The Internet is an amazing tool for economic growth. Companies that can sell goods primarily online don’t need to build lots of stores, and therefore have lower “brick-and-mortar” costs. That efficiency lets them reduce their prices, leaving more money in customers’ pockets to put to other productive uses.
Most fortunately for our local area, Internet retailer Amazon is spending $139 million to build distribution centers in Hamilton and Bradley counties. That will create thousands of jobs, which in turn will generate economic activity as those local workers spend their wages on various goods and services here.
Amazon decided to build in this area after it evidently reached an agreement with former Gov. Phil Bredesen that the company would not have to collect sales taxes in Tennessee. Current Gov. Bill Haslam stood by the deal. But some state lawmakers from outside this area are pushing legislation to renege on the deal and force Amazon to collect sales taxes in Tennessee after all. That may destroy the project.
The crux of the matter is a U.S. Supreme Court ruling that companies can’t be required to collect sales taxes in a state if their “nexus,” or physical presence, is somewhere else. Seattle-based Amazon notes that its distribution centers in Tennessee are unlike retail stores, which would naturally collect sales taxes. The company argues — reasonably, we feel — that its “nexus” is not in this state, and that merely distributing in Tennessee the items it has sold online does not amount to an in-state retail sale that would require sales tax collections here.
Forcing Amazon to collect sales taxes now, after it was assured it would not have to do so, would send a troubling signal to other companies that our state may not always keep its word. That could discourage businesses from building in Tennessee.
In fact, Amazon has already canceled a $100 million distribution center in South Carolina after that state sought to force it to collect sales taxes, and Amazon plans to close a center in Dallas and not to expand other Texas operations after Texas decided to compel the company to collect sales taxes.
Forcing Amazon to collect sales taxes could kill our local project, too, costing thousands of jobs and the economic activity those jobs create.
The original agreement with Amazon should be honored, and any effort to renege on that deal should be rejected.