After SC Tax vote, Amazon says UP YOURS!

Amazon logoAmazon.com is the largest and most successful on line marketplace with 33,700 employees and over $34B in revenue. One of the biggest reasons most people shop on the internet is the lack of sales tax on purchases – in most instances. Of course, state governments lament this “loss of revenue” and they have been looking hard at legislating this advantage away from internet merchants (more here). Amazon has been the obvious #1 target of the taxers and they have vowed to fight efforts to tax on-line purchases (more here).

One of the ways states can currently collect sales taxes from internet purchases is if the seller has a presence in the buyer’s state. For example, if you purchase an item from Amazon that comes from one of their affiliates and that affiliate has an outlet in your state, you pay the sales tax. One of the ways Amazon has fought this is to simply close their affiliate program in the states that enact on-line taxing legislation. According to this story Amazon has upped the ante with the state of South Carolina. After the legislature approved an internet tax, Amazon cancelled a project for a distribution center in Midlands. The plant is under construction and was anticipated to provide over 1200 jobs.

South Carolina lawmakers’ decision to deny a sales tax break for online retailer Amazon.com will cost Lexington County more than 1,200 jobs, but the effects could ripple across the state.

Some say the incentives were unfair to established brick-and-mortar retailers while others maintain the reneged deal will cause other industries to pause before bringing their business to South Carolina.

Amazon.com decided after the vote to cancel $52 million in procurement contracts and remove all job postings from its website for the Midlands plant, effectively saying goodbye to South Carolina.

Newly-elected republican governor Nikki Haley applauded the decision, saying that South Carolina wants to “level the playing field” for business. Ugh!

That did little to change Gov. Nikki Haley’s stance, and she applauded the House’s 71-47 decision in a visit to Charleston on Thursday.

‘When you come to South Carolina, we’re going to give you a fair competitive marketplace to do business, and we’re always going to take care of businesses that are in town,’ she said. ‘By allowing Amazon to get a tax break that we’re not giving to any other business in our state destroys what I am saying.’

Haley said retail is different from manufacturing because its jobs are subject to higher turnover and lower pay. ‘It is not a Boeing. It is not a BMW,’ she said during the Free Enterprise Foundation’s awards luncheon at The Citadel.

Amazon is not a Boeing or BMW so we don’t need their business? Those 1200 jobs are low-paying with high turnover – you know, the kind that Americans won’t do but Mexicans will. Great job, governor!

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One Response to “After SC Tax vote, Amazon says UP YOURS!”

  1. While I understand (and to a point, agree) with Gov. Haley’s statement, they’ve gone about this the wrong way.

    South Carolina may not only hurt themselves by eliminating jobs that, quite frankly, no place can say no to, but they could end up hurting other places if consumers choose retaliatory action and not buy from Amazon, thus harming all their vendors and Amazon because Amazon, I’m sure, will be painted as the bad guy.

    The best thing to do I think is to simply ban sales tax on Internet sales unless the “store” is headquartered in that state. In other words, if I start an online store in Massachusetts (where I live,) and sell stuff here, I should collect Uncle Deval’s 6.25%, but I shouldn’t be forced to collect Rhode Island’s 7%, even if I open a warehouse down there.

    The best solution in the long term is to make government smaller and more efficient.

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