Amazon Offers Calif. 7K Jobs to Put Sales Tax Law on Hold; Dems, Retailers Refuse
September 2, 2011 9:48 AM
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Senate President Pro Tem Darrell Steinberg is even going as far as gaining support for a bill that prevents Amazon from bringing a referendum to unravel the present sales tax law
Amazon CEO Jeff Bezos
If state leaders can put a hold on the new law until 2014, Amazon will drop its effort to repeal it and would hire 7,000 new employees in California
Amazon has been fighting a tax-related battle for quite some time now. In the past, state's like
, Illinois and Colorado have pressured the online retailer to collect taxes in order to make up for state budget shortfalls, but Amazon refused and would simply pack its bags to move on to another state.
recently joined the list of states who've pressured Amazon to collect. In fact, Governor Jerry Brown signed a bill in June that would require websites that forward shoppers to Amazon to collect sales tax in California. The law, which took effect July 1 and is expected to generate $200 million in revenue, angered Amazon to the point that it
asked California voters to repeal the law
Now, Amazon has
a new proposition
for the state of California that was discussed in a meeting Tuesday with leaders of the California Retailers Association and those in the office state Senate Republican Bob Dutton in Sacramento: If state leaders can put a hold on the new law until 2014, Amazon will drop its effort to repeal it and would hire 7,000 new employees in California.
While the hiring spree could be an appealing option for the state, since California's unemployment rate was at 12 percent in July and is expected to remain in the double-digits through 2012, Democrats are rejecting Amazon's proposal due to budget-related woes.
Earlier this year, state leaders needed to close a $10 billion shortfall. This gap was closed in June after deep spending cuts in previous budget cycles, but Democrats are backing the new law due to the fact that it has the support of local governments, public employees and small and large businesses.
like Best Buy and Walmart have been complaining about "unfair competition" with Amazon since they have to collect taxes and Amazon doesn't. The California Retailers Association quickly rejected Amazon's proposal.
"Our people came back and said this isn't legitimate," said Bill Dombrowski, president of the California Retailers Association. "It's unacceptable."
As for local governments and public employees, their "ranks are being thinned" due to a weak local revenue and overall state.
Senate President Pro Tem Darrell Steinberg is even going as far as gaining support for a bill that prevents Amazon from bringing a referendum to unravel the present sales tax law. Amazon spokespeople said they believe they'll have enough voter signatures by September 27 to qualify its referendum for next year's ballot.
In addition, Steinberg and other Democrats will create California jobs without the help of Amazon by proposing tax breaks for businesses, creating an economic development office and easing regulation.
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9/2/2011 5:18:31 PM
Amazon doesn't *have* to stop selling things in California. State governments do not have the authority to force online retailers to collect taxes if they don't have a physical presence in their state, based on a supreme court ruling. Basically, because Amazon has partners with offices in the state of California, this law would force them to collect sales taxes on sales made to the state of California, period. What Amazon *can* do is shut down relationships with any partners in the state of California. For some of those partners, that's a big chunk of their income. Doing so could cause a great deal of loss for the state of California in both jobs and tax income.
Amazon has none of its physical operations located in California. They're basically saying, "Put the law on hold and we'll start operating directly in California."
Living in Arizona, I already have to pay sales taxes on Amazon purchases since they have a Warehouse near Phoenix. I do, however, get everything from there within 2 days no matter what shipping method I pick.
9/2/2011 5:43:51 PM
That's a matter for the lawyers to hammer out, and I won't pretend to have enough knowledge about it. However, i was under the impression that this was a bit of a grey area, and that California would likely sue over it anyway, with the final court decision unknown.
It's fairly common practice for businesses to settle patent cases out of court even when they know they would have won, simply because it's cheaper to pay the other way to go away than it is to pay your lawyers to go through a long court battle. The same may be true here.
9/4/2011 1:12:21 PM
Dude, if you don't know, why are you arguing with someone who obviously does.
"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton
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