October 19, 2017 11:10:53 AM
Rural communities just thought Walmart was the great job killer. Now comes Amazon.
"If Amazon continues to grow its business by $20 billion a year, the annual toll of lost jobs for merchants, buyers and cashiers will be in the tens of thousands by my calculations," is the spin on Amazon by Scott Galloway, professor of marketing at the NYU Stern School of Business, in a recent Wall Street Journal article. "Disruption in the U.S. labor force is nothing new -- we have just never dealt with a company that is so ruthless and single-minded about it."
At least Walmart hires local folks and pays local and state taxes.
According to Galloway, Amazon "has replaced the expectation for profits with a focus on vision and growth, managing its business to break even while investors bid up its stock price." Amazon's efficient business model, what Galloway calls "a search engine with a warehouse attached to it," minimizes employment and taxes.
"Because Amazon is more efficient than other retailers, it is able to transact the same amount of business with half the employees," wrote Galloway.
He also said things are "deeply amiss" when "the fifth most valuable firm in the world" can get away "without paying any meaningful income tax:"
"Since 2008, Walmart has paid $64 billion in federal income taxes, while Amazon has paid just $1.4 billion. Yet, while paying low taxes, Amazon has added $220 billion in value to the stock held by its shareholders over the past 24 months -- equivalent to the entire market capitalization of Walmart."
The Amazon story becomes particularly important as Congress and our Legislature move to revamp tax laws. We can only wonder if our tax writers even understand the vast changes in worldwide business models, much less how to levy taxes fairly.
Who's gonna pay how much towards our $4 trillion federal budget and our $6 billion state budget are top-of-the-mind questions for most Americans.
"If a giant firm pays less than the average 24% in income taxes that the companies of the S&P 500 pay, it logically means that less-successful firms pay more," noted Galloway. "In this way, Amazon further adds to the winner-take-all tendencies plaguing our economy."
If the biggies avoid taxes we know who's left to pick up the difference.
In Washington, politicians are trying to spin big tax cuts for corporations and the wealthy as a good thing for the average guy. The spin is so intense it's got conservative Republicans saying it's okay for tax cuts to increase the national debt. Huh?
Down here in Mississippi the spin on tax collections is positive. For the first quarter of fiscal year 2018 tax collections are up say news stories - 2.6% over last year. Further down in the stories you see that tax collections were up the first two months but dipped for September - 4.5% below last year. The dip, which should be of concern, was downplayed.
Meanwhile, lack of jobs and declining state and federal spending play havoc with our rural communities. They need a Rumpelstiltskin who can spin all this into gold.
Bill Crawford, a former legislator, lives in Meridian. His e-mail address is [email protected]
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