In the face of pressure from Amazon, last week Utah State Rep. Mike McKell (R-Spanish Fork) withdrew an affiliate nexus sales tax fairness bill, which would have leveled the playing field for Utah retailers by requiring Amazon to collect and remit sales tax to the state. This week, in an op-ed published in the Salt Lake Tribune, Betsy Burton, American Booksellers Association president and co-owner of The King’s English Bookshop in Salt Lake City, harshly critiqued McKell, Amazon, and the state’s online sales agents for wanting to maintain an inequitable status quo at the expense of Main Street retailers and their communities.
On Monday, March 7, Amazon e-mailed McKell and said it would terminate its Utah online affiliates if the bill passed, as reported by the Salt Lake Tribune. McKell, however, said that it was hearing from the online affiliates — whom he termed “mommy bloggers” — in the state that ultimately changed his mind on the bill. “Given the fact that Amazon was really willing to pull those affiliate contracts, in the end there was no benefit to the state because we weren’t going to collect that online sales tax and we were going to lose that revenue in income tax from those families,” McKell told SLT.
In response, Burton penned an op-ed published in the March 12 edition of the Salt Lake Tribune. She questioned the rationale of state legislators in favoring “mommy bloggers” and an out-of-state mega-retailer such as Amazon over Main Street retailers.
The op-ed is republished below with permission from the Salt Lake Tribune.
Legislators caved to Amazon at the expense of Utah businesses
By Betsy Burton
How could any of our legislators in good conscience have sacrificed the bricks and mortar businesses in our state — we who own real estate, finance inventories, pay property taxes, collect and pay sales tax, hire so many of the people who live and work here, pay their salaries not to mention payroll taxes, support their and our communities in a myriad of ways, form the bones of our communities street by street, brick by brick, anchoring the main streets and countless neighborhood business districts across this state from our cities to our scenic byways — for the sake of some bloggers who work out of their homes and add very little to the fabric of our community or the substance of our economy?
I have nothing against home businesses but government is not — should not be — in the business of favoring one type of business over another, one segment of retail over another, particularly when in the process they are endangering our communities and our economy.
Simply put, Amazon is not required to collect sales tax and those of us who run bricks-and-mortar businesses are. The result? Given the sales tax we must charge and on top of that the money required of us to collect, account for and pay that tax to the state, Amazon has a nearly 10 percent advantage statewide over the businesses with which they compete — businesses that are the backbone of our community and our economy. This is one of the principal ways Amazon drives competitors out of business across the retail industry.
Naturally, Amazon would like to maintain this competitive advantage and had threatened to fire their local affiliates in Utah if House Bill 235, which would require them to collect sales tax, had passed. These “affiliates” include those the Tribune has dubbed “the mommy bloggers.” And our legislators, who supposedly represent all of us, caved. As a business owner I am outraged. As a citizen I’m beyond outraged. I love my community. I love my business. I do not want to lose either of them.
Amazon is a bully. Over the past years we have watched them bully numerous states, their competitors, local businesses and national chains alike, the publishers they buy their books from, the authors who write them, other manufacturers they do business with, politicians at the state and national levels. Caving to their threats is wrong. And I submit that it is dangerous. They have created an untenable antitrust environment in which it is impossible to compete. It is the duty of government to protect its citizens — and its businesses. We don’t want special treatment but we do demand that you do not pick and choose among us. We all deserve a level playing field.
Most states have stood up to Amazon. Utah did not. After working on this issue for years a coalition had been built that was so representative of economic and community interests in this state it seemed impossible to defeat. Yet after a threat from Amazon, Rep. Mike McKell, HB235’s sponsor, backed away when there was no time for anyone else to pick up the bill and so effectively killed it.
Here are the facts about Amazon’s killing impact on Utah. A new study by Civic Economics, “Amazon and Empty Storefronts,” estimates that in Utah, in 2014, Amazon sold $337.4 million worth of retail goods statewide. That is the equivalent of 237 retail storefronts, 800,000 square feet of commercial space, which might have paid $2 million in property taxes and more than $24.6 million in revenue lost to state and local governments. Even counting the jobs in Amazon distribution centers, Civic Economics estimates that Amazon sales produced a net loss of 2,066 jobs in Utah. Needless to say, the figures are worse for 2015.
Nationally, in 2014, Amazon sold $44.1 billion worth of retail goods nationwide, all while avoiding $625 million in state and local sales taxes. That is the equivalent of 30,000 retail storefronts, 107 million square feet of commercial space, which might have paid $420 million in property taxes. That amounts to a total of more than $1 billion in revenue lost to state and local governments. Amazon also operated 65 million square feet of distribution space, employing roughly 30,000 full-time workers and 104,000 part-time and seasonal workers. Even counting all the jobs in Amazon distribution centers, Civic Economics finds that Amazon sales produced a net loss of 135,973 retail jobs at the national level.
What’s really galling is that almost 80 percent of the U.S. population now lives in states that are collecting sales tax on Internet sales. Isn’t it time for Utah to do the right thing — for its businesses, for its economy and its communities?