It's not often that state taxation deserves a lot of national attention, but this is becoming headline news. This is FYI news only, so I'm not looking for a response unless someone cares to do so.
Most of us are aware of Amazon.com and their ongoing struggle to avoid charging sales tax. Tennessee had a governor (Bredeson-D) in office for 8 years who made a deal with Amazon: In exchange for four large distribution centers and a few thousand Tennessee jobs, he promised Amazon the state would legally exempt them from having to charge sales taxes in Tennessee. Of course, building the distribution centers means that Amazon would obviously have nexus in this state.
I believe this "deal" occurred virtually without press coverage and without fanfare. The distribution centers are under construction so Amazon is already heavily invested.
Fast-forward to 2011 and we have a new governor (Haslam-R) and a new party. Large, established Tennessee retailers are now up in arms about the deal, as Amazon can immediately cut their competitors' price by 10%. State govt workers are calculating and releasing how many state jobs will have to be cut because of loss of revenue. Powerful, vested in-state interests are trying to influence their cronies in TN legislature to do something.
There's a lot at stake here. If the "deal" had not been made, would Amazon even be building these centers (my guess is they wouldn't)? If not, then TN has not lost any sales tax revenue that they never had to begin with. What about the jobs that are risk if the deal is dishonored and Amazon pulls out? If they leave, should Amazon be compensated for the millions of dollars they've already spent building these centers? Does this increase pressure for the feds to institute a VAT?
And what about Tennessee's reputation to entice other companies to come here and provide jobs? If TN government renigs on its deal, who would ever believe them if they wanted to negotiate another tax concession to another large company?
Those of us involved in TN taxes are watching this one closely. So are other states. It's going to be interesting, as some very titantic special interests are clashing.
Most of us are aware of Amazon.com and their ongoing struggle to avoid charging sales tax. Tennessee had a governor (Bredeson-D) in office for 8 years who made a deal with Amazon: In exchange for four large distribution centers and a few thousand Tennessee jobs, he promised Amazon the state would legally exempt them from having to charge sales taxes in Tennessee. Of course, building the distribution centers means that Amazon would obviously have nexus in this state.
I believe this "deal" occurred virtually without press coverage and without fanfare. The distribution centers are under construction so Amazon is already heavily invested.
Fast-forward to 2011 and we have a new governor (Haslam-R) and a new party. Large, established Tennessee retailers are now up in arms about the deal, as Amazon can immediately cut their competitors' price by 10%. State govt workers are calculating and releasing how many state jobs will have to be cut because of loss of revenue. Powerful, vested in-state interests are trying to influence their cronies in TN legislature to do something.
There's a lot at stake here. If the "deal" had not been made, would Amazon even be building these centers (my guess is they wouldn't)? If not, then TN has not lost any sales tax revenue that they never had to begin with. What about the jobs that are risk if the deal is dishonored and Amazon pulls out? If they leave, should Amazon be compensated for the millions of dollars they've already spent building these centers? Does this increase pressure for the feds to institute a VAT?
And what about Tennessee's reputation to entice other companies to come here and provide jobs? If TN government renigs on its deal, who would ever believe them if they wanted to negotiate another tax concession to another large company?
Those of us involved in TN taxes are watching this one closely. So are other states. It's going to be interesting, as some very titantic special interests are clashing.