You may know the adage, “If you want less of something, tax it more.”
That is literally true in the case of Internet retail giant Amazon, which is spending $139 million to build distribution centers in Hamilton and Bradley counties. The centers are expected to create thousands of full-time and seasonal jobs in our area.
But some have criticized an apparent deal that would keep Amazon from having to collect sales taxes in this state. We say “apparent” because the precise sales tax details remain a little unclear. At any rate, Amazon struck an agreement with Democrat former Gov. Phil Bredesen to build in Tennessee, and current Republican Gov. Bill Haslam stands by the deal.
At issue is a Supreme Court ruling that a company can’t be forced to collect sales taxes in a state if, in effect, the company’s physical presence or “nexus” is outside that state. Seattle-based Amazon obviously would prefer not to have to collect sales taxes in Tennessee.
In fact, forcing it to do so could jeopardize the local project. When the state of Texas tried to require Amazon to collect sales taxes, Amazon announced it would close its distribution center there. Amazon has also said it will not build a facility in South Carolina if that state requires the company to collect sales taxes.
We can see arguments on both sides, but without a sales tax agreement, Amazon likely would not build here, and we would not get the jobs it plans to create. As Tennessee House Majority Leader Gerald McCormick, R-Chattanooga, told the Times Free Press, “I’d say we need to spend our time trying to create jobs rather than running them out of the state. And that’s what they’ll do if they run Amazon away and try to tax them as if they were a retail business. It’ll run them out of the state and kill thousands of jobs, and I’d hope they wouldn’t want to kill that.”
We would hope not either.