Amazon.com has always been accused of stealing local business through pricing and tax advantages but an American Booksellers Assoc.-sponsored research report points out the Internet giant’s advantage has enabled it to avoid $625 million in state and local taxes on sales of $44.1 billion. The tax avoidance is equivalent to 3,215 retail storefronts and a net loss of 136,000 retail jobs, according to the research.
Research group Civic Economics prepared the report that released at ABA’s Winter Institute in Denver Monday. The report, Amazon and Empty Storefronts: The Fiscal and Land Use Impacts of Online Retail, includes data from 2014, which means the numbers likely have increased even more, according to Dan Cullen, principle and senior strategy officer with Civic Economics. He estimates that Amazon’s continued growth will be exponential and said the findings portend a tremendous economic shift for local communities that could see increasing retail vacancies. Amazon continues to exploit its tax and monopolistic advantages without helping to pay for the public infrastructure it uses to unfairly compete, shifting costs to local governments with dwindling tax bases.
States and local communities are seeing this invisible shift as new retail not coming to town.
“This displacement impacts demand for new space as more local vacancies become more visible,” Cullen said.
During a panel discussion on the report, Stacy Mitchell, co-director of the Institute for Local Self Reliance, said the report reinforces the need for a bigger public conversation about tax incentives from local governments to attract Amazon distribution centers and other big-box development that hurt local business, and about unfair federal sales-tax policies that compete directly with local businesses.
Mitchell and ABA President and CEO Oren Teicher said recent efforts to educate consumers to buy locally and to buy from independent retailers has worked effectively. However, she said this new research should begin a new phase that takes “buy local” from a consumer conversation to a public-policy conversation.
“This is the first time in human history that we are separating commerce from place,” Mitchell said. She likened Amazon to the U.S. rail barons of the 19th century who controlled commerce by building railroads that drove development and growth through monopolistic practices and control.
Among several points she made, Mitchell said the Civic Economics research underscores a need to expose the inadequacies of U.S. antitrust policies. The unbridled dominance by a single online retailer will prevent local communities from creating human-oriented environments – “placemaking” – that contribute to quality of life, she said.
A total of $1 billion in revenue that state and local governments lost to Amazon accounts for $8.48 for every U.S. household, the report calculated.
Amazon operated 65 million square feet of distribution space in 2014, employing roughly 30,000 full-time workers and 104,000 part-time and seasonal workers.
“Even counting all the jobs in Amazon distribution centers, Amazon sales produced a net loss of 135,973 retail jobs, Cullen said.
The job creation Amazon hypes in seeking tax incentives and advantages doesn’t match the jobs the company takes from local communities. Additionally, Cullen said most of the jobs in Amazon distribution centers will be lost eventually to increased automation through robotics.