South Carolina Republicans do the right thing...
Posted: Thu Apr 28, 2011 1:39 pm
http://www.fitsnews.com/2011/04/27/sc-h ... azon-deal/
Summary: The previous governor negotiated a deal with Amazon which would allow them to build a warehouse within South Carolina, but not have to collect sales tax from South Carolina residents who purchase goods from Amazon. The tax exemption came up for a vote in the Republican controlled state legislature, and was handily voted down, 71-47. Amazon immediately ceased operations in South Carolina, which will now lose 1,300 new jobs at the abandoned facility.
Analysis: It is simply not fair to give one company a competitive advantage over other companies. Large big box retailers and small local ones have to collect sales taxes. Why shouldn't Amazon? If they are allowed such an exemption they are basically selling their goods at a discount equal to the state sales tax amount relative to other retailers doing business in the state. Of course Amazon's decision hurts the state considerably. 1,300 jobs is nothing to sneeze at, even of the lower paying variety. And Amazon's SC customers will still not be paying sales tax. But SC did the right thing, which in and of itself is a good.
From Amazon's perspective, it hardly matters - some other state will give them a sweetheart deal.
Interestingly enough, this might herald a movement away from sales taxes and towards RE taxes. Internet retailing has basically been the death knell for sales taxes, as it becomes too easy to avoid them at the expense of local business. The first state that gets rid of the sales tax altogether will probably find it's local economy flourish. Companies like Amazon actually LOVE the sales tax, because their customers don't pay it, but their competitor's customers do. Getting rid of the local sales tax altogether would level the playing field and force online companies to have to compete on their own merits as opposed to the rules of an artificial construct. At the local level, it would provide a strong immediate boost to long suffering local retailers. This last point can't be overstated.
The flip side of that coin is that consumption taxes are preferable to income taxes. I would support a Federal VAT or sales tax imposed fairly upon all parties in place of the income tax. But at the local level, any state that looks at this intelligently will have to assume that there are better ways to gain revenue. It just hurts local business too much.
Also worth noting that the 'tea party' seems to be having a good influence on the Republicans. The paleo Republicans always gave the sweetheart deals to corporations. It's how they became known as the corporate welfare party. I like the fact that the Tea Party is being intellectually honest here and despite it's anti-tax message, acknowledges that if we are indeed taxing, it should be done fairly and equally. And the SC Republicans, which saw the influence of the Tea Party in the election of their new governor, Nikki Haley, were not about to ignore them.
Summary: The previous governor negotiated a deal with Amazon which would allow them to build a warehouse within South Carolina, but not have to collect sales tax from South Carolina residents who purchase goods from Amazon. The tax exemption came up for a vote in the Republican controlled state legislature, and was handily voted down, 71-47. Amazon immediately ceased operations in South Carolina, which will now lose 1,300 new jobs at the abandoned facility.
Analysis: It is simply not fair to give one company a competitive advantage over other companies. Large big box retailers and small local ones have to collect sales taxes. Why shouldn't Amazon? If they are allowed such an exemption they are basically selling their goods at a discount equal to the state sales tax amount relative to other retailers doing business in the state. Of course Amazon's decision hurts the state considerably. 1,300 jobs is nothing to sneeze at, even of the lower paying variety. And Amazon's SC customers will still not be paying sales tax. But SC did the right thing, which in and of itself is a good.
From Amazon's perspective, it hardly matters - some other state will give them a sweetheart deal.
Interestingly enough, this might herald a movement away from sales taxes and towards RE taxes. Internet retailing has basically been the death knell for sales taxes, as it becomes too easy to avoid them at the expense of local business. The first state that gets rid of the sales tax altogether will probably find it's local economy flourish. Companies like Amazon actually LOVE the sales tax, because their customers don't pay it, but their competitor's customers do. Getting rid of the local sales tax altogether would level the playing field and force online companies to have to compete on their own merits as opposed to the rules of an artificial construct. At the local level, it would provide a strong immediate boost to long suffering local retailers. This last point can't be overstated.
The flip side of that coin is that consumption taxes are preferable to income taxes. I would support a Federal VAT or sales tax imposed fairly upon all parties in place of the income tax. But at the local level, any state that looks at this intelligently will have to assume that there are better ways to gain revenue. It just hurts local business too much.
Also worth noting that the 'tea party' seems to be having a good influence on the Republicans. The paleo Republicans always gave the sweetheart deals to corporations. It's how they became known as the corporate welfare party. I like the fact that the Tea Party is being intellectually honest here and despite it's anti-tax message, acknowledges that if we are indeed taxing, it should be done fairly and equally. And the SC Republicans, which saw the influence of the Tea Party in the election of their new governor, Nikki Haley, were not about to ignore them.