Commercial Real Estate Finance

Posts Tagged ‘sales tax’

Back in October, the U.S. Postal Service announced its latest batch of price increases for both domestic and international mail, an honored tradition for the quasi-government agency. News that a normal stamp will cost one cent more isn’t catching anyone by surprise, but it signals an ever-present concern for real estate owners, developers, and tenants involved with retail.

According to the the Wetumpka Herald (my number one source for news and commentary from Wetumpka, Alabama),

The price increase announced by the U.S. Postal Service Oct. 11, 2012 will go into effect Jan. 27. Among the higher costs will be a 1-cent rise for a typical 1-ounce mail piece from 45 to 46 cents.

… In addition, the Postal Service will soon introduce a first-class mail global forever stamp which will allow customers to mail letters anywhere in the world for $1.10.

That last part is my favorite. For a mere $1.10, I can send a letter to the Philippines. That’s a bargain.

Federal subsidies aside, there’s no way an enterprise can offer such impressive service for so little money without putting pressure on its bottom line. While prices have so far increased incrementally, the USPS has resorted to some major cost-cutting (closing lots of post offices) and will no doubt continue to raise its rates.

My guess? Rates will soon grow at a much faster pace.

This is relevant to retail real estate because postal services–the USPS primarily, but also private services like UPS and FedEx–are fundamental to Internet retail. Sure, Amazon.com (NASDAQ: AMZN) doesn’t need a healthy mail delivery network to sell MP3s, but what about clothes, furniture, and electronics? Read the rest of this entry »

For years now, the U.S. economy has seen an ongoing struggle between traditional retail stores and their nimbler, lower-overhead online counterparts. Last week, retail property giant Simon Properties (NYSE: SPG) made news by suing the state of Indiana over a dispute with its rivals—or, more accurately, it’s tenants’ rivals–Amazon.com (NASDAQ: AMZN). SPG is seeking, as they put it, greater fairness to taxpayers (in particular, the offline retailers who do pay taxes to the state.)

It is certainly unfair that Amazon, which does millions of dollars of business in the state of Indiana, is avoiding the taxes that Simon Properties and its retail tenants must pay. This legal move will likely prove another important chapter in the ongoing debate over how or if to tax an Internet retailer, which has become a pretty sticky issue. Typically, whether or not to tax is determined by an online retailer’s physical presence in a particular state. Read the rest of this entry »