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Big Box Tax
Several states are considering 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 Economic Impact 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.
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Big Box Tax - Minnesota (proposed bill)
This biill would impose a tax on the gross receipts (revenue) of retail stores that have more than $20 million annually in sales and either do not provide employee compensation worth at least $22,000 per year (including wages, insurance, vacation, and other benefits) or have more than one-quarter of their employees working less than 40 hours a week.
Big Box Tax - Maine (proposed bill)
This bill would impose a 3 percent tax on the gross receipts (total sales) of any stores over 60,000 square feet that are located outside of a downtown. Two-thirds of the revenue generated from the tax would be used to support the state's Dirigo Health Care Program and one-third would be transferred to Maine's Small Enterprise Growth Fund.
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