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About That $1 Billion Tax Gap Caused by Amazon (a Roundup)

this is all Amazon's fault

this is all Amazon’s fault

A new report released this week at the Winter Institute conference states that Amazon has cost local and state governments a billion dollars in tax revenues each year.

The report was produced by the American Bookseller Association and a research firm called Civic Economics, and according to the report on the Civic Economics website:

  • In 2014, Amazon sold $44.1 billion worth of retail goods nationwide, all while avoiding $625 millionin state and local sales taxes.
  • That is the equivalent of 3,215 retail storefronts, 107 million square feet of commercial space, which might have paid $420 million in property taxes.

You can read news coverage and commentary about the report at PW, Teleread, and The Passive Voice.

I’m not planning to cover it in depth because I don’t feel like repeating the ABA’s propaganda today, but I will note that the billion dollars is a negligible sum of money.

I live in Prince William County, VA, which has a population of 450 thousand and an annual govt budget of close to two billion dollars. Forty percent of that budget is generated from property taxes (and another 8% from sales taxes).

In other words, one small county outside of DC generates more property tax than the entire Amazon tax gap. Multiply that across the thousands of local govts in the US and you begin to see just how small that gap really is.

I would also point out that there’s a problem with the second conclusion, that Amazon is indirectly responsible for $420 million in potential property taxes paid by retailers who don’t exist because you shop at Amazon.

Here’s what the report says:

In addition, we estimate that the shift to online sales has resulted in a national reduction in demand for retail space totaling over 100 million square feet, the equivalent of over 30,000 traditional storefronts employing 136,000 workers. These land use changes result in uncollected property taxes of $420 million dollars.

Given that big box retailers killed off the need for those storefronts long before Amazon came along, that is unlikely to say the least.

image by Sam Howzit

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Fbone January 26, 2016 um 4:09 pm

Johnson Controls merging with Ireland-based Tyco will allow them to save $150 million in US corporate tax. Apparently this is a large enough number for Congress to take notice. I imagine $1 billion will do the same.

fjtorres January 27, 2016 um 7:57 am

Congress is taking note because they passed a law to "prevent" mergers like that and all it did was codify the terms of those mergers.

Nate Hoffelder January 27, 2016 um 9:46 am

Congress also took note because that merger was a change in an industry. The online tax situation is a long-running dilemma with no end in sight. It’s also already being dealt with, so there is no reason to single out Amazon for special attention.

fjtorres January 27, 2016 um 5:37 pm

Well, Nate, you gotta remember: Amazon is eee-vile!
So eee-vile you should pay others to sully their souls uploading your ebooks to Amazon on your behalf so you can sleep conscience free, knowing you aren’t dealing with Amazon.

Anonymous January 31, 2016 um 5:20 pm

I would point out that google paid less tax in the UK last year than my sister, who is on $55K. I’m sure Amazon was probably the same. That doesn’t seem fair.

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