Lax tax for e-commerce cost US 260K jobs

July 19, 2011
Missouri News Horizon

Missouri News Horizon: Online shopping costing jobs

According to an article in the Missouri News Horizon, Dr. William Fox, director of economics at the University of Tennessee Center for Business and Economic Research and the co-author of a 2009 study on state and local revenue losses due to uncollected sales tax on online purchases, has presented new research at the Southern Legislative Conference in Memphis.

Although many at the conference have been focused on Amazon and its recent actions regarding sales tax, Dr. Fox looked at the larger picture and examined the effects of e-commerce not only on state revenue but also on jobs:

“The Amazon part is only about 5 percent of e-commerce,” he said.

But Fox said his center’s research estimates the total of e-commerce is about $4 trillion, with about $46 billion in taxes due across the nation. He said most states surveyed are going to lose about $200 million or more this year due to uncollected taxes on e-commerce.

But the issue goes far beyond uncollected sales taxes, according to Fox. There was consistent growth in retail employment until about 2000, a rate of about 2 percent per year.

“Since 2002, retail employment in the U.S. has absolutely flattened out,” Fox said.

To put a sharper focus on it, Fox told lawmakers Walmart hires five workers for every million dollars in sales. Amazon hires one.

“As we move from people who buy on Main Street, and they move to buy from Amazon because of the tax subsidy that is implicit in the way we pay, we cost the economy four jobs,” he said. . . .

Fox figures the costs to the country because of e-commerce in general is 260,000 retail jobs.

“This is not a little issue. It’s not a small concern,” Fox said. “They don’t need a subsidy to operate. E-commerce associated with business-to-consumer sales this last year grew 18 percent, while commerce on Main Street essentially grew zero percent.” (emphasis added)

To put that figure of 260,000 lost jobs in perspective: The last jobs report indicated that just 18,000 jobs were added in June, giving rise to speculation about a double-dip recession and raising the unemployment rate to 9.2%.

This data is critically important. With unemployment still high and even rising a year after the recession technically ended, everyone is concerned about jobs and job growth—but this is the first time we’ve seen figures on the effects the online marketplace is having on jobs.

North Carolina’s Secretary of Revenue, David W. Hoyle, also presented at the conference, and the article offers more details on what he had to say about Amazon and North Carolina’s efforts toward collecting sales tax online.

We highly recommend you read the entire article.