“If this was five years ago, the tweet would be making a very compelling point,” said Carl Davis, the research director of the left-leaning Institute on Taxation and Economic Policy. Historically, “as doubt that Amazon used its ability to not collect sales tax to gain a competitive advantage.”
But that criticism is outdated.
The Supreme Court ruled in 1992 that a state can require retailers to collect a sales tax only if they have a physical presence in that state, so an out-of-state e-commerce company with no store or distribution center in that state has no obligation to do so. Several states have enacted broad laws, colloquially called “Amazon laws,” that attempt to counteract this disparity between e-commerce and brick-and-mortar businesses.
As recently as 2012, Amazon was collecting a sales tax in only five states, according Mr. Davis. He also noted that Amazon “cut ties with in-state businesses to avoid collecting sales tax” in several states between 2009 and 2014.
During this time period, liberal think tanks and analysts made the same point as Mr. Trump about Amazon’s effect on localities.
“Amazon’s refusal to collect sales tax in most states hurts state and local governments’ ability to finance education, health care and other services,” the left-leaning Center on Budget and Policy Priorities said in 2010.
The company began to collect sales taxes in 2012 in California, where it began to build warehouses, as well as in Texas, Pennsylvania and other states, The Times reported. By the end of 2016, Amazon’s tax collection had expanded to 29 states, according to Mr. Davis.
And as of this April, Amazon has collected sales taxes in all states that have one. (Five states — Alaska, Delaware, Montana, New Hampshire and Oregon — do not.) Amazon does not, however, require third-party sellers on its marketplace to collect sales taxes, but offers the service to them.
“Other large e-retailers, most notably eBay, generally do not collect sales tax still,” said Joseph Henchman, the executive vice president of the free-market orientated Tax Foundation. Amazon, on the other hand, “ultimately changed their position.”