As Amazon continues building warehouses across the country, local officials are providing the online giant with massive tax incentives and public assistance to do so, claiming that an Amazon warehouse will be a boon to their community. But the one-page fact sheet “5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse,” released on October 22 by Advocates for Independent Business (AIB) and the Institute for Local Self-Reliance (ILSR), provides eye-opening data that reveals how these deals actually do more harm than good to local economies.
Between 2012 and 2014, Amazon picked up $431 million in local tax incentives and other subsidies from local and state governments to finance its warehouse expansion. But, ironically, Amazon has a long history of shirking its obligation to collect and remit sales tax, and still does not collect in 19 of the 45 states that collect and remit sales tax.
Oftentimes, officials rationalize the tax deals by saying that Amazon will create jobs but, as AIB and ILSR point out, the retailer actually destroys more jobs than it creates. “While local brick-and-mortar retailers employ 47 people for every $10 million in sales, Amazon employs just 19 people per $10 million in revenue. This means that as Amazon grows and crowds out other businesses, the result is a net decrease in jobs,” the fact sheet points out.
Moreover, the company’s new generation of warehouses is equipped with robots that do much of the sorting, stacking, and moving of products, so the number of jobs that Amazon creates is likely to drop even lower.
The American Booksellers Association is urging its membership to download the fact sheet and use it to educate policymakers and the public.
“This fact sheet provides clear and succinct data that booksellers can use to educate town officials, state legislators, and customers on the kind of negative impact these tax deals have for communities,” said David Grogan, ABA Senior Public Policy Analyst. “We urge our members to make sure their community leaders and editorial boards of local newspapers get a copy. Government should not ask its local businesses to fund a competitor, especially when the net effect of these subsidies will harm their community.”