The Amazon Deal

According to a U.S Supreme court decision from 1992, a store only needs to collect state sales taxes if it has a shopping in that state. That is what Amazon(Let's Make a Deal,Ross Ramsey, NY Times,June 23rd), the giant web store, is using to make her case against Texas Comptroller offices. The comptroller, Susan Combs, sent last year a $269 million bill to Amazon, saying its distribution center in Irving, TX establishes legal footprint that required it to collect sales taxes from Texas customers. This deal, in a time were our Government is deciding where he runs or not for President, made such noise that Rick Perry released a note a day later throwing Combs, a fellow Republican, under the bus and saying that he disagreed with her. Amazon, on other hand, said it will shut down its facilities, layoff 119 employees, and leave Texas if it has to start paying sales taxes.

This Amazon taxes deal became an ideology battle. Every one is looking to find revenues to fill up the $27 billion gap in the 2012-2013 budget. Nevertheless, no one wants to a business shut its doors and layoff Texans. To address the issue, Perry called for the clarification of the State's taxes law. Both House and Senate budget bills included clarification of the taxes law, but they went against the Governor's will. Hence, his veto in the bill on the regular legislation session. Perry sent the bill again to the floor and to be appreciated during the special session. So, the legislature included it in the budget bill, with the same language, saying that the controller is right and obligating Amazon, and companies alike, to pay Texas sale Taxes. Ops! What happened to the Republican party in the Senate and House? They sure do not work for Perry, but they usually make what he wants. Is he losing control of his party? Perry fooled himself when he thought that a legislature hungry for new sources of revenue would feel compassion for Amazon and its 119 Texans employees. Amazon, tried to cut a deal, offering to hire 6.000 fulltime jobs and invest $300 million in new warehouse and distribution center in the next three years. All they want is for this bill to die was to keep not paying sales taxes in Texas until 2016, when they hope to have successfully lobbied a national law that would streamline the taxes laws among states. it was not enough. The bill was passed and now is in Perry's desk.

Now, we need to see if Perry will veto the entire bill because of the Amazon deal, or if he will concede defeat and sign the bill as it is.

*Update August 09th

Perry conceded defeat and signed the whole bill. Amazon now has to pay the $269 million bill and start to charge sales taxes for every sales in Texas.