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The Business Ramifications of an Amazon Warehouse Coming to Lakeland

By Saunders Law Group on July 14, 2013


According to The Ledger, the Polk County Commission has approved $4.5 million in tax incentives for Amazon if the corporation should choose to build a "fulfillment center" (read: warehouse) in Polk County.

Judging by the invective over the incentives in the comments section, however, it seems that many commenters are confused about the business ramifications of  an Amazon warehouse coming to Polk County. Here is a break-down on some of the issues addressed:

Florida Sales Tax on Internet Purchases

Part of the reason that Amazon is considering expanding to Florida is because the U.S. Senate passed a bill in May that would allow states to force Internet retailers to pay state sales tax. "States lose an estimated $11 billion a year in sales taxes that aren’t collected by online and mail-order retailers," according to the Seattle Times article.

Prior to this regulation, Internet retailers like Amazon were obligated to charge sales tax only in the states where they had a physical presence: offices, warehouses, or other installations. Now that Amazon is faced with charging state sales tax in the near future, regardless of what borders its facilities fall into, the company has begun constructing warehouses in other states.

Polk county Tax Incentives for amazon

According to The Ledger, these are details of the proposed Amazon deal:

  • Polk County Offers:
    1. $4.5 million in property tax incentives over a 10-year period
    2. Lakeland officials are expected to slash non-utility impact fees by 90 percent.
    3. Enterprise Florida is offering $3,000 per job created
    4. Workforce Florida is offering $1,500 per job created
  • Amazon Invests & Creates:
    1.  385 jobs, 248 of which are expected to be full-time and paying $35,820 on average, with $9,422 in benefits for a total of $45,242 on average for a year's salary.
    2. A minimum $10 million investment, but Amazon is expected to spend $102 million on a warehouse site, according to the Ledger.

Impact of an amazon warehouse on Small Businesses

One of the most immediate impacts from having an Amazon warehouse so close by would be same-day shipping, allowing Amazon to process and distribute orders at a nearly-unprecedented rate. Some citizens have voiced concerns over the fact that Amazon is being offered incentives of $4.5 million. While $4.5 million is a considerable sum, it is important to remember that tax incentives are calculated based on the amount of investment a business is expected to put into the local economy:

  • Spread over a 10-year period, $4.5 million in property tax incentives is $450,000 per year.
  • If that figure represents a 75% cut in property taxes, the distribution center's annual property tax would still be $150,000.
  • 248 full-time jobs at an average of $45,242 salary is an investment of $11,220,016 per year for Amazon.
  • Amazon is expected to make a $102 million capital investment at the site, according to The Ledger.

Small businesses and non-profits receive tax incentives as well, but as the amount of investment in the local economy rises, so does the level of incentive for a company to do business here.

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