Texas has had a business-friendly reputation, but it's taking a hit as Amazon.com (NASDAQ:AMZN) is closing its distribution center in the state over the attempt to extract a sales tax from the company; something other states have attempted and failed to do.
The distribution center in question is based in suburban Dallas. Texas will lose more jobs, as Amazon had plans in place to expand operations in the Lone Star state.
When you get to the root of this, it's still the bad practice of governments of making promises they can't keep, and their refusal to limit the size of government.
That's the crux of the matter no matter how it is now being spun.
Katherine Cesinger, spokeswoman for Texas Governor Rick Perry said, "We've had ongoing communications over the years encouraging Amazon to expand their business in Texas, and we recently encouraged them to stay in the state. We are always mindful of the tax burden on families and businesses in our state, and it is important that Texas clarify the laws regarding this issue to further strengthen the reliability of our tax system and to protect Texas jobs."
In 2010 the comptroller's office demanded $269 million in uncollected sales taxes from Amazon. Of course there is no proof that the taxes weren't collected, as it's quite probable there weren't any taxes to collect in the first place.
They're obviously using the difficult economic circumstances and strained government budgets as excuses to make their play for Amazon's money. Now it's cost them a lot of jobs and the inability to generate taxes from workers at Amazon.
Amazon was trading at $188.16, up $1.95, or 1.05 percent, as of 12:45 PM EST.
Friday, February 11, 2011
Amazon (NASDAQ:AMZN) Shuttering Texas Operations on Sales-Tax Dispute
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2 comments:
Borders bookstore to file for bankruptcy.
Jobs at stake: 19,000
Amazon to close Irving,TX distribution center.
Jobs lost: 119
Does anyone connect the dots ?
Borders, like bookstores everywhere, have been facing the sales tax headwind as a competitive handicap for years vs. Amazon.
In contrast to the aggressive unethical tactics by Amazon, it is interesting to note that the much vilified WalMart collects sales tax on online sales even to states where it does not have a physical presence.
Like girlie man Schwarzenegger, Rick Perry, gov. of the "Don't Mess" state is kowtowing to the bullying tactics of Amazon.
The proper venue where this should be addressed is Washington, but in the present political climate anything labeled "Tax" will be regarded as Toxic for the political careers of our elected officials. Even if Washington were to resurrect the “Sales Tax Fairness and Simplification Act,” H.R. 3396 which died on the vine in the last congress and its principal sponsor Bill Dellahunt (D-MA) is now retired, it gives the force of law only to states which enacted the “Streamlined Sales Tax Agreement” which 24 states have so far passed. But Texas hasn’t yet. So, state legislators should focus on this step first.
Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.
As a tactic to bring the issue to a speedier resolution, I suggestions the following:
For the major brick & mortar retailers who also have online operations, if they reorganize their online efforts copying the Amazon playbook of "Entity Isolation" to dodge the "Nexus" issue so they too can dodge the responsibility of collecting sales tax, the states will then face the specter of revenues drying up in a major way and this tactic will raise the political profile and urgency of this issue.
In contrast to the aggressive unethical tactics by Amazon, it is interesting to note that the much vilified WalMart collects sales tax on online sales even to states where it does not have a physical presence.
This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:
A dog is lying on the porch whining softly.
A passerby asks the owner what is wrong with the dog.
"thar’s a nail stickin’ up outta da porch tha’ he’s laying on.”
"Why doesn't he move?"
“Donno. I reckon it don’ hurt bad enough.”
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