published Monday, September 19th, 2011

Group says Amazon.com sales will cost Tennessee $3 billion, 10,000 jobs

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    Katherine Braun sorts packages toward the right shipping area at an Amazon.com fulfillment center in Goodyear, Ariz., in this Associated Press file photo. Some Tennessee lawmakers object to Amazon not paying sales taxes on products that will be shipped from its Hamilton and Bradley fulfillment centers.

NASHVILLE — Sales by online retailers like Amazon.com, which is building two distribution centers in Southeast Tennessee, will cost the state as much as $3 billion in revenue and the loss of over 10,000 jobs over the next five years , according to a new analysis released today.

The study was commissioned by a national group of traditional brick-and-mortar retailers, ranging from small mom-and-pop stores to giant chains such as Wal-Mart.

“If the state is deprived of the $456 million-plus [annually] in sales tax revenues, there are fewer dollars to provide state services,” said Sharon Younger, president of Younger Associates, who was hired by the Alliance for Main Street Alliance to analyze figures from a previous study by the University of Tennessee study.

She told reporters at a news conference that the figures take into accounts other lost jobs in the private sector and other tax revenue declines because those who lose jobs will spend less.

The Alliance’s Tennessee spokesman, Mike Cohen, said the study underscores the need by Gov. Bill Haslam to revisit the sales tax-collection exemption that his predecessor, Phil Bredesen, struck with Amazon to get the giant Internet retailers to locate the warehouses in Tennessee.

The agreement says the company can continue not collecting sales taxes despite having a physical presence in the state. Tennessee retailers’ contend that online retailers like Amazon enjoys an unfair advantage because they do not have to collect state and local sales taxes that range from 7 to 9.75 percent.

Cohen pointed to an agreement Amazon struck earlier this month with California to begin collecting sales taxes within 12 months and a similar agreement with South Carolina to begin collecting sales taxes within 4 1/2 years.

He said while Alliance for Main Street Fairness “applauds” Haslam’s efforts, “we hope there’s pressure on Gov. Haslam; we hope there’s pressure on Amazon to do the right thing and they’ll do in Tennessee what they’ve done in California. Do the right thing. Get on a level playing field. Nobody’s afraid of competition ... We just don’t want goverernment saying someone can have an advantage.”

During today’s news conference, Nashville businessman Allen Doty, a partner at Cumberland Transit, a bicycle and outdoor recreation store, said he has some customers who visit the store, check out products and then leave to purchase them online where they do not have to pay sales taxes.

The Younger analysis does not take into account the $139 million Amazon is spending to build the two warehouses nor the 1,500 full-time employees and estimated 2,000 seasonal employees Amazon is hiring. The company also has plans to open a warehouse near Nashville.

Read more in tomorrow’s Times Free Press.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
maddawg said...

Somehow I just don't believe this. Make up any numbers to support your cause.

September 19, 2011 at 2:15 p.m.

Dumbest reasoning ever. There is no parallel between Amazon and a traditional brick and mortar. $3bil lost revenue? What about the revenue from the jobs being created? If Amazon had never decided to build here, would the state be blamed for losing the jobs and the revenue from the taxes generated by the workers plus the $3bil counted in this article? Maddawg is right.

September 19, 2011 at 2:27 p.m.
Janestrong said...

Very typical, narrow minded response to progress in Chattanooga. I am old enough to remember the resistance to bringing in Dupont and building the Chattanooga Aquarium. I buy online and I buy in brick and mortar stores. I am so proud of Chattanooga with the new VW plant and the Amazon distribution centers.

September 19, 2011 at 2:45 p.m.
adolphochs said...

Trying to prove a negative and then compounding the hypothetical by extrapolating. I'm guessing they're using a marketing major instead of a statistician.

September 19, 2011 at 2:46 p.m.
bearhunter said...

Amazon has been around for a while and it's just now costing job s thats a load of crap. I welcome Amazon and any off shute business that come with it. i would imagine that UPS and Fed-EX will require more people to handle the Amazon shipments so that created extra job there. Hardee is building new resturant near Amazon location in cleveland.

September 19, 2011 at 3:05 p.m.
obama4president said...

Let's see... Amazon is ADDING 3,500 jobs (1,500 full-time and 2,000 seasonal). As the wages from these new jobs are spent in Tennessee it will more than likely ADD $30 million, or so, in sales tax revenue over the 5 years.

Don't forget that there will be many new jobs created by other businesses as the cash from all of the new Amazon jobs flows into the local economy. Then the wages from these new jobs are spent and more sales tax revenue and more jobs are created.

How much sales tax revenue and how many other jobs were created and /or supported by the $139 million that Amazon is spending in Tennessee by the time their doors even open?

If Tennessee decides to renege on its deal and Amazon decides to go somewhere else then the 10,000 jobs will be lost PLUS the 1,500 full-time and 2,000 seasonal jobs that Amazon is creating PLUS all of the jobs that these wages would have created.

This study ignore ALL of the benefits and quotes loss of revenue that does not exist, or will be lost whether Amazon is here or not.

September 19, 2011 at 3:06 p.m.
pmeadows9 said...

In my opinion, this research is very short sighted, and very self serving to the brick & mortar establisments that commissioned it. I don't believe having an Amazon distributon center in the state will affect the sales of store front establishments, nor will it deprive our state of sales tax revenue. Store front vs online are totally separate business models, and just because we have a distribution center in the state shouldn't increase online sales at the expense of store front sales. If Amazon located in a border state or half way across the country, Tennessee wouldn't derive any tax revenue,and most online purchasers don't care where the distribution facility is located. To address the retailer who said customers look at his product in the store and then purchase online, that could still happen if it's shipped in from another state that Amazon chose that offered the same type tax deal we did,before trying to reverse it after the fact. Bottom line is some customers are always going to appreciate factors such as seeing/touching the product, personal customer service, return policy and the ability to take it home today, while others are shopping for price and home delivery. The successful retailer will ultimately be the one that best serves the customer with all factors considered.

September 19, 2011 at 3:13 p.m.
biofish said...

If I don't play the lottery, it will COST me 5 million dollars.

September 19, 2011 at 3:17 p.m.
Didedi62 said...

Quit your complaining about the taxes. Be thankful that this company is hiring and that 2000 people will have jobs. Our economy is so bad right now that nobody needs to hear anything else about taxes. My family I are taxed to death and I'm sure that other families are in the same shape. I am thrilled to have Amazon.com come to our area and if they was promised this in order to come to here then our Gov. needs to leave it alone. For all of you that will be hired by Amazon I am so glad you will now have a job. BE HAPPY!!!!

September 19, 2011 at 3:19 p.m.
PaulWilson said...

Did anyone else reading this hear a crying baby off in the distance?

September 19, 2011 at 3:24 p.m.
LibDem said...

The distribution centers in Tennessee will not change the sales volume. When you order, you don't know which center will handle the shipment. Proximity is irrelevant.

Having said that, it's pitiful that states tremble in their boots when dealing with large corporations on the sales tax issue. Get a little backbone.

September 19, 2011 at 3:35 p.m.
harrystatel said...

BS. However, if we eliminate the Governor and State Legislature everybody wins (except the parasites in office).

September 19, 2011 at 3:43 p.m.
BJResh said...

This is fear mongering, plain and simple. I can think for myself, thank you very much. We don't shop at Amazon because of where they are located. It is price, convenience and availabilty of product that has had us shopping there for years. Moving here is not going to change our buying habits. We will still buy from local retailers when we need something right away, want to try it on first, etc. I will still shop at JC Penney, Coldwater Creek, Walmart, Lowes in their stores and on-line. Whoever has what I need at the best price is who gets my business. It has nothing to do with taxes or location. Amazon tends to have more product choices, especially with electronics, movies, books and their prices tend to be lower BEFORE taxes. You can also join Amazon Prime for a annual fee and get free shipping on most items, right to your door...no fighting with traffic and parking. I won't shop locally any less now that htey have a distribution center here. It is just that...a DISTRIBUTION center. You can't just walk in and pucrchase items, you still have to order like always. Most of our politicians will listen to whomever has the most bucks to hand out. Sad, but true. Just follow the flow of money.

September 19, 2011 at 3:47 p.m.
mrredskin said...

15 comments and everyone agreeing. wow.

September 19, 2011 at 3:49 p.m.

"The study was commissioned by a national group of traditional brick-and-mortar retailers, ranging from small mom-and-pop stores to giant chains such as Wal-Mart." 'Nuff said!

September 19, 2011 at 3:52 p.m.
hambone said...

When I read an article like this I always read it with the thought in mind of what the motive is.

In order for Tennessee to loose $456 million in sales tax every man, woman and child in Tennessee would have to spend $1,025 each ordering online from Amazon.

As one who has never placed an order with Amazon I cannot believe one word of this article!!

September 19, 2011 at 3:55 p.m.
nowfedup said...

Just a few questions, how much "tax breaks-incentives", besides no sale tax went to Amazon. Then how much sales tax in dollars, will the employees pay, not what they gross and remember over half are part time. Exactly what are "Employee benefits" in who pays for what. Why should ANY business NOT be allowed to collect sales tax if they sell here, regardless of the "no store" etc? Was this a contract or what with Bredesen,they site or "Agreement", what is legal status of "agreement"? Can a Governor do anything like a "Contract" to alter taxes? Does this set a precedence of some kind. And lastly what is the real impact on TN, and why is Amazon so upset about collecting TN sales taxes, as such is just a minor SW program, if they are not trying to seriously undercut TN business with 7-10% advantage, WHY not collect? There is something not being stated when a huge corporation can literally hold a state ransom and dodge tax issues like this one.WHY?

Really bizarre, odd thing as "store front, brick-mortar can actually sell though Amazon and NONE pay any sales taxes, AKA Amazon can assure 7-10% lower costs though them for a 3% or whatever fee they charge, which almost sounds like extortion as if stores competition goes on Amazon, they are 7-19% cheaper off the top, and that margin plus credit card fees can seriously impact small business profits, something really wrong with this bit of larsony7 So a lot of questions not being asked, more so in a state that can ill afford to lose taxes as at bottom of list in about every category. We really need a bit of "well let's see about this one" and as far as Bredesen approved" I doubt he had any authority and no UPS etc will not have to hire extra people, a dumb remark. But WHY does Amazon NOT want to collect the sales tax, is NOT that big a deal, all other do so quite easily.

September 19, 2011 at 3:56 p.m.

We can't have poor Walmart being treated unfairly now can we. I find it humorous that, "The study was commissioned by a national group of traditional brick-and-mortar retailers, ranging from small mom-and-pop stores to giant chains such as Wal-Mart." seems like in years passed good old Walmart gave less than no concern when the traditional retailers were driven out of business as Walmart stores popped up all over.

September 19, 2011 at 4:10 p.m.
Dyan0221 said...

Nowfedup, you should really learn how to write coherent sentences before posting about articles. I can barely tell what you're talking about. From what I can gather (and I may be completely wrong on this one), you're asking why Amazon does not want to collect state income tax. If so, the answer is very simple: One reason people shop through Amazon.com is to save state income tax. So, they would lose those customers in the states in which they have distribution centers. It sounds pretty simple, to me.

This whole article and "study" is ridiculous. We can't look at all the sales that happen at online retailers and use those as a direct correlation to "lost revenue" for Tennessee. Besides, as others have pointed out, having a distribution center in Tennessee won't increase the number of people who shop through Amazon.com. Amazon coming to Chattanooga simply adds jobs, generates more income (to be spent and therefore taxed), and adds income to other related industries that support Amazon's business. It sounds like a win-win to me! Brick and mortar stores are going to have to sell online to compete, but that's not the fault of Amazon coming to Chattanooga, it's a symptom of the times. Deal with it.

September 19, 2011 at 4:17 p.m.
justaperson said...

What a bunch of bull. Shoppers won't change their shopping habits just because there is an "on line" store in town. They will continue to shop in their prefered mode. Those who shop on line will continue to do so, and those who like to brouse the malls will continue to do so too!

September 19, 2011 at 4:36 p.m.
hummingbird said...

Interesting math in this study. To generate $456 million in sales taxes you would have to have close to $4.5 billion in sales IN TENNESSEE. Amazon's annual sales nationwide in 2010 were $34.2 billion.Apparently we here in TN are VERY good customers.This is a national issue and needs to be resolved at that level.

September 19, 2011 at 5:12 p.m.
inquiringmind said...

The bottom line is the world is changing and the old brick-and-mortar businesses may be going the way of 5 and dime, and corner drug stores. This is like the liquor stores collaborating to argue against selling wine in the grocery store, since it cuts into their profit margin and keeps us paying more than we ought to have to pay.

September 19, 2011 at 5:44 p.m.
NorthChatter said...

WalMart comes in to a town and puts all the mom and pops out of business...now they are crying because someone is threatening their market share. Don't you just love the irony? As a small retail business owner, I have a really hard time mustering up any sympathy to WalMart and CBL (owner's of Hamilton Place).

As to the guy in the article that says "people come in my shop, look around, then order online"...well, they are going to do that whether Amazon has a warehouse in Tennessee or not (and before the internet, it was mail order catalogs, they didn't pay sales tax either)...at least this way they are providing jobs to Tennesseans.

September 19, 2011 at 5:47 p.m.
harrystatel said...

Who makes up Alliance for Main Street Fairness? Where can one find the members complaining?

Can't find the members on their website.

But spokesman Mike Cohen is the brother to Memphis Congressman and former State Legislator Steve Cohen whose love of taxpayer's money is legendary.

Seems Mike Cohen has his own problems.

http://www.knoxnews.com/news/2011/may/27/ackermann-pr-sues-former-exec-mike-cohen/

Before I do business with Alliance members, I'd like to know who they are.

In the meantime, I'm shopping at Amazon.com.

September 19, 2011 at 5:50 p.m.
duh1 said...

Okay, let's get this straight. Before Amazon decided to build the distribution center, exactly how much sales tax did Tennessee collect from them? $0.00! Before Amazon decided to build the distribution center, exactly how many jobs existed that will be lost? 0!

Just how is it possible lose something that you never had to begin with?

September 19, 2011 at 6:10 p.m.
rolando said...

Excellent comments here...straight across the board.

This thread shows exactly why paper news media absolutely hates the Internet -- yes, even the TFP...especially the TDP. Have you seen its paper product lately? It is the size of a magazine.

Paper newsmedia liked it when there was no direct, immediate backtalk to their ridiculous articles...they liked picking and choosing the letters they published. But the ads-reading readers [you folks] stopped all that.

September 19, 2011 at 6:58 p.m.
Johnnie5000 said...

I usually refer to Best Buy (member of the Main Street bs) as a showroom for Amazon, TigerDirect and NewEgg... I hate WalMart (also a member of aforementioned bs organization) with a fiery passion for running locally owned retail shops and grocery stores out of business all over the country.... Amazon has always been good to me... Good prices, fast shipping, excellent return policy...

Gotta side with Amazon on this one.

BTW, I am absolutely dumbfounded that there are so many commenter's agreeing with each other on here. That never happens. That kind of says something in and of itself.

September 19, 2011 at 7:21 p.m.
JJester said...

If Walmart is feeling the crunch of online buying it is about time. They sell inferior products and have poor customer service. In addition, Walmart ran off most "mom and pop" stores years ago. The internet is the way of the future, regardless of taxes collected. Just ask all the book stores, movie stores, etc. There will always be a need for some local stores, but they must make changes to keep up with the 21st century.

September 19, 2011 at 7:22 p.m.
tlogank said...

This is the most united I've ever seen commentors on a TFP story, makes me proud to see that you guys are buying into these skewed stats. The bottom line is, if we forced Amazon to charge sales tax, we would have zero new jobs (because they would not have come here) and people would continue to shop there just the same. I don't understand how that logic can be refuted.

September 19, 2011 at 7:26 p.m.
tlogank said...

what I meant to say was "..makes me proud to see that you guys AREN'T buying into these skewed stats"

TFP, you should really have an edit option on your comments.

September 19, 2011 at 8:14 p.m.
Humphrey said...

I think we should get rid of netflix so that blockbuster can rent more movies and not go out of business. Actually, no I don't. The market decided when someone built a better mouse trap. As for amazon, people in TN. will buy from there wherever they are, so we might as well have their jobs here instead of sending them somehwere else.

September 19, 2011 at 8:17 p.m.
architect said...

I want to support the brick and mortar retailers. But being retired and on a limited income, I am looking for the lowest prices on things I need. So paying no sales tax is appealing and gives Amazon an edge, especially when they charge nothing to deliver to your door. Amazon is now pointing out, through a note at the bottom of orders, that Tennessee residents must pay the sales tax voluntarily to the state.

And pigs will fly when Hell freezes over.

This issue needs to be resolved at the Federal level, not state by state. If Amazon has to collect state taxes, there will be more competition, and our local retailers will be playing on a level field.

September 19, 2011 at 11:06 p.m.
nowfedup said...

Dyan0221 said...Nowfedup, you should really learn how to write coherent sentences before posting about articles. I can barely tell what you're talking about" D, am sorry as post was simply a series of question for the more evolved adults to answer. Noted so far NONE of the posters, touched any of them, and they need to be answered to get full story.
Seems most hot about slamming WM and not to concerned about the details the make up this deal. News flash kiddies, A will cause loss of jobs, and not one of you clowns has indicated just what estimated sales tax will be from all those higly paid hourly workers. Note right now TN is among top ten POOREST stats and lower 5-10 in education, health care and other more civil areas. How much was given to Amazon to move here, how much will the workers pay in sales tax with their wages? How much is the true cost of Amazon moving here, the total costs? Sure does show that low education exists in TN when none address the reality of it all, just drool, run down WM and post. Simple fact is NO ONE addressed why Amazon will hold it's centers ransom for favorable tax breaks and then will not collect sales tax in TN, WHY NOT and was "Bredesen agreement" binding and legal? Sorry kiddies but none of you seem to have got your GED yet as hot button reply's are just cheap shots, perhaps that is why A is moving to a state desperate for manual labor as cannot find third world nations close enough.

September 19, 2011 at 11:42 p.m.
nowfedup said...

Any of you lil darlings want to comment on the Amazon in PA? http://www.huffingtonpost.com/2011/09/20/amazon-allentown_n_971851.html

Noted UT said estimate 6K TN jobs will be lost in this quick shuffle and noted not one of you can answer to questions I posted, not surprising.

September 20, 2011 at 10:28 p.m.
mandy_B said...

:)

March 22, 2013 at 4:32 a.m.
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