Amazon haggling with states: jobs for no sales tax

Faith Merino · June 21, 2011 · Short URL:

Amazon is striking a deal with Texas to create jobs and invest in the state months after leaving

As Amazon cuts ties with states one-by-one as each new nexus tax bill is passed, a new reality is settling in its wake: the disappearance of tens of thousands of jobs. Poof. Gone. Like an evil dictator that knows that he can force obedience from his people by taking away their food and then giving it back again, Amazon is looking to strike a deal with states: drop the online sales tax requirement in exchange for the reinstatement of jobs.

Specifically, Amazon is currently striking a deal with Texas to create over 5,000 jobs and invest $300 million in the state over the next three years if lawmakers agree to a 4.5-year sales online sales tax exemption, according to documents obtained by the American-Statesman. To recap, Amazon cut ties with its distributors in the state of Texas after Texas Comptroller Susan Combs sent Amazon a notice in September stating that the popular eCommerce company owed the state of Texas $269 million in sales taxes that went uncollected between 2005 and 2009.

So, apparently, this is a case of tomato versus tomah-to (that’s hard to do in text form). But it makes sense. Rather than be forced to tax online consumers and kill its tax-free online shopping business, Amazon is simply offering to make the state of Texas happy by paying out what it would have collected in sales tax (and then some), thereby contributing to the local economy like brick-and-mortar stores do, while also keeping its customers happy.

Interestingly, the proposal does not specifically mention Amazon by name, but refers only to online retailers who would be exempt from collecting sales tax if they agree to create at least 5,000 jobs and invest $300 million over the course of the next three years into the state. Texas Governor Rick Perry had opposed the Comptroller’s decision to pursue Amazon over the uncollected sales taxes, and he is reportedly in support of the new proposal, which will be attached to the fiscal matters bill SB 1.

Amazon has reportedly struck a similar deal with South Carolina, where lawmakers approved a 4.5-year online sales tax exemption for online retailers who agree to create a minimum of 2,000 jobs and invest $125 million into the state by 2013.

Could California be the next state to strike a deal with Amazon? Last week, California legislators approved a bill that would require Amazon and other online retailers to collect sales taxes from consumers, despite Amazon’s threats to cut ties with its California distributors, which would kill thousands of jobs. 

Image source: nedgrace

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