Taxes on Large Retail Stores

Several states have considered legislation that would impose a tax on large retailers.  None of these bills have passed yet, but we include two examples here.  One argument for taxing large retailers is that they impose costs on state and local government in the form of public assistance programs, such as a Medicaid, for low-wage big-box employees, as well as high infrastructure and services costs associated with sprawling development. (See our Key Studies page for details on these costs.)

Another argument for a tax is that it would discourage certain types of development.  In the case of the Maine bill below, the measure imposes a 3 percent tax on the revenue of retailers over 60,000 square feet that are not located in a downtown -- thus creating an incentive to focus retail development in town centers rather than out on the fringe.

The Minnesota bill imposes a graduated tax (1 to 2 percent) on the revenue of retailers with at least $20 million in annual sales that either do not pay a living wage or have more than one-quarter of their employees working part-time. This would provide an incentive for big-box retailers to offer higher quality jobs.

The revenue generated by the tax can be used to offset some of the impacts of large retailers. The Maine bill transfers one-third of the revenue to the state's Small Enterprise Growth Fund and two-thirds to Dirigo Health, a state program that provides health insurance plans for small businesses and the self-employed.

Resource:

• Testimony on LD 1553, An Act To Impose a Gross Receipts Tax on "Big Box" Stores in Maine - Before the Maine Legislature's Taxation Committee, by Stacy Mitchell, Institute for Local Self-Reliance, April 25, 2005