We are surrounded by small businesses in Downtown Phoenix, and we know much of Downtown’s success rests on the shoulders of these business owners. As we survey the current economic climate, it is critical to understand the impact a national retailer can have on the health of our local economy. Kimber Lanning, founder and executive director of Local First Arizona, provides insight on the ramifications of the current sales tax impasse between the State of Arizona and Amazon.

Last week at the Arizona State Senate subcommittee hearing Don Isaacson, the lead attorney for Amazon, took the podium to make the case that economies change over time. “We all remember the days of mom and pops,” he said, “and then there were the days of the big box retailers….” I surmise this to be a very honest glimpse into the world vision Amazon holds, but what does it mean for Arizona?

For the moment, let’s forget the fact that there are over 40,000 independent businesses operating in Arizona today, with a payroll of around 21 billion per year, and let’s focus on our state’s economy and what would be left of it if Amazon’s vision becomes reality.

“For every book store or hardware store that closes, one more accountant loses a job, one more web developer loses a client, one more graphic designer loses a project.”

Let’s say Amazon is successful in eliminating 20% of the independent businesses in Arizona. Most people understand the immediate job loss and can easily process the thought of, say, 5,000 people losing their jobs because businesses closed. “Amazon is hiring,” some people will say, and that’s true. So let’s be fair and say Amazon will create 1,000 more jobs over the next couple of years, leaving a net job loss of 4,000. But now, let’s move on to calculate the secondary jobs that were supported by the 20% of now defunct independent businesses. For every book store or hardware store that closes, one more accountant loses a job, one more web developer loses a client, one more graphic designer loses a project. Soon these supporting businesses will close down, because, well, Amazon isn’t hiring them for their services.

Now let’s measure the impact on real estate. How could we put a number or real value on the blight caused by over 8,000 closed up businesses littering our state? With no new start ups looking to rent commercial space, how many building owners would be forced into bankruptcy? What exactly would the world look like if we all decided to buy everything from Amazon? Where would we all work and how would we earn enough money to keep shopping on Amazon?

“With no new start ups looking to rent commercial space, how many building owners would be forced into bankruptcy?”

Given this bleak picture of the world, which may or may not come true, it’s unfathomable that Amazon has convinced so many people that they should not have to collect sales taxes as every other business has in the history of this country. Sales taxes, or transaction taxes, are collected to pay for services we all enjoy like police and fire protection, libraries, neighborhood services, parks, transportation, and additionally, a small percent of sales taxes are dedicated to education. Anyone interested in improving education in Arizona should be screaming for consistent sales tax collection.

The word TAX has become such a political lightening rod that people are not thinking clearly about which tax we are talking about. This is not a corporate tax that causes companies to have to reach into their profits to pay, nor is this a NEW tax. This is the tax that consumers have always paid on their purchases in order to be able to enjoy the services I outlined above. We could revisit our founding fathers’ logic and decide that we all want to opt out of fire protection or any other services provided by the city, county, or state, but it’s a safe bet that most people are not ready to fight their own house fires with garden hoses.

“Anyone interested in improving education in Arizona should be screaming for consistent sales tax collection.”

Recently the Arizona Department of Revenue handed Amazon a bill for $53 million to cover part of the taxes they failed to collect between 2006 and 2010, and there was some public outcry about this being “unfair” to Amazon. Think of this bill as a simple fine for breaking the law. With four distribution centers located here in Arizona totaling over 4 million square feet of space, Amazon is and has been refusing to collect transaction taxes on sales conducted to the people of Arizona.

Every other retailer operating in this state collects these taxes, whether they are on-line or bricks-and-mortar businesses. Order from Walmart on-line and you will pay AZ transaction taxes. Order from Land’s End and you will pay the same taxes because their parent company, Sears, has stores here in Arizona, even though Land’s End does not. They are law-abiding companies doing business here and enjoying a comfortable profit.

I have heard many Amazon defenders claiming that forcing their company to collect sales tax flies in the face of free markets. In reality, allowing one company to be exempt from a law requiring all transactions to include a tax for municipal services is absolutely anti-free markets. I don’t know a single independent business that wants a government hand-out. In fact, most are happy to compete as long as the playing field is level.

“Amazon is and has been refusing to collect transaction taxes on sales conducted to the people of Arizona. Every other retailer operating in this state collects these taxes, whether they are on-line or bricks-and-mortar businesses.”

Amazon will most definitely take Arizona to court over their $53 million bill, not because they feel they have a case, but just to drag the battle on longer. Meanwhile they continue to ignore the tax, which gives them a 9.3% advantage over all other businesses. They may offer the Arizona Department of Revenue a bargain and agree to collect the taxes starting in 2014, which is what they did in California, but in the duration how many other Arizona businesses will be lost?

Arizonan’s are currently the 7th LEAST taxed people in the union. If we fail to pay sales taxes our services will decay rapidly. Already it is estimated that Amazon has failed to collect upwards of $750 million in sales taxes, so let’s not be surprised when we get our next property tax bill and it’s double what we expected. The taxes have to come from somewhere. It’s in our best interest to stick to the agreement we have and pay our sales taxes and to require businesses operating here to collect the exact same taxes.

Senate Bill 1338 is currently moving through our legislature and will close Amazon’s last loophole by specifically requiring businesses with warehouse space OR retail space to collect the same amount of sales tax. This initiative, which supports the very fundamentals that makes capitalism work in this country, is nothing short of the only solution to save jobs in Arizona.

 


  • Excellent piece.

    If I recall correctly, Amazon’s argument against having to pay sales tax in CA was that it didn’t have premises there. Since it does it AZ, I wonder what its argument is here.

    • essentially the same argument…they say they don’t have retail space here so they shouldn’t have to collect. they say warehouses are exempt.

  • Was with you until this: “With no new start ups looking to rent commercial space, how many building owners would be forced into bankruptcy?”

    The point of creating more startups isn’t to fill unused, overbuilt commercial space, it’s to create new things that solve problems for potential customers.

    And any startup smart about their money won’t move into commercial spaces unless they absolutely have to or they require retail space.

    Amazon SHOULD pay sales taxes, as their fulfillment centers use facilities that taxes help pay for. With that part I agree.

    But on another note, why are small businesses continuing to compete with Amazon? They should be setting themselves apart by providing what Amazon can’t provide (community, culture contributions, etc.) instead of stocking items that are cheaper somewhere else.

    • Of course the point of the article is not to fill more commercial space and yes we have grossly overbuilt. The point is that, as retails stores go under, so do all of the services like print shops, accountants, payroll service providers, etc, etc in those commercial spaces. Just a side point to get people to understand that it’s not just the retailers who are impacted.

      Start ups not only create retail jobs they create service jobs

      Wasn’t suggesting retail start-ups take commercial space..

      it’s unfair to lump all small businesses into this statement of yours:

      “But on another note, why are small businesses continuing to compete with Amazon? They should be setting themselves apart by providing what Amazon can’t provide (community, culture contributions, etc.) instead of stocking items that are cheaper somewhere else.”

      There are plenty of small businesses who aren’t trying to compete with Amazon but just because they aren’t does not mean Amazon should be exempt fro collecting taxes. Some businesses do try to complete and many of them will fail- sales taxes aside- if they have poor customer service or if they have poor stocking choices or odd or inconsistent hours- plenty of reasons for them to fail. BUT lots of them have figured out ways to compete without going head to head on the same products. Totally agree with you on your point- they should be setting themselves apart. But that is not why I am passionate about this issue and nothing to do with why I believe we should level the playing field. LFA works every day to show these companies how to be better. Some get it and some don’t. But that’s totally an aside to this article

  • Frank Savage

    Hello,

    Mrs. Lanning, you seem to complete miss the point of e-commerce and how use tax works in Arizona, and many other states for that matter. Arizona requires that private citizens report their use tax– “Use tax is due when tax was not paid on purchases made over the Internet, through toll-free numbers, from mail order catalogs and from out-of-state locations. An individual will use their Arizona individual income tax form to report unpaid use tax.” (http://www.azdor.gov/) This bill and the charging of Amazon is a way for the senate to double dip in Amazon and private citizens’ pockets. Amazon does not have to pay sales tax in Arizona because their WAREHOUSES are located in Arizona not their servers where the sale is ACTUALLY made. If they are not paying property taxes and other state use tax then you have an argument.

    You’ve made statements such as “Every other retailer operating in this state collects these taxes, whether they are on-line or bricks-and-mortar businesses.” This is a complete and total fallacy. You seem to ignore that there are many retailers operating on such sites as eBay, Amazon, and throughout the internet (of which many are these independent “mom and pop” stores you speak of.) Whether or not they collect sales tax is a choice, and one way or another as these businesses report profits and sales, tax is collected. You also seem to outright ignore that Amazon offers free e-commerce services to many local business and more specifically the “mom and pop” shops you speak of. These services not only empower those shops, without the means, to continue competitive business, but also helps running a business in Arizona that sells goods on-line affordable. I sincerely question your motives.

    It is not “Amazon” who has convinced people. It is the GLOBAL e-commerce infrastructure that generally does not collect sales tax. I’ve purchased items on-line from 5 different companies in the last month. Not a single one charges sales tax.

    “This initiative, which supports the very fundamentals that makes capitalism work in this country, is nothing short of the only solution to save jobs in Arizona.” There are in fact MANY other solutions to saving jobs in Arizona, but unfortunately people like you have a voice that enables politicians to get more money while appearing as though they are trying to better the lives of citizens. And if this is the ONLY solution then we Arizonans are fighting a losing battle.

    I would suggest that as an “economic specialist” you seek to find a better definition of capitalism, because it is a grim climate and Amazon is not the problem. Too bad that you could not have written an article with as much passion about the banking system. Possibly reflect on how those banks that make sales IN Arizona cause harm to Arizona’s economy, and capitalism in general.

    I am generally a firm believer of your causes,stance on issues, and I LOVE LFA, but this is disappointing.

    Thank you for your time,

    Frank

  • Frank,
    Thanks for taking the time to respond. While you and I disagree entirely on this issue, I am in full support of a complete discussion and would choose discourse over apathy any day.

    That said, I would like to respond to your points. I am very aware of the use tax and how it works. It is not true that all retailers in Arizona have a choice of whether or not to collect this use tax. Private citizens are not reporting their taxes in the manner in which you describe- the vast majority have no idea they are supposed to report this unpaid tax , and both you and Amazon are aware of this. To put this burden on the consumer is unrealistic- what if all 40,000+ independent businesses decided tomorrow we were not going to collect sales (use) taxes and report them every single month- and simply shrugged our shoulders and said- “hey, not my fault if the state falls apart- it was the consumers’ fault for not reporting!” This concept is a laughable, Frank, and shows that you’ve really drank Amazon kool-aid. Do you report your purchases? I’m just curious.

    Further, the requirement to collect sales tax is an existing tax policy based upon a physical present in a state – not where the sale takes place. If that were the case then Target.com would not collect sales tax in Arizona. Target.com collects because of the physical presence they have. Furthermore, if a company is owned and operated by law abiding citizens – which I believe most Mom and Pops are – they are collecting the sales tax in Arizona when a sale is made to an Arizona company. Collecting sales tax is not a choice it is the law – if you have a physical presence in Arizona.

    Your email suggests that somehow having Amazon collect taxes will force the on-line mom and pops they support out of business. Are you suggesting that those on-line mom and pops can’t compete on a level playing field- that somehow requiring them to collect the same taxes that the rest of us collect every day will force them under? Perhaps as you suggest, they are only able to survive by skirting the law, blaming the consumer for not reporting their purchases (and paying their taxes later), and enjoying the false rewards of a 9.3 percent discount? I believe you are underestimating these on-line mom and pops, and I know most of them will survive with this new policy because they will adjust their business model and compete. Some won’t make it- true enough- but business is business and failure happens in the world of bricks and mortar and on-line retail. This fact should have no impact on the push for e-fairness.

    Offering to support e-commerce for a local company does not exempt that local company from collecting the tax just as a local store owner on Main Street must collect the tax – it should be equal regardless of where in Arizona you do business whether on mainstreet or mainstreet.com.

    You mention you have bought 5 things on-line in the past month and none of them collected sales tax. Did they all have physical presence in Arizona? And if so, I’m curious if you’ll name them here in your response- if they are right, Frank, and they are not supposed to collect tax here, then you should have no concern about naming them for all to see. Please let us know who they are. And also, please let us know if you honestly plan to report your purchases on your tax return.

    This concept of double dipping you mention is simply bizarre. You really think people will report something they bought on their tax return that they already paid tax on? And to suggest that paying property tax is sufficient and should exempt Amazon from collecting sales tax is equally irrational. I’ve been paying both for 25 years now- and so is nearly everyone else! If you are a man who is simply against all taxes then I suggest you check out of the system entirely. I would help you do that- because frankly- the rest of us are paying your way. If you are buying on-line only and not supporting the use tax system, then we should be able to let you opt out of fire protection, police protection, public schools, parks, transportation, city services like trash collection, etc. Let your street light go dark in front of your house, Frank, because you didn’t contribute- and go thank your sales tax paying neighbors for their help in carrying your weight while you’re at it.

    One point you made that I agree with is that this is clearly not the only way to save jobs in Arizona, it is one of many. I was being dramatic, fair enough. And I will save the writing about banking for another day.

    It’s too bad you had to question my motives, because I think they are on my sleeve for the whole world to see. I want to save independent businesses in Arizona, I want to save jobs in Arizona, I want a level the playing field to encourage fair competition, and I want to continue to enjoy a high quality of life that sales taxes afford here in this state I love.

    I will not question your motives, Frank, because I can respectfully disagree with you.

    Lastly, I am Ms Lanning, not Mrs Lanning- unless you want to speak to my mom.
    Kimber

  • Frank Savage

    MS. Lanning,

    I stated five different companies (not items)

    GoDaddy.com (copy and pasted from my receipt – Tax:$0.00)
    WalMart.com (charged sales tax for items I was picking up at the store, but not those that were being shipped to me)
    Spencers Gifts.com
    Amazon.com
    An smaller eBay retailer (that is located in Arizona, but to publicly announce them under this forum would be unfair)
    Every single one of these has a “presence” in Arizona. GoDaddy? Why are they not charging me sales tax? Both GoDaddy and I are BASED in Arizona.

    I was stating that you have disregarded that companies like Amazon lend to enriching private small business. I did not state that they would shut down without Amazon.

    Yes,
    I have already filed my taxes this year and, among other use tax, I reported approximately $100 of merchandise specifically from Amazon.com.
    So, if this bill passes the state of Arizona will now refund this tax that they are going to collect from Amazon? Because it was Amazon’s liability and not mine?

    My response speaks specifically of collecting tax via e-commerce. The 40,000+ independent businesses collecting sales tax figure is irrelevant.

    You miss the point of what I meant by douple-dipping. The state is certainly getting some form of use tax. You retort simply insults people’s intelligence. If you take the time to go to http://www.azdor.gov (Dept. of Revenue) Use Tax is clearly visible within the third paragraph just under the statement for the deadline for filing this year. So, they are in fact collecting tax from private citizens, and THEN they are trying to stick Amazon with a bill for at least some portion they have already and are going to receive.

    You’ve also convoluted the most important point…it’s not about Amazon-kool-aid. It’s about logic, and pointing out a lack of understanding. Amazon is NOT making a sale IN Arizona. Arizonans are purchasing goods in Arizona via encrypted binary code that are in a blink of an eye transmitted to what appears to be Seattle (headquarters) or Virginia (web services-not exactly sure where their servers are located.) This is where Amazon is making their sale. It is as simple as that. Just because they have a warehouse here does not matter. It is an order “Fulfillment Center”. They’re just another big company as far as I’m concerned, and it jut seemed like it would be easy to point that out to you. You seem to have a anti-Wal-Mart style approach to this matter, and it is not suiting. An anti-Wal-Mart style approach towards Wal-Mart; you here no argument from me.

    Again, saving jobs, changing and improving upon the quality of people’s lives, preserving independent business, and improving environmental standards in this state has very little to do with this bill. It seems like someone has been drinking the tax-money-for-politicians-kool-aid.

    I have a disable five year old who to this day does not speak in full sentences,does not eat solid foods (stage 2 baby food – about 20 jars a day,) and is still in a public school pre-K program. When he was denied state help because of budget cuts and restraints the last thing I did was blame Amazon. Your tone on this subject acts as though we will get the help he needs once a bill like this passes, and the sun will shine even brighter in Arizona. You and I both know that’s not true. Well, the sun part probably is.

    I’ll probably still vote for you if you ever decide to run for mayor.

    I sincerely appreciate your response,

    Thanks

    • Frank Savage

      One last thing.

      I wish you did question my motives.

      Your article simply – did not sit right with me.

      Frank

  • Frank!
    Ah! We are making progress! We are talking about two different things.

    If the bill passes you will not be given a refund for past taxes you’ve paid, no. But going forward you will pay taxes on purchases at the time of the sale and will no longer need to file them. You are referring, I believe, to the $53 million bill the Department of Revenue just sent to Amazon, which is completely unrelated to this bill and was actually a surprise to me. That said, you are very correct: if they are successful in collecting the $53 million, I doubt they will offer you a refund- that is a fair point. I have no idea how they came up with the $53 million number as every expert agrees Amazon’ts sales just last year alone to Arizona residents indicate they didn’t collect closer to $175 million- a much larger sum.

    You didn’t pay taxes to Go-Daddy because they a qualified as a service provider. This is about retail sales only.

    Wal-Mart states publicly over and over that they collect tax on in-state sales; they have been tested on this repeatedly- I have no idea why yours didn’t get taxed. Spencer’s should have charged tax most definitely. Thank you for sharing those.

    I understand that Amazon enriches small businesses- I have spoken to many of them- but I am not trying to place them at a disadvantage; I am saying they should compete fairly. I support them and applaud them- leveling the playing field is not the same as placing them at a disadvantage or disregarding them.

    Frank I have to insist that is you who is misunderstanding- the law does not state that physical presence is eliminated if the actual, technical sale happens elsewhere- they have physical presence here no matter where the actual technological calculation is made. The law says nothing about where the transaction occurs. If their merchandise wasn’t in Arizona- if it wasn’t shipped from within Arizona- you would have a point. I agree that this is simple logic. Our bill just goes one step further by defining physical presence as both retail store fronts and warehouses for shipping merchandise.

    Let me extend my best wishes regarding your 5 year old child. And also my outrage that you are being denied the help you deserve- once we plug this tax loophole in the system, I will stand with you to help reinstate the state’s health care benefits that have been eliminated. Don’t throw in the towel yet- I believe in the power of the people. While we have seen our fair share of corruption, I believe the system can correct itself with good people working for change. e-commerce has kept over a trillion dollars out of state coffers around the country in the last 10 years, and our elected officials are blaming each other for wasting money. And they are partially to blame. The fact is, the money was never collected. And meanwhile families like yours are being denied the help they need.

    We can fix this, I swear we can.
    Kimber

    • Frank
      Thinking about this more and want to make two additional points about our Bill.

      First, it has nothing to do with retroactive tax collection. Let the past be the past- all we are asking is for them to collect the use tax at the time of the sale going forward. I am not advocating for going back and retroactively forcing them to pay what they never collected. The Arizona Dept of Revenue is doing something altogether different.

      Secondly, regarding your stance that Amazon should be exempt from collecting sales tax because the transaction happens in a nanosecond somewhere else.

      Even Amazon is not claiming they shouldn’t have to collect taxes here in Arizona because the “transaction” happens elsewhere. That is not what they are basing their claim on. They are claiming they don’t have “physical presence” here in Arizona because they claim the term physical presence refers only to a store front. So our Bill aims to further define “physical presence” as storefront or warehouse. Simple as that.

      Hope this helps.
      Kimber

  • Frank Savage

    And that is the problem is it not? It IS a warehouse. It is a distribution site where no sale whatsoever is made. So, despite the obvious, there’s no retial sale going on here, this bill seeks to twist definition where there happens to be a loop hole. That’s what happens with taxes; there’s loop holes. Get over it. There’s nothing illegal about tax loop holes, and to discuss them as though they are is careless.

    A warehouse is a warehouse and retail is retail. Which by definition is “The sale of goods to the public for use or consumption”. So while GoDaddy is DEFINED as a service provider their services function by definition as retail. I bought something from them and now I use it. You seek to refine a definition, but ignore those already in place. Your argument would actually be stronger if you were seeking to redefine GoDaddy’s practices. GoDaddy uses a loop hole, and you’re okay with their use of this loop hole.

    Why is it that Amazon is claiming they do not have a “physical presence”?
    They may not be using the wording, but that is exactly what they are saying. “Our retail sales do not have a ‘physical presence'” because they don’t have a store front here; on-line or otherwise.

    This redefining of what a warehouse is only gives more weight to statements such as “public outcry…’unfair'”

    If I was a resident of California, but owned a home in Arizona and drove my car to and from. I would have to pay property tax on the home, but it is not until I decide to be a resident of Arizona that I pay registration fees to Arizona for my vehicle. And while in Arizona if I happened to make a business call that finalized a sale for my company I would not be subject to Arizona taxation. Amazon is filling orders, not even finalizing sales transactions, here in Arizona.

    Lets leave Amazon out…

    And I say, “Okay” it is as simple as that. This bill seeks to obtain sales tax on flow of any goods out of a warehouse located in Arizona even though there is no sale actually occurring. Something leaves a warehouse it’s taxed. This bill is seeking a state to state and local trade tariff (tax). Well that is until, (if) this bill succeeds and the definition of what a warehouse is, is redefined. If a company makes absolutely no sales in Arizona, but stores merchandise here they need to be taxed prior to the merchandise leaving the warehouse? I understand that is most likely not what the bill aims for, but by redefining “warehouse” that is what occurs. Even though the sale did not occur here their “warehouse” is distributing the product from Arizona. Some companies with their own distribution centers tend to purchase the merchandise from their own distribution center (receive invoicing and everything), they then sell the product, and collect sales tax from customers. The redefining of warehouse would alter this process requiring a company to charge themselves sales tax for their own goods to leave a distribution center, and then charge sales tax to their customers. Now of course these companies would simply alter their methods if that were the case, or are they simply not obligated to tax their warehouse because they are not Amazon?

    Here is the definition of warehouse:
    1. A place in which goods or merchandise are stored

    and in business
    1. (Business / Commerce) a place where goods are stored prior to their use, distribution, or sale

    We can “further define” all we like. I am not a “black and white” person in general, but when it come to a definition they are just that. As you will see the real definition of a warehouse negates a sale from its definition. When products leave a warehouse the sale has already taken place. A warehouse does not concern itself with taxation because it is not its function and certainly not it’s definition.

    Your argument has so much conviction I hope this bill does pass now, but that is also because I’m a fight for the little guy, root for the underdog, “stick it to the man”, etc etc kind of guy. There are leaks and holes within the argument, but oh well…

    Born, rasied, and spent my whole life in Arizona,

    Frank

  • Will Novak

    I love LFA and support shopping local big time, but I think arguments like these are going down the wrong track. I don’t shop local because it keeps some nameless faceless accountant employed. This argument basically comes down to “Don’t shop with Amazon, they’re too efficient and don’t keep enough people tertiary people on the books” which strikes me as bizarre.

    This argument is very akin to if you lived in 1915 and were begging people to keep buying horses and buggies because your friend Jimmy made them and you didn’t want Jimmy’s Buggie to go under. Its fighting a losing cause.

    Lets shop local because we enjoy the sense of community that local shops give us. Lets shop local because just standing inside Zia feels better than perusing albums online. Lets shop local so we have a better ability to asses and control the quality of the product were getting.

    But when we cry “no fair!” about who is and isn’t paying whatever tax, and are trying to save the jobs of accountants we’ll likely never meet, we fail to have a compelling argument that most people are interested in.

  • Frank,
    Ok the two of us are spending tooooo much time on this but I am going to give this one last shot. lol. Maybe we should arm wrestle 😉

    OK so you are under the wrong perception that Arizona charges use tax when/where a sale takes place. That is not how the law is written. It says businesses must collect sales tax if they are conducting business and have a physical presence. Period. Rightly or wrongly that is the law. I don’t know why you keep indicating the law bases the collection of tax on where the transaction takes place. Other than the fact that Amazon has made that claim but they have not tried to defend it in court in Arizona.

    Amazon is tampering with the definition which is black and white- they have 4 million square feet of physical presence which they claim doesn’t count. They have failed in every court case they have tried to claim that they should pay tax only where the transaction occurs and not where the merchandise ships from and/or where they have physical presence. They lose over and over because it is immaterial to the court if a computer wire carries the sale to Seattle and back again. I could argue that using a credit card processor in China means the sale takes place in China instead of in my shop.

    Frank, if Arizona law said a company must collect use tax only in the place where the sale takes place you would have a great point. But the law says a company must collect tax if they are conducting businesses and have a physical presence. They have a licence to conduct business in Arizona, and they have physical presence in Arizona. We are not tampering with the definition of a warehouse. That is not the issue. The issue is that Amazon says a warehouse does not count under the definition of physical presence and the courts have historically shown they agree with us. A warehouse is considered physical presence. WE ARE NOT TWISTING DEFINITION OF PHYSICAL PRESENCE. And most warehouses are for wholesale products which are not taxed when being sold to a retailer who must collect tax.

    Your example of Arizona vs California is correct and Amazon has decided to move to Arizona and open 4 million square feet of space. Physical presence.

    If you haven’t read this, please do. http://www.dailyfinance.com/2012/02/03/tax-doomsday-is-coming-for-amazon/

    Kimber

  • Will,
    Thanks for letting me know. I wish, above all other wishes, that most people were like you. However, most people are not motivated by the experience they have in local stores. When I started Local First, I geared all of our messaging toward people like you, whom we call the low hanging fruit. But most people are motivated by cheaper prices and they are the ones this OpEd was written for. People need to understand that “cheap” is costing them a fortune. It’s not about a faceless accountant- it’s about a father, or brother, or aunt or wife, losing a job because everyone decided that cheap was more important than customer service, American made goods, or quality experience.

    It’s not you that I’m worried about- it’s the people who visit a retail store and spend a clerk’s valuable time to learn all about a product, and then leave to go buy it from Amazon where they can save 9.3% in sales tax (even if the item is priced the same). This is happening all day every day right here in Arizona and I hear about it constantly. Arizona’s retailers can’t survive with this disadvantage.

    Amazon is efficient, that’s for sure. But they are also crooks who have a single goal of being the biggest- and they are skirting laws to get there. I find it truly fascinating how many people defend them. Many of us believe they are the Bernie Madoff of retail, really, and time will tell.

    I’m sorry you feel like I’m just crying “that’s unfair” because more than anything, I am not a whiner. In fact I’m a pretty fierce fighter.

    But I do appreciate your feedback
    Kimber

  • Hi Kimber, I just wanted to commend you on this article. I have now read it 3x trying to remember how you phrased your points because I plan on spreading the message in it :). I’ve spent a lot of time working with small businesses and your points on fair competition are spot on and really speak to me personally. I am probably one of your “low hanging fruit” as well, but I think times are changing. There are more and more of us delicious low hanging fruit here now that believe in buying from Cindy and the PHX Public Market, from Jane and Lisa at Practical Art, from Carly over at Carlys. We go there because, yes we want to support the local business, but more importantly, we value the quality of the product and the relationships built there.

    I have had several people ask me time and again if I were ever offered a “hand-out” from the government to run my business would I take it? (Actually had to reiterate it this week!) My response is always no. Correction: “HELL NO.” A “hand-out” is never free. Someone is paying for it. And that someone is usually tax payers. Would you be ok with taking money away from schools, libraries, parks to fund your business? — A business that is doing perfectly fine turning a profit? I just don’t think people realize that part of it. They think, oh fantastic, no tax..awesome. But they don’t see the millions lost that could have created schools, libraries etc all because you’d rather not pay taxes upfront on your purchases through amazon.

    Anyways, I believe a shift is happening here Kimber. Someone’s spiked the water because everyone is buying local and incredibly proud of it. What you’ve built here has created quite a strong culture that makes me proud to call myself a Phoenician. And there is an army here ready to take up and march if you lead it.

    p.s. I’ve heard the story of you punching the thief in the face. I do not doubt your fierceness.

    Kindest,
    jpoon

  • Lorraine K Vail

    I buy local and look for US manufatured goods. Also, I research the internet, and when local isn’t available or price competitive, I will buy on line and I expect to be charged sales tax. But I am not sympathic to the argument that Amazon’s tax evasion and failing businesses are the root of Arizona’s revenue problems. If Arizona wants to generate more tax revenue, and it should, the income tax rates need to be raised. Being dependent on excessively high sales taxes hurts those who are the least able to pay, and puts Arizona businesses at-risk for people for price shop on line.

  • Lorraine,
    Totally agree we need to completely revamp the whole suite of taxes here. We have attached too much weight on sales tax, which is the most volatile of all taxes and keeps us on the boom and bust ride. However, that is another battle. I believe we need to deal with this very real e-fairness issue right now and work on the tax structure next. Tax reform in this state is a 5-8 year battle and if we wait on the e-fairness issue the devastating impact will be irreversible.
    The time is now, in my opinion to tackle this first, and then revising the tax code is of utmost importance.