From Shelf Awareness:
One of the most well-attended and discussed sessions yesterday at the Winter Institute featured the release of a new Civic Economics-ABA study called The Fiscal and Land Use Impacts of Online Retail, which aims to demonstrate the effects of the growth of Amazon on American towns and cities. The study determined that in 2014, the last year for which it could get full-year statistics, Amazon sold $44.1 billion of retail goods nationwide, which is “the equivalent of 3,215 retail storefronts or 107 million square feet of commercial space, which might have paid $420 million in property tax.” Also in 2014, Amazon avoided collecting state and local sales tax of $625 million. Between uncollected sales tax and the loss of property tax, state and local governments lost more than $1 billion in revenue–about $8.48 per household in the U.S.–the study found.
In 2014, Amazon’s warehouses–65 million square feet of space–employed roughly 30,000 full-time workers and 104,000 part-time and seasonal workers. But including all the jobs lost from stores whose sales Amazon supplanted, Amazon sales “produced a net loss of 135,973 retail jobs.”
Matt Cunningham of Civic Economics noted, too, that in 2014 Amazon book sales were about $5.618 billion, some 11.6% of Amazon retail sales. That amount of sales represents about 3,600 “bookshop equivalents and 40,000 bookstore employees,” which he called “a sobering statistic.”
The study noted that as of the beginning of this year, Amazon is collecting sales tax on purchases in 27 states–soon to be 28–which is helpful for some state and local governments, but that other trends continue to get worse. “The displacement of retail space from communities to the Internet… has contributed to a slowdown in the occupancy and development of commercial space,” the study wrote. “This, in turn, has an invisible but certain impact on an essential source of revenue for most states, cities, and schools: property taxes.” And Amazon’s warehouses and distribution centers “on the peripheries of cities” are valued and taxed at lower rates than the spaces they are supplanting, often in downtowns.
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At the presentation, Stacy Mitchell of the Institute for Local Self-Reliance emphasized that the study should serve as the basis for “generating a much bigger public conversation about the impact of Amazon,” particularly with government officials at all levels.
Link to the rest at Shelf Awareness
PG says this is a typical tactic of legacy businesses facing an innovative newcomer – lobbying government officials to place the newcomer at a disadvantage or even outlaw what the newcomer wants to do. See taxicabs vs. Uber, for example. Add in the practice of subsidizing city centers at the expense of suburbs.
Let’s consider a hypothetical bookstore located in Oregon, a state which has no sales tax. Powell’s Books would be one example.
If a faithful Powell’s customer leaves Portland for the bright lights of New York City, where the sales tax is 8.875% and decides to phone one of the exemplary Powell’s employees to order a book and have it shipped to New York, will Powell’s have to charge (and pay to the State of New York) New York City sales tax?
PG will assure one and all that it’s well-settled law that Powell’s has no legal obligation to collect New York sales tax unless it has nexus, also known as sufficient physical presence, in New York.
The ability to collect a state sales tax is restricted by the US Constitution. The Due Process Clause requires a definite link or minimum connection between the state and the person, property or transaction it seeks to tax and the Commerce Clause requires an even higher level of connection. The Commerce Clause requires a substantial presence in a taxing state by the entity the state desires to tax. (See Quill Corp. v. North Dakota, 504 U.S. 298 (1992), a staple of law school constitutional law classes, for the Supreme Court’s ruling on the issue)
So, if Powell’s doesn’t have a legal obligation to collect New York sales tax, does it have a moral obligation to do so?
In PG’s extraordinarily humble opinion, the moral obligation to pay taxes is coterminous with the legal obligation to pay taxes. If an individual or organization has a legal obligation to pay taxes, their simple moral obligation is to pay the taxes due under the relevant statutes and regulations.
If Powell’s decides to make a free will donation to New York City because a former Portland resident lives there (and everyone at Powell’s watches New Year’s Eve on Times Square), Powell’s is free to do so.
New York City might send Powell’s a certificate of appreciation for being such a generous organization. However, PG thinks few people would say that free will donations to New York City are a moral obligation instead of a charitable impulse.
As far as retail stores and retail employees that do not exist because people like to buy things from Amazon, why is Amazon different from Sears & Roebuck? Sears & Roebuck was founded in 1886, and famed for the Sears & Roebuck catalog which offered goods and prices unavailable from the local general store.
From the Sears Archives:
In 1888, Richard Sears first used a printed mailer to advertise watches and jewelry. He illustrated the cover of the 1894 catalog declaring it the “Book of Bargains: A Money Saver for Everyone.” This catalog expanded from watches and jewelry, to include merchandise such as sewing machines, sporting goods, musical instruments, saddles, firearms, buggies, bicycles, baby carriages, and men’s and children’s clothing. At this time Sears wrote nearly every line appearing in the catalog by drawing upon his personal experience using language and expressions that appealed to his target customers.
Many thousands of stores closed because their customers ordered from Sears. PG doesn’t know whether the American General Stores Association campaigned to increase taxes on Sears or otherwise prevent Sears from selling its products at such low prices or not.
PG says it is a self-evidently foolish idea to promote the freezing of commerce and society into its present form, whether that form exists in 2016 or 1886.
If the American Booksellers Association hired researchers from Civic Economics to poll American consumers and ask if Amazon should be terminated, PG knows what the results would be.