published Sunday, May 15th, 2011

Kennedy: Amazon issue is tying me in knots

My 9-year-old son is a Boise State football fan. He likes being different, and the blue turf at Bronco Stadium is as different as it gets.

Not long ago, he decided he wanted a Boise State baseball cap. We looked first at a cap store in Northgate Mall and found a nice one that fit.

“I can get it cheaper on Amazon,” he said, and handed the cap back to the sales associate.

Indeed, he ordered a cap online a few weeks later, and after five days it arrived by UPS in a small brown box. My son ripped open the package and popped the hat on his head. I saw him deflate. The cap was about three sizes too small; it looked like a beanie on a boulder.

As his eyes began to water, my younger son zipped through the room and confiscated the cap, which fit perfectly on his 4-year-old head. I promised my older son we would go back to the mall the next day to find a cap that fit, and we did.

“Hi there,” I said, as we strolled into the cap store at Northgate. “Got any Boise State caps?”



“Yep, same one we had the last time you were here,” the sales associate said dryly.

Ouch.

Twenty dollars later, my son was strutting through the mall beaming. Moral of the story: Sometimes a cap in the hand is worth two online.

I thought about this story this week as lawmakers in Nashville wrestled with whether to compel Amazon, which is building giant distribution centers in Hamilton and Bradley counties, to collect sales taxes on purchases by Tennesseans. (As I write this column the issue is unresolved, and Amazon has promised to take its jobs elsewhere if the tax is imposed.)

I envy people who can take an issue like this, boil it down and immediately pick a side. This story touches my life in a bunch of ways.

Here are a few:









  • My wife is a first-grade teacher. Her salary helps keep our lights on. Tennessee’s patchwork tax system is dependent on state and local sales taxes to pay a big portion of the cost of public schools. When online purchases escape sales taxes, the tax base erodes and schools suffer.

I can draw a straight line from the debate in Nashville to my family’s financial security, which is about as personal as an issue can get.

  • On the other hand, Amazon is bringing good-paying jobs to Tennessee at a time when unemployment is slamming some of my friends and former co-workers.

Also, I’ve got two precious boys who will grow up and need jobs some day. I paid for my college education as a seasonal laborer, making twice the minimum wage assembling air conditioners and packing rods at an aluminum plant. The thought that such good-paying jobs might some day be available to them is huge.

  • As a newspaperman, my daily bread is provided by advertising dollars from traditional bricks-and-mortar retailers, some of which have been pummeled by the one-two punch of recession and tax-free online competition.

If it weren’t for those Sunday ad inserts from Best Buy and Target, the slump in the newspaper industry would have been much deeper.





If I see one more career journalist clean out his or her desk, it will break my heart. Unspoken, but always in the back of my mind: That journalist could be me.

  • At the same time, I can’t get it out of my head that the elected leaders of Tennessee shook hands and made a promise to Amazon as part of the deal to bring the distribution centers here.

That trumps everything. As parents, my wife and I stress to the boys that honesty is the No. 1 virtue. Breaking promises for personal gain is the definition of dishonesty.

If I didn’t teach my sons to put honor above financial gain, what kind of father would I be?

A cowardly one, that’s what.

about Mark Kennedy...

Mark Kennedy is the editor of the Times Free Press opinion pages and writes the Sunday “Life Stories” column. He also writes a Saturday automotive column, “Test Drive,” for the Business section. For 13 years, Kennedy was features editor of the newspaper, and before that he was the newspaper’s first Sunday editor. The Times Free Press Life section won the state press award for Best Community Lifestyles four times during his tenure. Before Chattanooga’s newspapers ...

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ninjapirate said...

"That trumps everything. As parents, my wife and I stress to the boys that honesty is the No. 1 virtue. Breaking promises for personal gain is the definition of dishonesty. "

<p>Newegg.com and Buy.com are two internet retailers that have been collecting the sales tax... shouldn't they get a break too if Amazon does?

May 15, 2011 at 1:38 a.m.
dfclapp said...

There are several points you neglect that are worth mentioning. Those working at Amazon will be able to pay taxes for goods at retail outlets in TN. Buying any item of clothing by mail order when you are uncertain of the size you need is foolish. Retail outlets and mail distribution centers are two different animals and should not be treated the same in terms of collecting sales tax, no matter how much you want more revenue. The distribution center is not the same as the store.

May 15, 2011 at 5:41 a.m.
WhitesCreek said...

Tennesseans owe the sales tax no matter who they buy their Boise Hat from. The issue is simply who will collect it? When your son bought a hat from a local retailer, there is no question that the tax was collected and paid by that retailer. We'll leave aside the moral issue of taking advantage of the retailer's brick and mortar place of business for your son to personally inspect merchandise, the touch and feel part of a transaction, which he then bought somewhere else.

When the hat was ordered online at a cheaper price, was that price due to the failure to include sales tax? Is your son a tax cheat?

Is that what this issue is really about? Enabling people who want to cheat on their taxes?

May 15, 2011 at 8 a.m.
NorthChatter said...

Tennessee is not going to get the sales tax either way

(either with the current plan where they are exempt, or if Amazon pulls up stakes and leaves)

So why not at least add jobs and get something out if it? 'Cause your going to get a big fat nada if they leave.

May 15, 2011 at 1:49 p.m.
tlogank said...

Since Amazon has NO retail outlets in TN, why should they pay sales tax? You can't walk up to their fulfillment centers and buy anything. Everything you buy from them comes through their home office out west. Local stores complain, but if their prices were even close to competitive they wouldn't have anything to worry about. I will continue to shop amazon. Should I pay 11.99 locally for a book or .99 cents plus tax and free shipping from Amazon? Especially if they would create a total of 3000-4000 TN jobs. The answer is very easy for me.

These are not taxes we are already collecting so it would not hurt TN one bit. It would provide 1000's of paychecks to TN residents then they would go to their local wal mart (who is fighting amazon because they say amazon destroy's downtowns.....says this from the original death to the downtowns). These paychecks would results in TONS OF NEW SALES TAX COLLECTIONS.

It is really simple, do the deal and put people to work or run them off and another state will take the jobs.

May 15, 2011 at 2:42 p.m.
rolando said...

Whitescreek, you say one should not go to a retailer to look-see-feel a product then go buy it somewhere else where it is cheaper.

Does this apply to a new car I look at/sit it/kick the tires at one dealer then find another dealer with the same car who sells it $1,000 cheaper [for instance]?

Same thing for any other product out there.

Sometimes local profit-taking is obscene...priced a pair of bifocals lately? One must recoup those grossly overpriced expenses somehow...

May 15, 2011 at 3:34 p.m.
rolando said...

Mr Kennedy, you say quality of public education is directly related to the dollars-spent-per-child. This is inaccurate since numerous stats are available nationwide indicating no such relationship exists -- for example, the Washington, DC and NY City public schools are notorious for their inability to educate our youth, yet they are among the highest per-student cost in the country.

If the failures of our public schools are not dollar-related, they must be due to something else Throwing money at the problem is not working.

Curiously enough, Tennessee won $500 million in the national Race to the Top competition last year.

The Dept of Education had this to say:

"...Tennessee received high marks for its commitment to reform from key stakeholders, including elected officials, teacher's union leaders, and business leaders. [A]ll school districts [were] committed to implementing Race to the Top reforms. ...Tennessee also [had] aggressive plans to improve teacher and principal evaluation, use data to inform instructional decisions, and turn around their lowest-performing schools. In addition, both states have put in place strong laws and policies to support their reform efforts." [Delaware was also a winner.]

Our Tennessee Legislature and Governors efforts to reform our failing schools are the reason we won...it remains to be seen if the money does any good.

May 15, 2011 at 4:14 p.m.
nucanuck said...

It seems that we can agree that we want Amazon in Tennessee which means keep our agreement that Amazon will not be required to collect state sales tax. Most seem to think that we gain jobs at no real cost because we weren't going to get that tax money anyway.

So what's all the fuss?

The first issue is fairness to existing state retail, many of whom sell on-line and mail-order as well. Do we throw them under the bus? Will the growing on-line world force eventual closure of local retailers? Do we care if we have to buy on-line because local fades into a shadow of it's current profile?

Tennessee is not the only state facing the prospect of on-line driven falling sales tax revenue. The economic base of our State will have to be shored up sooner or later with some other form of tax.

The best approach for the State is to move beyond a sales tax base. Remove all sales taxes and institute a state income tax. All retail is then treated the same and the State gets a more stable, fairer tax base for all.

What's the downside you ask? It's probably a better deal for the middle class than for the rich and the rich generally call the shots.

May 15, 2011 at 8:25 p.m.
rolando said...

Back to that same old "income tax" scheme, nucanuck?

With sales tax, the taxpayers directly control the tax rate through the ballot box -- with an income tax, the Legislature controls the tax rate and voters have no direct say in the matter.

Which would we rather have control the tax rate, the taxpayers themselves or those who spend the taxes? Personally, I opt for the taxpayers every time.

One only need look at states with an income tax to see the result -- California, for instance, or any other leftist state.

Your suggestion to remove all sales taxes is a pipe-dream that will never happen -- we may end up with an state income tax but the sales tax will never go away...taxes never go down.

May 16, 2011 at 8:01 a.m.
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