Amazon offers jobs to avoid collecting Texas sales taxes

[jocampo]

Here is the complete article:

http://www.techflash.com/seattle/201...fers-jobs.html

Sounds good to me ... I actually pay taxes when I buy books from B&N but not for Kindle books.

With the economy so fragile here in USA, looks like a good idea. Of course, I know that deal is pretty sweet for Amazon, for sure, and cheaper long term, probably.

[Elfwreck]

I don't like the idea of companies being allowed to make contracts with a state to avoid paying taxes. I wouldn't mind if there was a policy--"any company that offers X jobs + $Y investment over Z years is exempt from taxes over those years"--but don't want private bargains to evade the legal standards.

Also, it looks like they're offering investment/jobs for 3 years, in order to avoid 4.5 years of taxes. Why would the state take that? Why not say, "No, we're pretty sure you're planning on doing a lot of business here anyway; pay your damn taxes like everyone else."

[jocampo]

Originally Posted by Elfwreck

I don't like the idea of companies being allowed to make contracts with a state to avoid paying taxes. I wouldn't mind if there was a policy--"any company that offers X jobs + $Y investment over Z years is exempt from taxes over those years"--but don't want private bargains to evade the legal standards.

Also, it looks like they're offering investment/jobs for 3 years, in order to avoid 4.5 years of taxes. Why would the state take that? Why not say, "No, we're pretty sure you're planning on doing a lot of business here anyway; pay your damn taxes like everyone else."

As a consumer and frustrated citizen who pay taxes and see nothing in return , I think is better for both parties and us, the consumers, agree on that and move on.

There is no policy for this and needs to pass congress approvals I think, but we are talking about lot of permanent jobs that won't hurt the economy and the state.

I would be happy if I don't have to pay taxes every time I buy a Kindle book though.

[Elfwreck]

Originally Posted by jocampo

I would be happy if I don't have to pay taxes every time I buy a Kindle book though.

Technically, you're supposed to pay taxes on them even if they're out-of-state purchases. They fall under "use tax" and you're supposed to report them on your state income tax forms. (Nobody does.)

Part of the problem with the economy is that parts of government services are paid for by taxes that aren't being collected, and companies (1) aren't investing that money in a way that benefits the state (if they were planning on doing so, why would Amazon be trying to get out of sales taxes?) and (2) the government fiscal structure hasn't shifted to deal with a substantial portion of tax-free commerce.

I think that we can agree, at least, that the tax system is messed up, and a lot of thought should be put into what's allowed to change it, because it needs to not get worse.

[jocampo]

You are actually right, but you know what? because I work for a private company, a big one, I personally believe that we do more good than harm, creating jobs instead of collecting those taxes that who knows where are they going to.

Anyway... I don't like to talk about politics, lol ... but thought it was an interesting article. The proposal will be controversial, no doubt about it.

[lestatar]

^ Agreed. I won't ever discuss politics, especially on forums, but I too found the article interesting - food for thought.

[tubemonkey]

Originally Posted by Elfwreck

I don't like the idea of companies being allowed to make contracts with a state to avoid paying taxes. I wouldn't mind if there was a policy--"any company that offers X jobs + $Y investment over Z years is exempt from taxes over those years"--but don't want private bargains to evade the legal standards.

Also, it looks like they're offering investment/jobs for 3 years, in order to avoid 4.5 years of taxes. Why would the state take that? Why not say, "No, we're pretty sure you're planning on doing a lot of business here anyway; pay your damn taxes like everyone else."

Totally agree with you

[vxf]

Originally Posted by lestatar

^ Agreed. I won't ever discuss politics, especially on forums, but I too found the article interesting - food for thought.

It's more economics, than politics. But ok, I guess the distinction is murky nowadays.

Regardless, rules should be universal. There is no reason a state should be able to negotiate to whom its laws apply - including tax laws.

From a purely economic standpoint, it leads to a race to the bottom, the signs of which we have long seen - the press has long been talking about how little the tax bills of the largest companies are in the US. At least part of it is due to the stronger negotiating position of larger firms.

I won't get into the whole taxes-job creation debate. But there is an indirect effect on jobs. The most pernicious consequence of discretionary taxation is on competition - we end up having a tax system that favors the large, incumbent firm, while the smaller, nimble, high growth competitor has to foot the full tax bill. One of the primary roles of the government in the economy is to ensure competition - this is completely the opposite. Smaller firms tend to grow faster and create more jobs. This is trading short-term jobs in your own state for long-term job creation in the wider nation.

[MrsJoseph]

Originally Posted by vxf

It's more economics, than politics. But ok, I guess the distinction is murky nowadays.

Regardless, rules should be universal. There is no reason a state should be able to negotiate to whom its laws apply - including tax laws.

From a purely economic standpoint, it leads to a race to the bottom, the signs of which we have long seen - the press has long been talking about how little the tax bills of the largest companies are in the US. At least part of it is due to the stronger negotiating position of larger firms.

I won't get into the whole taxes-job creation debate. But there is an indirect effect on jobs. The most pernicious consequence of discretionary taxation is on competition - we end up having a tax system that favors the large, incumbent firm, while the smaller, nimble, high growth competitor has to foot the full tax bill. One of the primary roles of the government in the economy is to ensure competition - this is completely the opposite. Smaller firms tend to grow faster and create more jobs. This is trading short-term jobs in your own state for long-term job creation in the wider nation.

+1 It should be a level playing field for all companies.

Why shouldn't my company have the same benefits as Amazon?

[Kali Yuga]

Originally Posted by Elfwreck

I don't like the idea of companies being allowed to make contracts with a state to avoid paying taxes....

Corporate tax breaks and abatements are downright routine.

They're almost always done on a case-by-case basis.

At this time, it is not entirely clear that Amazon should be liable for collecting sales taxes.

And let's not kid ourselves, the people who are pushing for Internet-only retailers to collect sales taxes aren't doing it for the good of the nation. It's big retailers like Walmart and Sears, who don't want Amazon et al to have a pricing advantage.

Originally Posted by Elfwreck

Also, it looks like they're offering investment/jobs for 3 years, in order to avoid 4.5 years of taxes. Why would the state take that?

a) Getting jobs looks good
b) Hiring 5000 locals spreads the wealth a little bit -- e.g. those individuals pay taxes, buy food, pay rent and so forth, that stays local
c) Amazon will close its TX distribution center and otherwise continue to fight rabidly to avoid paying sales taxes (i.e. either TX gets 5000 jobs, or a big legal bill and nothing)

[jocampo]

Originally Posted by Kali Yuga

And let's not kid ourselves, the people who are pushing for Internet-only retailers to collect sales taxes aren't doing it for the good of the nation. It's big retailers like Walmart and Sears, who don't want Amazon et al to have a pricing advantage.

True!

[anamardoll]

I think this whole thing with Amazon is making them look silly. They're doing the Texas Two-Step with several states, We're In, We're Out, trying to avoid taxes. As far as I am concerned, they are wasting goodwill in all this. They've already laid off several Texan workers and now they're trying to coyly snake back in for a few years -- no thank you, Amazon.

I'm a federal kind of girl, though. I think the easiest thing to do would be to say "everyone pays a federal tax on an item that sells for $20 or more". No more of this state tax silliness that is difficult for (small) online retailers to try to figure out. (Though lets not kid ourselves that the Amazon legal department wouldn't have it all covered.)

And for what it's worth, the OP was VERY firmly on the "no online taxes" side, so this was already an economic argument to being with -- let's not pile on ElfWreck for expressing a difference of opinion.

[anamardoll]

Originally Posted by Kali Yuga

a) Getting jobs looks good
b) Hiring 5000 locals spreads the wealth a little bit -- e.g. those individuals pay taxes, buy food, pay rent and so forth, that stays local
c) Amazon will close its TX distribution center and otherwise continue to fight rabidly to avoid paying sales taxes (i.e. either TX gets 5000 jobs, or a big legal bill and nothing)

When Amazon threatened to close the facility over this, quite a few Texas newspapers said, "Buh-bye, don't let the door hit you on the way out."

Whether or not Amazon "should" pay taxes doesn't change the fact that they are wasting a lot of goodwill in the states where they keep using people's livelihoods as a hostage token. Threatening, "if you make us abide by the rules, we'll take our ball home" is going to get a lot of "well, bye!"

What is Texas supposed to do? Offer tax waivers to EVERY business who threatens to take their ball and go home? Or just offer the waivers to the really BIG businesses who threaten to take their ball and go home.

[witeowl]

Originally Posted by Kali Yuga

And let's not kid ourselves, the people who are pushing for Internet-only retailers to collect sales taxes aren't doing it for the good of the nation. It's big retailers like Walmart and Sears, who don't want Amazon et al to have a pricing advantage.

True, but that doesn't make them wrong. The jer-, erm, less than polite kid pointing out my error in class may be doing it for his own reasons, but the error is still there.

[Penforhire]

City, state and federal incentives for desirable businesses are nothing new or unusual. Business development zones are often driven this way, both in America and overseas. The incentives can be huge and sway companies, such as the multinational manufacturer I work for, to build factories in a location primarily because of that benefit.