PRIME NUMBERS: AMAZON AND AMERICAN COMMUNITIES

New study reveals explosive growth of third-party sales, sales tax avoidance

2017 GraphicsA new report from the American Booksellers Association (ABA) and Civic Economics reveals the continuing — and increasing — loss of jobs and essential state and municipal revenue as a result of the growing retail dominance of Amazon.com. The report documents both Amazon’s sales and, for the first time, the explosive growth of sales through its third-party Marketplace from 2014 to 2016. And the report makes clear that Amazon’s sales tax avoidance strategy has continued despite well-publicized agreements with American states.

Prime Numbers: Amazon and American Communities, released by ABA on April 4, 2018, paints a comprehensive picture of Amazon’s impact at the state and national level.

USA

Marketplace sales growth and sales tax avoidance

Prior to the release of Amazon’s Annual Report for 2016, analysts were left to speculate as to the size and trajectory of Marketplace sales. Also prior to that report, the company made a strong public relations push in promising to collect and remit sales taxes to states and localities nationwide. While governors and state legislators believed that they had won a significant victory on behalf of communities and tax-paying Main Street businesses, the truth was that more than half of Amazon’s total retail sales volume was beyond these tax agreements.

According to Civic Economics, Marketplace sales grew from 46% of Amazon’s retail sales in the US in 2014 to 56% in 2016, more than doubling in volume over the same period. Amazon’s direct sales grew at a much slower pace, which resulted in a significant shift toward third-party sellers, which are left to their own discretion to decide whether and where to remit sales taxes.

Moreover, a recent report from the federal General Accounting Office estimates that such third-party online sellers “likely collect and remit between 14% and 33% of potential sales taxes to state and local authorities.” Based on that range, Prime Numbers estimates the total uncollected state and local sales taxes in 2016 at as much as $5 billion, resulting in shortfalls that leave states, cities, and towns scrambling to fund schools, first responders, infrastructure, and other services.

Retail movement from commercial to industrial districts

Essential Findings

The growth of online sales in general and Amazon in particular has had a visible impact in American communities, exhibited by the much-discussed “retail apocalypse” as retail activity increasingly moves from commercial districts to industrial parks.

Prime Numbers estimates that, in 2016 alone, Amazon’s retail sales displaced 44,000 storefronts employing 637,000 retail workers. Even considering Amazon’s massive distribution network, the net result is a loss of more than 500,000 jobs nationwide.

State-by-state impacts

Prime Numbers provides a detailed accounting of these impacts at the state level as well. While retail displacement is predictable simply as a function of each state’s retail activity, tax and employment impacts are highly variable.

 

The study estimates that only one American state, Kentucky, gains enough in Amazon distribution jobs to offset the loss of retail store employment. Every other state and the District of Columbia is a net loser of jobs despite Amazon’s well-publicized and frequently subsidized job announcements.

State and local sales tax impacts are naturally correlated with each state’s dependence on such taxes, as well as the extent to which Amazon collected sales taxes in a given year. The continuing sales tax gap may come as a surprise to politicians who thought they had solved the problem when Amazon agreed to begin collecting sales taxes in all states in 2017. The secret back door to renewed tax avoidance through third-party sales means many states will be surprised that little has changed.

Full study and state-by-state results available online

ABA and Civic Economics have made the full Prime Numbers report available online at www.CivicEconomics.com. A summary graphic is also available for each state and the District of Columbia, allowing readers and policymakers to see for themselves how their community is impacted.

Learn more about this study and the American Bookselling Association from Bookselling This Week at www.bookweb.org/news.

Advertisements

Civic Economics: In Print 2017

Covers 1703It’s been a while since we sat down to update Civic Economics: In Print, a bibliography of English language books that we know about and that cite our work.  We know that our work makes a difference because so many distinguished planners, authors, advocates, and researchers rely on it.  We’re up to 48 with this edition.

To celebrate our fifteenth anniversary, we’ll be highlighting and commenting on many of these books over the coming year, so stay tuned.

If you know of a book we missed, or if you write one, be sure to let us know.  In the meantime, download a copy of Civic Economics: In Print before venturing to your local bookseller.

Celebrating Fifteen Years of Civic Economics

Anniversary MapWe’ve been so busy in 2017, we totally forgot something huge.  Fifteen years ago in July, we left a conventional economic development consulting firm to establish Civic Economics, putting hard data and planning sensibilities to work on a wide range community and economic development challenges.  It’s been quite a ride so far, and we’re grateful to our clients and friends for bringing us so far.  So, from Matt and Dan, thanks!

On the road with Civic Economics: We’re going to need a new map!

Project Map 1605 w ukFourteen years in, Civic Economics is proud of our diverse client base, having served the people of more than 30 states and provinces in the USA, Canada, and Mexico.  After all those miles and experiences, great meals and local beers, we carry that project map around like a trophy.  But a new project renders obsolete that trusty graphic.

 

We don’t want to step on our client’s plans for the release of our latest work, but we will say that Matt and Dan are planning a trip to England in the Fall of 2016.  Watch this space for more information as the release approaches.

Civic Economics on the Road: Unite in the Queen City

13227483_1335651469794715_940900916353978509_oAmazon and Empty Storefronts, released in January by Civic Economics and our friends at the American Booksellers Association, has made waves across the world of bricks and mortar retail. The 1700+ members of CBA, the Christian Retail Association, have invited Matt Cunningham to join them at Unite 2016, the International Christian Retail Show in Cincinnati.

Matt will be leading sessions on Monday, June 27 and Tuesday, June 28. The sessions will focus on the rise of Amazon and the New Localism as it relates to Christian retailers.

In case you missed it, learn more about Amazon and Empty Storefronts and the Civic Economics of Retail.

Photo: Kevin D. Hartnell via Wikimedia Commons

 

AMAZON and EMPTY STOREFRONTS

Cover ImageCivic Economics has produced a long string of studies on the economics of local retail and service businesses.  Thanks to years of collaboration with business organizations around the nation, the importance of independent, locally-owned business has become Retail Studies Composedconventional wisdom around the world.

On January 24 in Denver, Civic Economics and longtime partner the American Booksellers Association released Amazon and Empty Storefronts, which we believe will be a highly influential addition to the series.

In Empty Storefronts, we estimated the fiscal and land use impacts of Amazon for the nation and each state.  Though too many states still do not collect sales taxes on Amazon transactions, great progress has been made in the name of tax fairness.  Less well understood is the displacement of retail activity from traditional storefronts, pulling retail space and jobs out of American communities.  Perhaps most pressingly, this displacement produces an almost invisible property tax revenue loss impacting every community and school district in the nation.

At the study site, you’ll find a Complete Report and an Executive Summary available for download, as well as state summary sheets for each state and the District of Columbia.


EMPTY STOREFRONTS: NATIONAL FINDINGS

In 2014, Amazon sold $44.1 billion worth of retail goods nationwide, all while avoiding $625 million in state and local sales taxes.

These sales are the equivalent of 31,000 retail storefronts or 107 million square feet of commercial space, which might have paid $420 million in property taxes.

A total of more than $1 billion in revenue is lost to state and local governments, $8.48 for every household in America.

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, Amazon sales produced a net loss of 135,973 retail jobs nationwide.

 

 

Free Books!

WIFor us, that is.  You still have to buy your own.

Since 2002, Civic Economics has enjoyed its relationship with the American Booksellers Association, and we especially enjoy their conferences.  Bookshop owners and employees are a fun and interesting bunch, and collecting galleys of unpublished books is awesome.

In January 2016, both Dan and Matt will travel to Denver to speak to the ABA’s Winter Institute.

On Monday, January 25, the ABA and Civic Economics will release “Amazon and Empty Storefronts,” a new study of the magnitude and impact of  the ongoing growth of online shopping.

The ABA has been our most reliable partner in conceiving and commissioning innovative studies of the economics of local retail and service provision, and “Amazon and Empty Storefronts” promises to be the most influential yet.

On Tuesday, January 26, Dan will Join Stacy Mitchell of the Institute for Local Self-Reliance for “The New Localism,” a discussion of new considerations, trends, and innovations in the indie business world.

We look forward to seeing our bookseller friends in Denver in January.

 

Hacking Our City in the ATX

HOC - Group PictureAs Austin braced for the annual creativity crush of South By Southwest, a group of planners gathered to explore the challenges facing the city in the first annual Hack Our City.  Dan Houston was fortunate to join the group, which included a few locals and visitors from as far away as Seattle, Atlanta, and Arlington, VA.

With continuing and rapid economic growth, Austin has struggled to preserve affordability and mobility.  Hack Our City explored these closely related challenges in interdisciplinary teams. We may not have found the magic bullet, but the exercise left us locals with a host of great ideas and examples from around the country.

Thanks to SXSW Interactive and the Capital Factory for hosting us.  And look for opportunities to participate in Hack Our City next year.

Localism goes international, as in International Economic Development Council

Kimber Lanning, Local First Arizona  (Photo: Jim Poulin/Phoenix Business Journal)

Long-time friend of the firm and regular customer (one more punch in the card and we’ll have to give her a free study) Kimber Lanning of Local First Arizona has been named the Citizen Leader of the Year by the International Economic Development Council at its annual conference in Fort Worth.

While we’re always thrilled to see our clients get the recognition they deserve, this one is particularly pleasing to us because it comes from the world of economic development professionals.  Slowly, it seems, the essential message of the localism movement is reaching the mainstream. An industry all too often given to subsidizing big box development needs to understand the very real economic impact of the policy choices.  Kimber, more than any one we know, has driven that point home through persistence and a well-run organization.

So, congratulations, Kimber, and thanks for taking localism international.

Read more about the award HERE and HERE.

CE in Print

CE in Print

How do we know the work of Civic Economics makes a difference? Because so many great writers cite it in their books. CE in PRINT is a bibliography of the 38 books we know of today. If you see another one (or write it), please let us know and we’ll be happy to share it with the world.

Over the years, of course, Civic Economics has been featured in media outlets from the Homer Tribune to the Economist and the New York Times, but there’s just something about a book.

Anyway, please feel free to download CE in PRINT before your next trip to your local bookseller.  Click here for a PDF: CE in Print 1407