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Amazon offering a bribe to keep its sales tax exemption

Well, what would you call this?

Amazon.com is negotiating a deal with Texas officials that would see the online retail giant promise to bring more than 5,000 jobs and $300 million in capital investments to the state over the next three years – if in exchange lawmakers will grant Amazon a 4 1/2-year exemption from collecting tax on online sales, according to documents obtained by the American-Statesman.

The proposed deal would be implemented by attaching it to Senate Bill 1, the wide-ranging fiscal matters bill being debated in the Legislature’s special session. SB 1 is a must-pass measure essential to balancing the state’s 2012-13 budget.

A draft copy of the conference committee report that would add the language to SB 1 was obtained by the American-Statesman. Mark Miner, spokesman for Gov. Rick Perry, confirmed Monday that the governor’s office has seen the draft copy of the proposed legislative language.

[…]

The proposal is similar to one Amazon recently struck with South Carolina, where that state’s legislators approved a 4 1/2-year exemption on collecting sales tax in exchange for Amazon creating at least 2,000 jobs and investing at least $125 million through the end of 2013.

One wonders who will be responsible for verifying that the job-creation and capital spending metrics have been met, and how we’ll know that these were genuinely things Amazon would not have done otherwise. Will there be any penalties for them if they fail to reach those goals, or if they just decide not to bother trying? I mean, a subsequent Lege could pass another online taxation bill as this one did, but unless there’s a provision to charge back taxes, what does Amazon have to lose by reneging?

By the way, would this deal mean that other online retailers will be required to pay sales taxes, just not Amazon? Anyone think some of them may try to do their own deal, or maybe sue to be exempted as well? Which makes me wonder what the cost of this may wind up being.

The proposal is the latest twist in Texas’ standoff with the world’s largest online retailer over the collection of online sales tax. The state stepped into the national debate over that issue last September, when Comptroller Susan Combs sent Amazon a notice that it owed $269 million in sales taxes it failed to collect on Texas transactions from 2005 to 2009.

[…]

Combs has estimated the state loses $600 million a year from untaxed online sales.

I guess Amazon’s share of that is between $50 and $70 million per year, depending on if we’re talking four or five fiscal years for that $269 million to accrue. Seems like it should be a bigger percentage than that. I think the state would be better off with the $600 million than with perpetuating that race to the bottom, but maybe that’s just me.

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2 Comments

  1. Ross says:

    I vote for making them collect the sales tax. And for all online retailers that don’t collect tax to provide a list of recipients in Texas to the State Comptroller, who can then start proceedings to collect the tax from the buyers.

  2. […] here for the background. I’m glad to see someone besides me express skepticism about the job […]