Amazon offers Texas 5,000 jobs in trade for sales-tax exemption

http://seattletimes.nwsource.com/html/businesstechnology/2015383772_amazontexas22.html

by taylorbuley • 15 years ago

18 25 15 years ago

seattletimes.nwsource.com

cbailey• 15 years ago

While it's common practice for a city government to give tax breaks for large corporations in exchange for bringing a large number of jobs (almost like a "thank you" for bolstering the local economy), the sales-tax exemption is new to me. I had to reread the beginning of the article before it really hit me.

evan_2• 15 years ago

Keep in mind that they're already sale-tax exempt in Texas. They don't have any locations in Texas, therefore they don't have to charge sales tax.

They want to open a facility in Texas, but they don't want to have to start charging sales tax. Doesn't hurt to ask.

daniel_solano2• 15 years ago

Actually, they have had a facility in Texas for some time that they were planning on expanding. Last year, the comptroller demanded they pay back something on the order of $600M in back taxes and penalties.

pcarmichael• 15 years ago

Without a presence in Texas, Amazon is not obligated to collect sales tax. However, the customer must then pay a 'use tax', which is the same rate as the sales tax: http://www.window.state.tx.us/taxinfo/sales/faq_use.html

What the public in general seems to miss is that the tax revenue is due one way or another - either Amazon collects or customers self pay. Most of the public who are not business owners do not realize they need to self pay - it is neither enforced nor made obvious that one needs to do so. So instead of making the public aware of 'use tax' and trying to enforce it, the Texas legislature is trying to change the definition of an in-state presence to include independent subsidiaries, affiliates, etc. Then by doing so, the government can force the merchant to collect the taxes owed for them.

The first 'internet sales tax' bill was passed by the legislature but vetoed by the governor. Similar language was added to an omnibus spending bill, which is much more likely to survive.

dangrossman3• 15 years ago

They have a distribution center there as well as the Woot offices/warehouse in Dallas... as an outsider without all the facts, my first impression is that Amazon has a significant physical presence in Texas and really should be collecting sales tax already.

daniel_solano2• 15 years ago

Well, this is a case of the State trying to milk every bit of sales tax revenue it can. Normally, if you have a presence in a state, you are responsible for collecting sales tax from your customer and sending it to the state.

Let's say that you have business where you put together and sell computers. If you worked out of Dallas and sold a computer to someone in Houston, you'd collect the tax and send it to the state. The state then keeps a portion and sends a portion to the local governments where you live.

Now, let's say that you move to some other state and sell a computer to someone in Houston. Normally, if you mail it directly to your customer, you do not collect any tax and it is up to your customer to pay a local use tax.

Amazon's problem is that it has a distribution centre in the Dallas area, and the state says that counts as a 'local presence', but Amazon does not agree.

To carry on with the example, you live out of state and you sell a computer to someone in Houston. However, instead of shipping it directly to the customer, your brother who visits every weekend picks up the computer, gets it to his home in Dallas, and then ships it out from there. The state finds out about this and decides that your brother counts as a "local presence". Accordingly, it then demands that you pay up on all of the taxes you have failed to collect.

noonespecial• 15 years ago

Today corporations are negotiating directly with states. As equals. Not long ago, cities and counties were about the most they could swing. It won't be long until it becomes countries.

That used to strike me as extremely dystopian. Now I'm not even sure that would be so bad.

bdhe• 15 years ago

I think things were far worse not so long ago: http://en.wikipedia.org/wiki/East_India_Company

Although it might be a stretch to compare them to a modern-day corporation, they were a private company and had territories, a (edit: govt. chartered) monopoly and even their own army. edit: In fact, the Tea act of 1773, that lead directly to the Boston Tea Party, was because the EIC was facing financial troubles after a famine in Bengal.

Maybe these things come and go in cycles.

brianbreslin• 15 years ago

Some corporations already negotiate at national levels. GE probably does all the time with the same leverage amazon has at a state level.

maratd• 15 years ago

Same goes for GM, large banks, etc. and those are only the ones we read about.

MichaelApproved• 15 years ago

"Finally, it wants the Texas comptroller's office to set up a website where its customers can send sales tax owed on Amazon purchases to the state. Historically, voluntary sales-tax payments haven't been reliable."

I thought that part of the story was a joke. "Historically, voluntary sales-tax payments haven't been reliable." has got to be an understatement.

Has anyone here ever voluntarily paid sales taxes?

epochwolf• 15 years ago

> Has anyone here ever voluntarily paid sales taxes?

I didn't even know it was possible to do so.

sixtofour2• 15 years ago

I would be reluctant to do so, because that establishes one more connection between me and the state. The best thing, in general, is to minimize your profile with the state.

SwellJoe• 15 years ago

When I ran a business in Texas, I generally did. There were occasions where I bought parts intended to resell them, but ended up with them stuck in one of the desktop or development machines...so, I probably cheated a little bit, but not much.

But, I was under the impression individuals were not legally obligated to pay sales tax on goods from out of state, but this article makes it sound like they are. So, I never paid on individual purchases during the 15 or so years I lived in Texas.

esrauch• 15 years ago

In NY State at least there is a "use tax" which is not the same as sales tax, but it effectively is just sales tax on goods bought out of state.

dangrossman3• 15 years ago

Not that I'm some kind of tax expert, but AFAIK, "sales and use tax" is levied on categories of goods and services, regardless of where they're purchased.

There's only an obligation to COLLECT the tax by retailers with a presence in the state, but all residents of the state have to pay the tax on all purchases.

When it's collected by the retailer it's called sales tax, when it's not it's called use tax and you have to send it in yourself.

ohyes• 15 years ago

In CT it is a line on your tax form.

It is only on certain goods and I just do an estimate, but yes, I paid it.

dangrossman3• 15 years ago

Yes, I keep receipts on anything I buy out of state and pay the sales tax at the end of the year. It's mostly Amazon.com purchases, really. I'm in PA.

anamax• 15 years ago

> Has anyone here ever voluntarily paid sales taxes?

Yes.

FWIW, it's a line on CA's form 540 (I paid on the long form but assume that it's on the short form as well).

Turbotax even asks about it.

LarryA• 15 years ago

Yep, on the California Tax form - called the Use Tax. I go through my eBay/Amazon/etc stuff and work up a total. I like having stuff like libraries and roads without potholes.

shib71• 15 years ago

The idea that it is valid to insert arbitrary and tangential (if not completely unrelated) laws into bills is something about the American system that baffles me.

SkyMarshal• 15 years ago

It's nuts, do other countries have a solution to this?

giardini• 15 years ago

This appears to be a violation of the equal protection clause of the 14th Amendment. If Texas can do this for Amazon may I also request it for _my_ Texas corporation? Can I get a better deal than Amazon's? Do we now all haggle with the state about how much tax we pay?

sixtofour2• 15 years ago

I could go the rest of my life without buying a book. There's enough information and entertainment on the Internet and among my friends.

If corporations and states require me, the consumer, to keep track of their bookkeeping for them, indeed make it dangerous to purchase something online when I don't have the time, inclination or ability to find out where each vendor's presence happens to be, I might just opt out entirely. It's the safe thing to do.

Amazon offers Texas 5,000 jobs in trade for sales-tax exemption

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