Why SC Rejected Amazon
A rejection by the South Carolina House of Representatives to offer corporate giant Amazon.com an exemption from collecting sales tax in the state for five years in exchange for building a new facility in Lexington County has created a firestorm of debate on the proper role of government in attracting business to the state.
This recent email by SC Representative Bill Taylor sums up the opposition to business “incentives” nicely.
Dear Friends:The Amazon decision is a critical decision for South Carolina, thus, this newsletter is dedicated to the House’s decision on Amazon’s request for tax breaks. Look for another note, tomorrow, concerning other activities of the week
Yes, the House Rejected Amazon.com Sales Tax Break:
The proposal would have exempted Amazon from collecting sales taxes in SC for 5 years, if it provided at least
1250 full-time jobs.
After much debate – The vote to reject the tax break was 71-47. I was one of the 71 who rejected the proposal.
It was not a clear cut issue as some would believe – i.e. Jobs or no jobs? The underlying implications and messages are complex. Gov. Haley expressed her concerns as well to voters in Aiken this past Monday saying she would let legislators know giving Amazon a tax break is not a good way to do business. She said, “It would be a slap in the face to businesses like Wal-Mart and to every small business we have if you give in to one business, you’re not being smart about it.”
I’m most definitely for creating jobs; I’m not for special tax advantages to one company that disadvantages existing SC businesses. I’m also opposed to corporate extortion.
Here’s what you won’t read or see in the news about Amazon:
· Supporters said SC needed to honor a deal struck in the final weeks of the Sanford administration. There was no ‘deal’ on the tax break. There were backroom promises made by people who didn’t have the authority. The memos actually stated the Commerce Department would make its best efforts to secure the legislature’s approval. They did and reasonable people didn’t buy it.
· While everyone wants more jobs in SC, legislators heard from scores of SC businesses who strongly objected to the special tax break for Amazon; in essence. Law makers would be picking more winners and losers.
· A similar ‘tax deal’ was made by Texas and when the 5 year tax break ended recently and Texas sent Amazon a $269 million tax bill, the company refused to pay and said it would close its fulfillment center there. The SEC has launched an investigation.
· This same scenario is being played out in other states as Amazon uses heavy handed tactics to get its way. Legislators elsewhere are grappling with Amazon’s bullying.
Read what they write in Amazon’s hometown newspaper: When Colorado took on Amazon, an editorial in the Seattle Times stated:
“Amazon reacted with punitive petulance, sending a deliberate message to lawmakers in every other state: Make us play by the same tax rules as other businesses and your state will be punished, too. The company fears the most capitalist of principles: fair competition. It instead relies on a rigged market. Despite the ubiquity of its Web presence and its affiliates, Amazon says it only officially exists in four states (Kansas, Kentucky, North Dakota and Washington) and that it therefore isn’t required to collect local taxes on its transactions in the other 46 states. That has allowed the company to sell goods at seemingly lower prices than local brick-and-mortar competitors, which in turn artificially tilts the market in Amazon’s favor. In recent years, New York, North Carolina, Hawaii and Rhode Island have awakened to the scheme, passing laws that explicitly apply their local taxes to online retailers. Now, with budget crises intensifying, even more states are pondering similar legislation. And so rather than simply accepting a level playing field, Amazon opted to make an example out of Colorado as a means of pre-emptive intimidation. This is politics at its most bare-knuckled – not surprising, considering it comes from Amazon CEO Jeff Bezos, a caricature of Information Age greed. Punishing one state’s economy to scare other states is all in a day’s work for this guy.”
Small Business Viewpoint: SC’s Small Business Chamber of Commerce lauded legislators for rejecting the Amazon tax break. Here’s a brief video outlining their position: http://www.youtube.com/user/SCSBCC#p/u/0/_uKQ7JiaJX8
The Need for Tax Reform: The Amazon debacle again demonstrates the need for comprehensive tax reform in South Carolina. It’s not government’s job to pick winners & losers through tax policy – that’s contributed greatly to the mess this country is currently in. For me, tax reform in SC starts with the Fair Tax and moves on to an overhaul of our broken property tax system (Act 388). Will citizens give their elected representatives encouragement and permission to consider options to reform our tax system? Will you? Most politicians are reluctant because they fear retribution at the ballot box. I don’t. It’s time to get on with reforming our tax system to make it fair for all.
And What Did Amazon Do? Moments after the vote, Amazon stayed true to its threats and pulled the plug on SC, canceling its contracts and removing all SC job postings from its website. It says it will complete construction of the distribution center.
The response to the legislative rejection will be mixed. I did what I was sent to Columbia to do – make wise decisions for South Carolinians and District 86. I was not alone – of 118 legislators who voted – 71 rejected the deal as a debacle not a deal.
Let’s make South Carolina great by bringing the right companies and jobs to our state. I want businesses that support South Carolina, it’s people, existing businesses and pay their way.
If only more states and localities would show the same restraint as South Carolina, perhaps the stranglehold that big business has on local economies could come to an end. Jobs are great, but when they come at the expense of true free market capitalism where all are granted an equal playing field, it’s best we don’t play that game. In the long run, we, the people, the hostages to back room deals made by those with power and resources, will all be better off.
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