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Donald Trump Wants to Get Revenge on Jeff Bezos by Messing With Amazon’s Taxes

WASHINGTON, DC - JUNE 19:  U.S. President Donald Trump (2nd L) welcomes members of his American Technology Council, including (L-R) Apple CEO Tim Cook, Microsoft CEO Satya Nadella and Amazon CEO Jeff Bezos in the State Dining Room of the White House June 19, 2017 in Washington, DC. According to the White House, the council's goal is 'to explore how to transform and modernize government information technology.'  (Photo by Chip Somodevilla/Getty Images)
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Chip Somodevilla/Getty Images

Amazon’s stock tumbled about 5 percent today after Axios reported that Donald Trump “wants to go after” the company, possibly by changing its tax treatment.

This is not an especially shocking development if you’ve kept up with Trump’s occasional rants about Amazon CEO and Washington Post owner Jeff Bezos. Trump hates the newspaper’s critical White House coverage and has accused Bezos of using the publication as a political sword to protect Amazon’s business interests. “If I become president, oh do they have problems. They’re going to have such problems,” he said during a campaign rally in 2016. According to Axios, Trump’s rich pals have added fuel to the fire by telling him that Amazon is hurting their businesses. “His real estate buddies tell him—and he agrees—that Amazon is killing shopping malls and brick-and-mortar retailers,” Axios writer Jonathan Swan reports. Trump is also apparently hung up on the mistaken belief that Amazon is somehow fleecing the U.S. Postal Service. (Pretty much the opposite is true; Amazon’s packages are a crucial moneymaker for USPS.)

The president, as usual, does not have a precise game plan. He has supposedly mused about attacking Amazon on antitrust grounds, but nobody really has any idea how that would work. (Slate ran a piece last year about how the Feds could bring a competition case against the everything store; it struck this nonlawyer as interesting, but maybe a little novel for the courts.) He’s also talked about tinkering with its tax treatment.

The latter might actually get him somewhere. While Amazon already collects sales tax everywhere on the goods it sells directly, it does not collect sales tax everywhere for third-party shops that do business on Amazon Marketplace, which gives them a bit of an unfair leg up against brick-and-mortar retailers. The company started tacking state sales tax onto Marketplace orders shipped to Washington this year after the state passed a law, but is fighting a court battle over attempts to collect in South Carolina.

Amazon makes a great deal of money off of Marketplace. It earned more than $10.5 billion in fees from merchants last quarter, up 38 percent year-over-year, compared with $35.3 billion from its own direct sales. That breakneck growth might slow a bit if all Marketplace sales finally had to include sales tax.

That wouldn’t be an entirely bad thing. When it comes to sales taxes, Amazon and its flock of smaller third-party merchants should be forced onto an even playing field with local retailers. States are already pushing things in that direction regardless. But if Trump’s rage at Bezos spurred Congress to move on the issue and more broadly modernize the law governing internet sales taxes, it would present a rare silver lining to the president’s seething resentments. To be sure, the spectacle of a White House using legislation to punish a media owner might be less than great for civil society and would probably send yet another chilling message to would-be corporate critics. But from a tax policy perspective, it would be a fine outcome.