Amazon offers jobs to avoid collecting Texas sales taxes

[Elfwreck]

Originally Posted by anamardoll

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.

Potentially: sure. States could reasonably say, "if you promise to create $##,###,###.## in economic activity in our state over the next X years, you are exempt from [Y-type] taxes for that period of time."

Oregon manages with no sales taxes; other states could presumably find other ways to fund their public activities. More jobs = more homeowners = more income & property taxes. More sales, even online sales = more cars, gas sales, more post office activity, more packaging costs, more income taxes for the company itself. A state could look over its budgets and decide that sales tax revenue could be offset by other kinds of economic activity, and encourage those activities by cutting back on or removing sales taxes.

It's not the "goes tax-free" that bugs me; it's the special deal only available to Amazon. If Amazon's going to bring enough revenue to the state that it's worth keeping them without charging sales tax, than so would any company of comparable size & activity level.

[Kali Yuga]

Originally Posted by anamardoll

Threatening, "if you make us abide by the rules, we'll take our ball home" is going to get a lot of "well, bye!"

Amazon isn't breaking the rules.

Quill v North Dakota established that if you're selling via mail over state lines, you only need to collect sales tax if you have an office in that state. States are gasping for revenues, and are now interpreting that ruling as broadly as possible in order to collect more tax revenues. This tactic may strike you as a company shirking its responsibilities, or as staying competitive, or acting spoiled. Either way, it is within the rules for Amazon to close its distribution center in Texas and, on that basis, avoid any requirements to collect taxes from its TX customers.

It's also worth noting that this won't be money taken directly out of Amazon's pockets. It's the citizens of Texas who will pay, because Amazon will collect the sales taxes at time of purchase and then send them on to the State.

Originally Posted by anamardoll

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.

As you may have noticed, every elected official is scrambling to say that they are "promoting job growth."

The reality is that short of hiring people at public expense, there isn't much government can do to create jobs. One of the few things it can do is offer are tax incentives, with the hope it'll actually attract business to hire and/or to work in a specific region.

Basically, either Texas can demand tax revenues and Amazon will remove the basis for that claim; or they can offer Amazon a tax holiday, retain the right to collect sales taxes from other businesses that have offices in the state, and get a guarantee of a few jobs out of it.

And yes, big businesses pull this kind of stunt all the time. I'm not aware of any magic formula that will result in companies moving into a state, voluntarily paying higher taxes, voluntarily raising the prices their customers pay, and having this not tick off the conservatives who hate taxes. If there is one, PM me so I can steal the idea from you and make a mint off of it.

[anamardoll]

Originally Posted by Elfwreck

Potentially: sure. States could reasonably say, "if you promise to create $##,###,###.## in economic activity in our state over the next X years, you are exempt from [Y-type] taxes for that period of time."

Oregon manages with no sales taxes; other states could presumably find other ways to fund their public activities. More jobs = more homeowners = more income & property taxes. More sales, even online sales = more cars, gas sales, more post office activity, more packaging costs, more income taxes for the company itself. A state could look over its budgets and decide that sales tax revenue could be offset by other kinds of economic activity, and encourage those activities by cutting back on or removing sales taxes.

It's not the "goes tax-free" that bugs me; it's the special deal only available to Amazon. If Amazon's going to bring enough revenue to the state that it's worth keeping them without charging sales tax, than so would any company of comparable size & activity level.

I don't mind a tax-free proposition either, if the state wants to do that, but I don't like the "hostage" tone Amazon is taking. I've been following the Texas situation for awhile now and Amazon has just been a PR nightmare if you look at the tone arguments they've been putting out.

I also do not know how a presence that is basically a warehouse for storing goods to be shipping to Texas, Oklahoma, etc. is going to generate X "economic activity".

That Texas warehouse only employed a handful of employees (in the grand scheme of things), and didn't bring in tourists or shoppers from other areas. It didn't even serve Texas customers -- prime customers get their stuff in 2 days regardless of whether or not that Texas warehouse is there. (Non-primers get their stuff at pretty much the same rate too, I reckon.)

The ONLY thing their presence in the state gives Texas is a few hundred jobs. Which is nice, but not *crucial*, and for Amazon to take this high-and-mighty tone of "oh, if you're going to make us follow the rules, we'll just leave, what do you think about THAT, huh?" Eh. I know a lot of folks who were amused with the newspaper response was not to let the door hit them on the way out.

NOW they want to make deals. And that's....well, okay, I guess. But why should they get to do that? B&N employees more Texans than Amazon's little warehouse will, but NookBook taxes aren't going anywhere.

Anyway, as you say, those purchases are meant to be taxed regardless of Amazon's presence in the state. Amz just doesn't want to collect them. And they're playing Texas two-step with their OWN employees in an attempt to tug heartstrings in Texas over it. I don't like it.

[Kali Yuga]

Originally Posted by Elfwreck

Oregon manages with no sales taxes...

Oregon had a $1 billion deficit by August 2010.

Also, keep in mind that Amazon is getting targeted while, at least as far as I know, small Internet business are not. Amazon is definitely asking for special treatment (as do many other companies), but they are also getting singled out by the State.

Nor are they the only company that receives (let alone requests) tax incentives. Sports teams routinely demand huge tax incentives or outright payments to stay in a city, states have "enterprise zones" with special low sales tax rates, lots of companies demand tax concessions in exchange for moving to a state or city.

[anamardoll]

Originally Posted by Kali Yuga

Amazon isn't breaking the rules.

Quill v North Dakota established that if you're selling via mail over state lines, you only need to collect sales tax if you have an office in that state. States are gasping for revenues, and are now interpreting that ruling as broadly as possible in order to collect more tax revenues. This tactic may strike you as a company shirking its responsibilities, or as staying competitive, or acting spoiled. Either way, it is within the rules for Amazon to close its distribution center in Texas and, on that basis, avoid any requirements to collect taxes from its TX customers.

We're saying the same things: Amazon had a state presence and said "If you're going to make us collect taxes because of that presence, we'll leave."

That's fine, and well within their rights.

What Texans DIDN'T like was Amazon pausing on the threshold, glancing back over their shoulder, and saying, WON'T THAT BE A SHAME FOR THE FOLKS WE'LL HAVE TO LAYOFF in a coquettish tone.

Leave or don't leave over the rules, but don't hold your employees hostage in the hopes of guilt-tripping the state into making a special exception to the rules. A special exemption that will save Amazon LOADS of sales, but won't do ANYTHING for Texas other than cover a few hundred jobs. I'm telling you: it didn't go down well at all locally.

[RainingLemur]

Originally Posted by Elfwreck

It's not the "goes tax-free" that bugs me; it's the special deal only available to Amazon. If Amazon's going to bring enough revenue to the state that it's worth keeping them without charging sales tax, than so would any company of comparable size & activity level.

While reading through all the posts in this thread, this was about the same sentiment I was going to share. I agree with this part entirely.

[khalleron]

Originally Posted by Kali Yuga

Oregon had a $1 billion deficit by August 2010.

Not only that, but our income taxes are higher than any state I've ever lived in, and I've lived in quite a few.

I'm actually in favor of a sales tax - one of our major industries is tourism and I think of all the income we're losing from those sales taxes.

No one listens to me - they think, 'hey, no sales tax! Good!' without considering the whole picture.

It's also illegal to pump your own gas here - which REALLY kills me. Everyone complains about the high gas prices, but no one realizes why they're high.

Sorry - OT, I know. Rant over.

Anyway, I agree that big businesses should be taxed the same as everyone else. Giving them breaks is trading long term growth for short term gains.