Why Amazon Prime should be free to everyone

If you were looking for proof that Amazon is leveraging its ever-expanding shipping and distribution capacity to clob...

Posted: May 31, 2018 12:14 PM
Updated: May 31, 2018 12:14 PM

If you were looking for proof that Amazon is leveraging its ever-expanding shipping and distribution capacity to clobber every last competitor and become the go-to seller of everything, here is some: The tech giant announced in April that Prime, its $119-per-year subscription service that offers unlimited two-day shipping on most orders, has surpassed 100 million members.

At the same time Bed Bath & Beyond, among the major retailers buckling under the online competition led by Amazon, saw its stock hit a nearly 10-year low in April.

How did Amazon's delivery-on-demand subscription service get so big so fast?

The answer: taxpayer dollars and the decimation of our local economies.

State governments have diverted vast sums of money from local education initiatives, infrastructure projects and small businesses to help Amazon build warehouses, data centers and just about every other pillar of the Prime network.

After more than a decade of states fueling Prime's expansion, helping Amazon pad its coffers and protecting its price advantage, it is time to explore whether the Prime shipping and distribution network should be open to all without fees.

Since it was launched in 2005, Prime has become the retail equivalent of the "Death Star," capable of obliterating decades-old businesses. The platform is under the exclusive control of the Amazon empire, a remarkable feat for CEO Jeff Bezos, who cut his teeth on Wall Street. But while many like to attribute the growth of Prime to Bezos' business acuity, the true story of its success is the unprecedented taxpayer support Amazon has gotten from all levels of government.

Prime was able to spring into existence because states and even the federal government allowed Amazon to be the exception to seemingly every rule. For example, the publicly subsidized US Postal Service had a rule that it would not deliver mail on Sundays -- that is, until 2013, when Amazon cut a deal with the post office to get the Sunday delivery restriction lifted, at least for Amazon and Priority Mail Express parcels.

At the state level, Amazon has scored a staggering $241 million in subsidies since 2015, according to research done by Thomas Cafcas and Greg LeRoy for Good Jobs First, an advocacy group that tracks public subsidies. These have come in the form of property tax abatements, corporate income tax credits and, perhaps most importantly, sales tax exemptions.

States have justified these breaks by promising scores of jobs and sweeping economic development, just as they are doing now in telling residents that unprecedented corporate welfare for the tech giant's planned second headquarters, HQ2, would be well worth it.

But the costs of this so-called economic development in Seattle, for example, have been enormous. Rents have gone through the roof and rates of homelessness have surged. In the 25 states where Amazon has opened fulfillment warehouses, promised job gains have not come to fruition -- warehouse jobs increased, of course, after Amazon moved into town, but those gains were canceled out by losses to other local industries, such as retail.

Amazon long avoided collecting sales tax, which allowed the tech giant to sustain its unbeatable prices and crush competitors. Soaring revenues enabled the company to invest in a nationwide distribution network of warehouses, "sortation centers" and logistics facilities -- without which there would be no Prime as we know it. Year after year, states missed out on billions in tax revenue. In 2016 alone, the sales tax loophole for online retailers cost states more than $17 billion.

Today, it might seem as though Amazon's tax-dodging days are over, since the tech giant is finally collecting sales tax on items it sells directly to consumers, but it still claims an online marketplace exemption on third-party transactions, invoking the myth that it is merely an online mall.

In the past two years, Washington and Pennsylvania closed the loophole by passing marketplace tax collection laws. But Amazon retains its duty-free status in 43 states. South Carolinians can attest to the expensive damage to state coffers of cutting a deal with Amazon to allow the company to remain duty-free.

Amazon continues to add insult to injury by soliciting the offer of enormous tax breaks and other economic incentives from the cities vying to become the home of HQ2.

It is simply undeniable that the success of Prime has been fueled by a serious breach of the public trust, orchestrated by Amazon and enabled by state governments around the country. In some cases, states took money out of our pockets via subsidies and gave blank checks to Amazon. In other instances, they allowed Amazon to benefit at the expense of our local business economies by granting the tech giant an exemption from sales tax collection.

That is the real story of how Prime surpassed 100 million members, and it shows why the taxpayer-built service should be accessible to all without membership fees.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 300913

Reported Deaths: 5332
CountyCasesDeaths
Marion41330845
Lake26364448
Allen17299290
Elkhart16665212
St. Joseph16319220
Hamilton12459164
Vanderburgh9428112
Tippecanoe826727
Porter791279
Johnson6139164
Hendricks5807154
Vigo574474
Monroe525247
Clark495374
Delaware4789103
Madison4760119
LaPorte446894
Kosciusko446139
Howard325575
Warrick316072
Floyd306177
Bartholomew303262
Wayne295261
Cass293431
Marshall289944
Grant258747
Noble246846
Hancock243749
Henry237136
Boone235154
Dubois230430
Dearborn208829
Jackson206033
Morgan200643
Knox178017
Gibson177022
Clinton174920
Shelby174554
Lawrence171646
DeKalb171229
Adams165219
Miami155114
Wabash153018
Daviess152243
Fayette145233
Steuben141113
Jasper138311
Harrison137624
LaGrange136629
Montgomery131226
Whitley129910
Ripley123714
Decatur123542
Huntington122310
Posey118913
Putnam118326
Wells118327
Randolph117819
White117421
Clay115621
Jefferson114214
Greene100253
Scott99818
Jay95012
Starke89221
Sullivan86615
Fulton81117
Perry80921
Jennings80514
Spencer8047
Fountain7378
Washington7176
Carroll66813
Franklin65925
Orange65728
Vermillion5832
Owen5816
Parke5416
Newton54012
Tipton53726
Rush5216
Blackford51211
Pike50218
Pulaski36810
Martin3485
Brown3263
Benton3251
Crawford2781
Union2621
Switzerland2473
Warren2352
Ohio2257
Unassigned0265

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 363304

Reported Deaths: 6020
CountyCasesDeaths
Franklin49267665
Cuyahoga35214736
Hamilton29462371
Montgomery19636225
Butler14472144
Lucas14033409
Summit12962310
Stark8529197
Warren798975
Mahoning7068299
Lake662766
Lorain623697
Clermont563946
Delaware540335
Licking535875
Fairfield523763
Trumbull5159144
Greene510563
Clark501064
Allen460685
Marion457751
Wood4394107
Medina428654
Miami416465
Pickaway396448
Columbiana339597
Portage334471
Tuscarawas317557
Wayne314993
Richland306732
Mercer284737
Ross239259
Hancock232736
Muskingum231910
Auglaize223230
Putnam221449
Erie217165
Darke217058
Ashtabula215753
Geauga197351
Scioto193615
Union18658
Lawrence185436
Shelby184815
Athens18454
Seneca173118
Belmont158529
Madison156218
Sandusky152327
Preble148421
Huron147518
Defiance137921
Holmes137739
Logan123613
Knox122518
Fulton122025
Crawford119116
Ottawa118930
Washington116427
Clinton103414
Ashland102722
Williams10238
Jefferson10124
Highland99517
Henry98422
Brown9644
Champaign9345
Jackson90312
Van Wert8976
Fayette89217
Hardin86118
Morrow8552
Guernsey83313
Coshocton81413
Perry77012
Adams75012
Pike7261
Wyandot70516
Gallia70413
Paulding62710
Hocking61011
Noble59722
Carroll44310
Meigs37612
Monroe31021
Morgan2395
Vinton2105
Harrison1913
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