Stateline Story

Amazon: We'll Bring Jobs If California Drops Sales Tax

  • September 01, 2011
  • By John Gramlich
The retailer Amazon is stepping up its already aggressive lobbying effort to stop a new California policy that requires online companies to collect sales taxes on purchases made by Californians. The Internet giant, which has been vowing to bankroll a June 2012 referendum that would repeal the tax,  now is dangling the prospect of 1,000 new jobs in front of state lawmakers in an effort to avoid an electoral showdown and get them to reconsider.

The Los Angeles Times
reports that Amazon unveiled draft legislation this week that would suspend the sales tax law, which took effect on July 1, until at least January 2014. In exchange, the retailer said it would build two distribution centers - one in northern California and one in southern California - that would boost employment in the state at a time when it is desperately needed. California's jobless rate, at 12 percent, is one of the highest in the country, and the state budget signed just two months ago is considered fragile at best because it relies on an economic recovery that has yet to take place.

California's legislative session is set to end September 9, and lawmakers and lobbyists alike said it was unlikely that the legislation favored by Amazon could win approval by then, if ever. Supporters of the online sales tax law, meanwhile, reacted angrily to Amazon's latest proposal, calling it a stunt that has been tried before. "It's a totally cynical maneuver that's part of their game that they try to play in every state that keeps them from getting the sales tax," Lenny Goldberg of the California Tax Reform Association tells The Times .

California is expecting to collect at least $200 million from the online sales tax in the current fiscal year, and Governor Jerry Brown has shown little inclination to give up that revenue to appease Amazon, which has been fighting similar taxes in courts and legislatures around the country. While the retailer clearly sees a threat to its bottom line in such proposals, tax supporters see them as a simple matter of fairness, since in-person sellers are required to collect sales taxes.

California, because of its size, political importance and huge economy, represents Amazon's biggest battle to date.