Stateline Story

Amazon Blasts Texas Over Sales Tax Grab

Texas Governor Rick Perry has made a name for himself by mocking other states' tax policies.

Just this week, he denounced an Illinois decision earlier this year that raised taxes by as much as 66 percent, telling lawmakers in his annual state of the state speech that Texas, unlike Illinois, is the " envy of the nation ."

Last year, when Washington State was considering levying an income tax for the first time, Perry wrote letters to 90 businesses based in the state and urged them to move to Texas. "If Washington doesn't want your business," Perry wrote to the heads of companies including Microsoft and Starbucks, "Texas does."

Now, however, at least one Washington-based company is not viewing Perry and Texas in such a business-friendly light anymore. Amazon, the online retailer based in Seattle, is closing a suburban Dallas distribution center and canceling plans to expand operations in Texas over what it sees as an "unfriendly regulatory climate" in the state, The Associated Press reports .

The AP obtained a letter from an Amazon executive on Thursday (February 10) that informs employees of the decision to close the distribution center and discloses a dispute between the firm and the state over millions of dollars in uncollected taxes. Texas, like other states, wants the retail giant to collect sales taxes on goods that are sold in Texas, but Amazon has refused and threatened to do business elsewhere.

The company was "previously planning to build additional facilities and expand in Texas, bringing more than 1,000 new jobs and tens of millions of investment dollars to the state," the Amazon executive, Vice President of Operations Dave Clark, wrote to employees. "We regret the need to reverse course."

Texas, for its part, is standing its ground. "We regret losing any business in Texas, but our position hasn't changed: If you have a presence in the state of Texas you are required to pay sales tax, just like any other business that has a presence in Texas," a spokesman for the state comptroller told the AP.