On Monday morning, the second full day of Winter Institute 11, the American Booksellers Association and Civic Economics, an organization headquartered in Chicago that studies the state of retailing in the U.S., released a report on the devastating impact of online retailing on American communities in terms of lost state and local tax revenues.
The report, "Amazon and Empty Storefronts: The Fiscal and Land Use Impacts of Online Retail," was presented to a packed room of more than 150 Wi11 booksellers at Denver’s Sheraton Hotel by Civic Economics representatives Dan Houston and Matt Cunningham. The report determined that the failure of 23 states plus Washington, D.C. to collect the full sales tax on Amazon sales resulted in a $625.4 million loss in revenue in 2014 to state coffers. The report also found that since the growth of Amazon and other online retailers has resulted in a reduction in demand for retail space, about 100 million sq. ft. of retail space has gone undeveloped--the equivalent of over 30,000 traditional storefronts that the report estimated would have employed 136,000 workers and generated $420 million in property taxes. The combination of lost sales tax revenue and property taxes has led to a $1 billion "tax gap" on state and local governments, the report stated.
“We’re closing schools because [communities] don’t have the money,” Houston said, noting the “red states are hurt the most,” by the tax gap with Missouri holding the top spot, losing $60.2 million in sales tax revenues in 2014, followed by Colorado, Louisiana, and Alabama. The report noted that with more states starting to collect online sales tax, the sales tax gap is likely to close in coming years, but that the property tax gap will continue to grow, something that could result in "serious consequences" for communities that are dependent on commercial property taxes.
Stacy Mitchell, co-director of the Center for Local Self-Reliance, who was also on the panel, noted that Amazon is “a company that takes more than it gives back to the community.” Mitchell urged booksellers to assist the Center for Local Self-Reliance and Civic Economics in generating a public dialogue at the local and state levels about the report's findings. Comparing Amazon to the 19th century railroad monopolies before the creation of the Interstate Commerce Commission in 1887, Mitchell pointed out that Amazon wants to “sell everything” and is using its dominance in the marketplace to obliterate all of its competitors. “You all are the solution,” she said, suggesting that booksellers enlist other organizations, including media, in their communities to heighten awareness of the negative economic impact of Amazon’s business model of “separating commerce from place.”
Interviewed after the panel presentation, Becky Anderson, a co-owner of Anderson’s Bookshops in the western Chicago suburbs and a newly-elected Naperville, Ill. city councilor, told PW, “This is the kind of stuff I need to show people. When they see the tax loss to the community, maybe they’ll re-think that low price. We need to be the bigmouths to get this information out to our city governments, county governments, state governments, and then nationally. And officials better start listening.”
Amazon has not responded to a request by PW for comment on the report late Monday afternoon.