Some California cities are calling on the state to return to a more equitable method of sharing tax revenue generated by Amazon's online sales — warning that a change made earlier this year creates an unfair system of "winners and losers" in the disbursement of millions of dollars used for critical public services.
The stakes are high: Amazon is bigger in California than in any other state, with 60 fulfillment and sortation centers, 50 delivery stations, and 153,000 employees. That's according to its official count as of the end of 2020. The numbers are even higher now, given the rapid expansion of Amazon's fulfillment and delivery network.
In theory, California's cities should be benefitting from that growth. Amazon has been collecting sales tax from online purchases in California since 2012.
Until this year, that tax revenue was disbursed based on the customer's location, going to the local municipality where the product was delivered. But as of earlier this year, the practice changed to give the tax revenue to the municipality from which the item was shipped, the location of the Amazon fulfillment center.
City officials from across the state will consider the issue at the upcoming League of California Cities annual conference. A proposal submitted to the group by the City of Rancho Cucamonga, Calif., would call on the state to enact "a fair and equitable distribution" of the 1% percent sales tax from in-state online purchases.
"This change has created a situation where most cities in California – more than 90%, in fact – are experiencing a sales tax revenue loss that began in the fourth quarter of calendar year 2021," reads a report from Rancho Cucamonga accompanying its proposal to the group, known as Cal Cities.
The report adds, "Many cities may not be aware of this impact, as the fluctuations in sales tax following the pandemic shutdowns have masked the issue. But this change will have long-term impacts on revenues for all California cities as all these revenues benefiting all cities have shifted to just a handful of cities and counties that are home to this retailer's fulfillment centers."
The change has resulted in Amazon's sales tax revenue "being entirely allocated to the specific city where the warehouse fulfillment center is located as opposed to going into a countywide pool that is shared with all jurisdictions," according to Rancho Cucamonga's proposal.
The proposal attributes the shift to a change by Amazon in the ownership of its fulfillment centers from a third-party vendor to the company itself, which alters how its sales are treated under California's tax policy.
Amazon disputes this explanation, and says it is simply following guidance from the California Department of Tax and Fee Administration (CDTFA), which determines how sales tax revenue for Amazon online purchases should be treated.
"As a company with operations in California, we are obligated to follow the tax collecting guidance set by the state and have adjusted our tax collection process to ensure we remain compliant with the law," an Amazon spokesperson said in a statement to GeekWire this week. "We are committed to investing in the communities in which we operate and helping local economies grow."
California cities rely heavily on sales tax as a revenue source, due the limitations put on property taxes by Proposition 13 starting in 1978. A 1% local sales tax, known as the Bradley Burns tax, has been in place across the state since the 1950s.
The change in tax revenue distribution from Amazon sales "has created a tremendous inequity amongst cities, in particular for cities that are built out, do not have space for siting a 1 million square foot fulfillment center, are not located along a major travel corridor, or otherwise not ideally suited to host a fulfillment center," the Rancho Cucamonga proposal says.
It adds, "These policies especially favor retailers who may leverage current policy in order to negotiate favorable sales tax sharing agreements, providing more money back to the retailer at the expense of funding critical public services."
The proposal acknowledges "that those cities that have fulfillment centers experience impacts from these activities and deserve equitable supplementary compensation." However, it adds, "the neighboring cities whose residents are ordering product from that center now receive no revenue from the center's sales activity despite also experiencing the impacts created by the center, such as increased traffic and air pollution."
Rancho Cucamonga's proposal received initial endorsements from cities including Placentia, Sacramento, Moorpark, Lakewood, La Verne, and El Cerrito. Leaders in other cities across the state have since signaled their support, as well.
The proposal will be considered at the Cal Cities annual conference, Sept. 22-24 in Sacramento. Approval would enable the group to pursue legislative changes.
This story originally appeared on GeekWire.
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"To all you kids down there, I was once a child with a dream, looking up to the stars," Branson said before unbuckling. "Now, I'm an adult in a spaceship with lots of other wonderful adults, looking down to a beautiful, beautiful Earth. For the next generation of dreamers, if we can do this, just imagine what you can do."
Can Jeff Bezos top that? We'll soon find out. Amazon's founder is set to go even higher as a passenger July 20 on the first crewed flight for his space venture Blue Origin's New Shepard rocket.
On Tuesday, the Federal Aviation Administration issued its formal approval for New Shepard's launch, which will carry Bezos and three crewmates.
On this special episode of the GeekWire Podcast: the dawn of a new era in space tourism, what to watch when the Amazon founder blasts off next week, and what's next for commercial space exploration.
Joining us is longtime space journalist Alan Boyle, GeekWire contributing editor, who has covered Bezos' space ambitions for years.
Listen above, subscribe to GeekWire in any podcast app, and continue reading for edited highlights from Alan's commentary.
What this launch means for Bezos and Blue Origin: I think that there's a little bit of redemption here, because Blue Origin and Jeff Bezos have been working on this and other projects for a long time. And it's a little bit elusive to see the payoff from all that.
He's working on an orbital class rocket called New Glenn, which has been delayed. Blue Origin competed in a couple of high profile competitions for government contracts from NASA or the US Space Force, and they lost out on those.
So New Shepard is really going to be a signal success, and probably the highest success that Blue Origin has encountered in its more than 20 years of existence. If it works as Jeff Bezos hopes it will … then it is a sign that Blue Origin has actually achieved something having to do with human space flight, high-profile space flight. And if they can turn this into more successes, then Jeff Bezos' vision has a much better chance of coming to fruition.
The personal risk to Bezos: There is a risk of death. That's always the case when you have something that's as explosive as a rocket ship that you're dealing with. It was risky for Richard Branson also, even though that rocket plane has been tested. There are three people who lost their lives in the ground test, and one test pilot died in the course of testing SpaceShipTwo. So it is risky.
Blue Origin's New Shepard spacecraft has an escape system if something goes wrong. During the ascent of the rocket, there is a solid rocket motor that is supposed to light up, and push the passengers to safety, in case an emergency occurs. But it's still rocket science, and there are things that can go wrong. Especially with this flight, I think there's a lot more attention to it, because this is the first one to fly with people on it.
What this month means for space tourism: I think it's a turning point. For a long time, I had talked about the two-year rule in private commercial space flight, that the era when regular folks fly in space always seems to be two years away. But now it's less than two weeks away, perhaps. So I think that's a big deal. It's a big deal for the business of space flight.
Strangely enough, I am feeling like this is just becoming a business, and for people who are well-versed in science fiction and all that, and love Star Wars and Star Trek, maybe it loses a little bit of an appeal, because now, it's just a business, and the filthy lucre is entering into the picture.
I'm of two minds about that. I'm kind of sad that it's no longer science fiction, strangely enough. But I guess the day that we all had been thinking was coming some day down the road is really approaching its dates on the calendar.
This article originally appeared on GeekWire
Amazon surpassed 153,000 full- and part-time employees in California in the fourth quarter of 2020, rapidly outpacing the more than 80,000 Amazon employees in the company's home state of Washington, the latest numbers from the company show.
Driving the trend: While Amazon has tech, engineering and product development operations in Silicon Valley and Los Angeles, the surge coincides with the build-out of its distribution network, Prime Now Hubs, Amazon Pantry and Fresh facilities, and physical retail stores. California is also one of the first states where Amazon is opening last-mile delivery stations in rural areas.
Larger implications: In this new phase of growth, the company's employment promises to more closely mirror population patterns, beyond tech and engineering hubs. With 40 million residents, California is the nation's most populous state. The trends also show the magnitude of Amazon's growth beyond the Seattle region.
- The updated total in California represents an increase of nearly 70% from the 91,000 employees reported by Amazon in the state earlier in 2020. The surge makes California the company's largest state for employment by far.
- Washington state, home to the company's Seattle headquarters, had been its largest state for employment prior to 2020. Amazon's latest total of more than 80,000 employees in Washington state is up 8% from 74,000 earlier in 2020.
- In Virginia, where Amazon has established its second headquarters, or HQ2, the company employed more than 27,000 people as of the fourth quarter, up 46% from more than 18,500 employees earlier in the year.
Data source: The numbers come from an Amazon page that documents the company's economic impact across the country. The company updated the numbers along with its fourth-quarter earnings release. The numbers reflect direct Amazon employment, not contractors or workers employed through third-party firms or agencies. GeekWire has been tracking data from the page for five years, and we filled in the gaps using snapshots captured by the Internet Archive.
Reality check: Amazon is growing so rapidly that its official numbers are often quickly out of date. (The company puts a "+" sign by each employment number in recognition of this fact.) By Amazon's official count, for example, it has 25 fulfillment and sortation centers and 19 delivery stations in California, which would be the most in the nation. However, data maintained by logistics consultancy MWPVL International shows more than 30 Amazon fulfillment and sortation centers in California, and as many as 60 delivery stations in the state.
Global context: Amazon employed nearly 1.3 million people worldwide as of the end of 2020, growing by 500,000 people in one year. The numbers do not include seasonal workers. About 950,000 of those were in the United States, according to Amazon's economic impact map. By comparison, Walmart has about 2.2 million employees globally, 1.5 million of them in the U.S.
This story first appeared on GeekWire.
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