest tweet.
Hear a discussion of Trump vs. Amazon on this week’s GeekWire podcast:
