Republican presidential candidate and noted Twitter monster Donald Trump is on a tear this morning against the Washington Post. In a string of tweets, the bumptious developer states his belief that the Post is nothing more than a front for its owner Jeff Bezos in which Bezos can uses the paper’s financial losses as a tax write-off to alleviate the sting at his much more famous company, Amazon.
The @washingtonpost, which loses a fortune, is owned by @JeffBezos for purposes of keeping taxes down at his no profit company, @amazon.
— Donald J. Trump (@realDonaldTrump) December 7, 2015
The @washingtonpost loses money (a deduction) and gives owner @JeffBezos power to screw public on low taxation of @Amazon! Big tax shelter
— Donald J. Trump (@realDonaldTrump) December 7, 2015
If @amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The @washingtonpost scam is saving it!
— Donald J. Trump (@realDonaldTrump) December 7, 2015
Amazon, like many huge global corporations, has an extremely complicated corporate tax structure and has struggled for most of its history to actually turn a profit. But for Trump to think that Bezos can write off potential losses at the Post to blunt Amazon’s balance sheet sounds like yet another one of his exaggerations. So, explained in terms Trump might understand, here’s a quick primer on how Bezos’s ownership of the Post works:
What did the Post do this time?
The Post literally cannot stop writing about Donald Trump, who leads in every poll. A Nexis search just over the last seven days turns up 228 articles from the Post that mention Trump. But who knows what set Trump off this morning? A spokesperson for Trump did not answer when Washingtonian—a real classy joint, by the way—asked if there was any article in particular to which he was reacting.
How does Bezos own the Post?
Unlike Amazon, a publicly traded company, the Post became a subsidiary of Nash Holdings, Bezos’s personal investment firm, when he bought the paper in August 2013. Bezos paid $250 million for one of the great US newspapers—one of the truly most stunning deals in the history of publishing, I have to tell you. But even under Bezos, the Post and Amazon are completely separate. Bezos owns 18 percent of Amazon, making him its largest shareholder by far, while he owns the Post outright as a private investor.
So how much money is the Post losing now?
Unclear. As the Post is privately held, its profits and losses are no longer disclosed to the public. It could be a huge loser. Who knows? Bezos doesn’t have to say. But at least as a publication, the Post‘s readership has never been more huge. In October, the Post finally topped the New York Times—which is also failing, according to Trump—in online readership, with 66.9 million unique visitors. That’s a terrific number.
But how does that minimize the losses at no-profit Amazon?
It doesn’t! The Post and Amazon are distinct companies that operate independently of each other. For most of its history, Amazon was a dummy loser company that never made any real money. But for the previous two quarters, the Seattle-based giant has posted profits, driven largely by the phenomenal, really huge success of Amazon Web Services, its cloud-computing division, which posted $2.1 billion in sales in the third quarter of 2015. Amazon reported $79 million in net income in the three months ending September 30, according to documents filed with the Securities and Exchange Commission. However, that figure is smaller than Amazon’s second-quarter profit of $92 million, so maybe it’s just going back to being low-energy.
Then how does the Post measure up?
Because the Post is now privately held, we have no way of knowing how those jabronis are doing today. But consider the earnings report filed from the public corporation Graham Holdings in the second quarter of 2013, when it was still known as the Washington Post Company. The newspaper division lost $14.8 million in that three-month span, or 0.7 percent of what Amazon Web Services just raked in during third-quarter 2015.
How is Amazon screwing the public on its tax bill?
Rather than using a relatively puny—and independently owned and operated—newspaper company to mitigate losses, Amazon, like many huge tech companies, uses a web of foreign subsidiaries to keep its international revenues from being subject to the United States’ 35 percent corporate income tax, and some other nations’ taxes. But earlier this year, Amazon actually relented a bit when it announced it would stop sending all of its European revenue through a Luxembourg subsidiary and begin paying taxes in individual European countries. Amazon still keeps plenty of money outside the United States, but it is hardly alone in this practice.
What about Trump’s tax bill?
Trump has said he plans to release his tax statements, but so far, his only disclosure has been a photo of him signing a pile of documents he described on Twitter as his tax return.
Signing my tax return…. pic.twitter.com/XJfXeaORbU
— Donald J. Trump (@realDonaldTrump) October 15, 2015
But while the paper stack is huge, the final sum Trump owes might not match up. “I fight like hell to pay as little as possible for two reasons,” he told CBS News in August. “Number one, I’m a businessman. And that’s the way you’re supposed to do it.”
So if and when Trump’s tax return ever becomes public and he has a shockingly low effective tax rate, remember that’s how it’s supposed to be, because business. And don’t forget the $40 million break his company got for turning the Old Post Office into a luxury hotel.
So, what kind of scam is Jeff Bezos running then?
Look, Trump tells you what’s on his mind, all the time. He’s got 5.11 million followers on Twitter, the most of any presidential candidate—Republican or Democrat. Bezos? He’s only got 47,000. What a joke. But there’s something they may agree on–neither billionaire follows Post Executive Editor Marty Baron. Sad!
Benjamin Freed joined Washingtonian in August 2013 and covers politics, business, and media. He was previously the editor of DCist and has also written for Washington City Paper, the New York Times, the New Republic, Slate, and BuzzFeed. He lives in Adams Morgan.
