Before You Click on Amazon, Here’s Why Your Choice Matters (Infographic)

Image: Amazon vs. Local Business.Amazon is rapidly expanding its online empire, but behind the conveniences that the company offers are a lot of hidden costs.

The Advocates for Independent Business put together an infographic, released today, that shows how shopping at Amazon compares with shopping at local businesses in its impact on jobs, taxes, the local economy, and community.

Before you click, here’s why your choice matters:

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5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse

Image: Amazon fact sheet.Amazon is on a building spree, and many local officials are eager to bring one of its giant fulfillment centers to their own backyard. But a new factsheet released today by Advocates for Independent Business, drawing on research from the Institute for Local Self-Reliance, shows how communities are losing more than they gain in these projects.

Cities are so eager to lure Amazon that many have resorted to offering the company lavish tax breaks and other public assistance. Between 2012 and 2014, public records show, Amazon picked up $431 million in local tax incentives to finance its warehouse expansion.

Yet, Amazon fulfillment centers impose so many hidden costs on local economies that cities ought to reconsider welcoming them at all, much less greasing the way with public funds.

Download the fact sheet: 5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse

Small Business Groups React to Study Showing State Tax Incentives Overwhelmingly Favor Large Companies

Image: Small businesses receive only 10 percent in state incentive spending.Advocates for Independent Business (AIB), a coalition of 15 national organizations representing small businesses, welcomed the release today of new data showing conclusively that state economic development incentives overwhelmingly favor big business. The study, Shortchanging Small Business, produced by the research group Good Jobs First, examined subsidy awards in 14 states and found that 90 percent of the $3.2 billion in incentives awarded went to large firms.

“It’s stunning to see just how much state economic development programs are biased against locally owned businesses,” said Stacy Mitchell, coordinator of AIB. “We know from extensive research that small businesses, especially new and growing firms, often deliver out-sized benefits to local economies. Yet, state governments are putting these businesses at a competitive disadvantage by steering billions of dollars in public subsidies to their big corporate competitors.  We hope this report will be a wake-up call for state lawmakers.”

Of the thousands of subsidy awards that Good Jobs First analyzed, all were granted by programs that are accessible, at least on paper, to both small and large companies. In practice, however, the study confirms that these programs are biased toward big business.

As a policy solution, the report recommends that states reform their incentive rules by tightening eligibility to exclude large recipients and by implementing safeguards such as dollar caps per deal and per company. The report also notes that big tax breaks often mean little to small businesses, and that the savings from these reforms would be best spent funding public goods like infrastructure and education that benefit all employers.

The report is the second in a series of three that Good Jobs First will release this fall. See AIB’s statement on the first report, In Search of a Level Playing Field.

AIB Statement on New Report, “In Search of a Level Playing Field”

Graphic: Report finding.In a report released today by Good Jobs First, leaders of small business organizations from around the country overwhelmingly agree that despite pro-small business talk, states’ economic development incentives favor big businesses at the expense of small firms looking to grow.

Good Jobs First surveyed 41 small business leaders representing 24,000 member businesses in 25 states,  and found:
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AIB Hails New Requirement for Subsidy Transparency

Photo: Accounting.Advocates for Independent Business (AIB) today hailed a newly issued accounting rule that will require local and state governments to annually disclose the amount of tax breaks they give to corporations in the name of economic development.

The rule change was proposed earlier this year by the Governmental Accounting Standards Board (GASB). In February, AIB submitted a public comment letter strongly supporting the proposal and urging the board to go further by mandating that governments not only report the aggregate amount they spend on corporate tax breaks, but also disclose the details of individual deals.

“This issue is of significant interest to our member organizations, because when cities and states use tax breaks, as they often do, to subsidize the growth of large companies like Walmart and Amazon, it directly affects the competitive landscape for independent businesses,” said Stacy Mitchell, coordinator of AIB. “We commend GASB for issuing this new rule, which will make the total cost of these tax breaks transparent for the first time and open the way for meaningful public debate about whether they are warranted.”

Cities and states currently spend an estimated $70 billion a year on tax breaks for economic development. Studies indicate that subsidizing big retailers does more harm to the local economy than good by causing job and revenue losses at competing small businesses.

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AIB Submits Comments Supporting Greater Flexibility for Credit Unions in Small Business Lending

Image: AIB letter to NCUA.Driven by concern over the limited availability of credit for independent businesses, AIB has submitted comments largely in support of a proposal to give credit unions more flexibility to meet the needs of small business borrowers.

The National Credit Union Administration, the federal body that regulates credit unions, has proposed regulation that would lift existing prescriptive rules that set hard-and-fast standards on issues like personal guarantees and collateral. Instead, credit unions would be allowed to develop their own business lending underwriting policies, which would be reviewed yearly by their regulator. This is more akin to how banks operate.

AIB expressed support for the proposed regulation, with a modest caveat about how participation loans that are commercial in nature are regulated.

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How Washington Punishes Small Business

AshevilleDowntownby Stacy Mitchell and Fred Clements

This article was first published as an op-ed in the Wall Street Journal.

Small business looms large in American political rhetoric. From the campaign trail to the floor of the U.S. House and Senate, members of Congress love to evoke the diner and dry cleaner, the neighborhood grocer and local hardware store. Ensuring the well-being of Main Street, we might easily assume, is one of their central policy aims.

The legislative track record tells another story. It is one in which the interests of big corporations are dominant, and many laws and regulations seem designed to bend the marketplace in their favor and put small, independent businesses at a competitive disadvantage.

Since the late 1990s, the overall market share of firms with fewer than 100 employees has fallen from 33% to 28%, according to U.S. Census data. There are nearly 80,000 fewer small retailers today than in 1999. Starting a new business also appears to have become harder. Despite their prominence in our tech-fueled imagination, the number of startups created annually fell by about 20% between the 1970s and the 2000s, Census data shows.

Dismissing these trends as merely the product of market forces misses the powerful way that government policy has tilted the playing field.

A report last month by the research organization Good Jobs First, for example, found that two-thirds of the $68 billion in business grants and special tax credits awarded by the federal government over the past 15 years went to big corporations. State and local economic development incentives are similarly skewed. While the members our business associations—mostly independent retailers—must finance their own growth, one of their biggest competitors, Amazon, has received $330 million in tax breaks and other subsidies to fund its new warehouses. Indiana, for example, gave the company a $5 million tax credit to open a distribution center in 2009. Continue reading