This summer's Amazon Prime Day once again was lauded for offering some of the best deals of the year in online shopping. But a closer look at the stream of corporate welfare that has helped fuel the rapid growth of Amazon's flagship subscription service reveals that Prime is a raw deal for consumers and taxpayers alike.
Minnesota lawmakers must think long and hard before giving another penny to the third-richest company in the world.
Analysts say the true value of the Prime package - which includes music and video streaming, books, clothing, food, and, of course, expedited shipping service - is over $780 per year. But members still only pay $119 for their Prime subscription.
This seemingly unbeatable deal for consumers only begins to make sense in light of the fact that Amazon has built its business model with a big assist from government handouts. Amazon has received more than $5.7 million in subsidies from Minnesota taxpayers since 2000.
And Minnesota is far from the only victim of Amazon's lobbying schemes. In total, the company's far-reaching lobbying efforts have resulted in $1.5 billion in subsidies from taxpayers nationwide.
From 2000 to 2017, Amazon spent at least $9.8 million on state lobbying while making more than $6 million in campaign contributions. According to Amazon's own reports, it spent almost $14 million on state and local "government relations efforts" between 2013 and 2017. And as Amazon has grown, it has only continued to ramp up its influence-peddling: Over the last five years, Amazon has lobbied more government entities than any other tech company.
Meanwhile, local communities and small businesses have borne the cost of Amazon's strong-arm tactics. Taxpayers have lost out on more than $700 million in sales tax revenue, money that could have been used to ease crowding in schools, modernize crumbling infrastructure, or expand access to health care services. Amazon's refusal to pay its fair share has decimated good-paying jobs and small businesses forced to try to compete with the tech behemoth.
Amazon often promises economic development and new jobs at its warehouses and fulfilment centers in return for taxpayer assistance. But the company pays its employees an average salary of less than $29,000 annually, and data clearly show that private-sector employment fails to increase after Amazon moves in.
Making matters worse, when small businesses resort to selling their wares on Amazon's e-commerce site, they face exorbitant fees that make it impossible for them to compete with major brands. Third-party merchants have complained for years that Amazon uses consumer and sale-trend data to manipulate and drive down prices. While the tech giant vaunts itself as a company that supports small businesses and growth, the economic turmoil each Amazon expansion and acquisition leave in its wake tells a very different story.
Prime Day should serve as a resounding wake-up call to Minnesota lawmakers. Taxpayers are tired of giving up their hard-earned money to the third-richest company in the world, helping to subsidize Amazon Prime and the record profits the subscription service helps generate. Last year, Amazon reported $177 billion in revenue, more than enough to pay its own bills.
While Amazon and other out-of-state online sellers will be required to start paying sales taxes to the state of Minnesota on Oct. 1, the moment has come for Minnesota lawmakers to stand up to Amazon and its army of lobbyists. It's time to prioritize our local communities and finally say enough is enough.
Robert B. Engel of Denver is the chief spokesperson of the Free & Fair Markets Initiative (freeandfairmarketsinitiative.org), a nonprofit coalition focused on supporting a modern, fair marketplace that serves the best interests of small businesses, local communities and everyday Americans.