Amazon Announces It's Leaving Texas In Tax Dispute; Governor Blames Comptroller, Says He'll Fix

from the politics-is-about-power dept

You may recall late last year that the state of Texas sent Amazon a tax bill for $269 million. The issue, as always, is the question of whether or not Amazon has to collect sales tax. Technically, e-commerce companies have always said they don't have to collect sales tax in states where they have no physical presence. Of course, Amazon actually has a giant distribution facility in Texas, and also bought Woot (based in Texas) last summer. It's still tried to avoid the tax issue by claiming those are subsidiaries, not itself.

Apparently, that strategy wasn't working, so last week Amazon announced that it was leaving Texas over the issue, making sure to announce that it had planned to hire 1,000 additional workers at the facility. Hearing a major employer leaving the state is generally a pretty bad thing for state politicians and Governor Rick Perry realized that, because it took all of one day for him to throw the state comptroller under the bus and claim that the whole thing was a mistake by the comptroller:
"That is a problem and I would suggest to you that we need to look at that decision that our comptroller made," he said. "The comptroller made that decision independently. I would tell you from my perspective that's not the decision I would have made."
In fact, Perry publicly began to explain why Amazon shouldn't have to pay sales tax on items shipped in Texas:
"You couldn't go in and buy anything out of that store, and that, historically, has been the way we defined whether you pay taxes or not -- if you had a storefront. This obviously didn't have a store front. It was specifically there to manage products that need to be shipped out."
Perry then asked the state legislature to make sure that it crafts some new rules that keep Amazon from leaving. Looks like Amazon just successfully called Texas' bluff.

Filed Under: taxes, texas
Companies: amazon

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  1. identicon
    Ryan Diederich, 14 Feb 2011 @ 9:36am

    Everyone missed the point....

    If every individual, company, and entity, strictly followed every single rule, regulation, and ordinance set before it, this world would be a sad place.

    The morals and general consensus of the population change with time, laws change as well. Historians often use the state of the laws to determine what the moral thoughts were of the people at the time. If divorce was frowned upon, we would see strict laws regarding it, quite simple.

    But if laws change, then someone or some even must change them. I side with amazon, that a company which has no physical presence should be free from having to charge sales tax. I dont consider a distribution facility a physical presence, it is merely a logistics building.

    The main point is that this facility does not serve texas in any way, it serves a large portion of the united states. That being said, the building could have been anywhere, obviously amazon understands that which is why they have decided to move out. Might as well put the facility in the state with the lowest internet sales, to make sure to keep taxes paid to an absolute minimum.

    Maybe the government should consider an internet sales tax (i know this sounds scary, but its not so bad if put in place INSTEAD of state level taxes). That way, all internet companies could be treated the same way, and they would place their logistical buildings in the most convenient place.

    This has positive effects, it allows states to compete for businesses without having to modify their tax system. Texas can vie for Amazons facility by being in the center of the country, having cheap land and construction, etc.

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