Peter Rose: The gloves have to finally come off

Recently, I read two stories about Amazon serves well in an effort to find the definition of “The Problem.” They do need to be called out, but the problem is far larger than Amazon. The problem is policy.

Story No.1: In Fortune magazine, headline: Amazon Will Pay A Whopping $0 in Federal Taxes on $11.2 billion profits.

The article states that Amazon actually reported $129 million 2018 federal tax rebate, making its tax rate a minus 1.9 percent.

Story No. 2: Amazon announced that its “second headquarters” that was to be built in New York City would not be going forward after extensive opposition wore out their patience. Virtually all quarters of the news, from Fox to MSNBC vilified the opposition, defended and sided with Amazon for the unfair and unwise treatment.

A sad day, they said.

Amazon built its business with tax loopholes and obsolete sales tax policy that was not corrected to address an era of internet sales. It took decades for lawmakers to even acknowledge that there was a problem. But what became abundantly clear in this foot dragging was that this failure to act was a policy in and of itself. That policy was and is a decision of favoritism, through which winners and losers get actively chosen.

The failure to course-correct had a profound impact on the allocation of dollars spent, from locally owned and independent operators to national organizations funded by shareholders. 

Billions of dollars in Michigan alone were deliberately ignored. Michigan didn’t need or want those revenues.

Moreover, the negative effect on Michigan businesses was significant. We paid the taxes and Amazon got the sales. The idiocy of this is beyond comprehension. Reckless, ill-advised, irresponsible – stupid.

We encouraged the money to leave the state; didn’t want the tax dollars. But we surely enforced collection from the brick and mortars that were here 365, contributing to the overall welfare of the state.

And this played out across the nation, it gave Amazon all the time they needed to build an empire that today is still just an embryo. The corporate strategy was to lose money so as to build their infrastructure and the shareholders were happy to oblige the predatory (and supposedly illegal) tactics. They’re playing the long game, after all.

Amazon lost tons of money as they built the machinery necessary to capture more and more market share. That market share came from independent merchants across the nation and happened because Amazon did this on purpose.

The result is carry-forward losses that result in zero federal taxes.They got a refund. This is a mutant form of capitalism that is aided and abetted by policy.

And it gets worse: Antitrust laws have been drastically under-enforced and outright ignored, providing advantage for “big’ at the expense of “small”, and pan-sector dominance is a new phenomenon, also being ignored.

These are policy decisions. And far worse yet is offering the moon in tax advantage to locate new facilities in whichever state wins a bidding war. The tilting of this playing field is severe.

Amazon could soon enough buy (examples): Bank of America, Quicken Loans, and Apple. Maybe Blue Cross, FedEx, Merck, or Monsanto. Or how about Google and Facebook, or all of the above – would this be good?

I, for one, want as broad of a selection of options as possible, for everything I buy, but the big are getting bigger, in all walks of life. The only way that trendline gets stemmed is lack of support for the companies aggregating their brands and power under one umbrella. It’s a general trend, not specific to Amazon. But the mercenary, predatory nature of Amazon’s game plan is different. And it’s just not OK.

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