Friday, February 11, 2011


by Earl Staggs

The dust has barely settled on a major battle here in the Lone Star state and another one is just beginning. The Green Bay Packers and the Pittsburgh Steelers fought it out for the Super Bowl Trophy. Now two other giants are squaring off.

This time, it’s versus the State of Texas. The prize is not a trophy, but a ton of money. This contest is not about athletic ability on the playing field but about power and muscle at the negotiating table.

Here’s the opening from an article in today’s local paper:

“As a result of an ongoing tax dispute with Texas, has decided to take its ball and go home. The online retailer said Thursday that it would shutter its Irving distribution facility April 12 and cancel plans to hire as many as 1,000 additional workers rather than pay Texas what the state says is owed in uncollected sales tax. Texas wants $269 million from Seattle-based Amazon in past-due sales tax. It sent the bill to the company last October.”

Amazon is appealing the case through “an administrative process” and claims they have a special sales tax loophole. The State is standing firm on the basis that Amazon must play by the same rules as other retailers. One trade group in Washington representing traditional retailers called Amazon’s actions “callous.”

So what does Texas do in this situation? It could forgive the $269 million in sales tax and hope Amazon leaves its operation where it is, keep their present employees and add 1000 more. The State’s economy could certainly use that. Or it could hold fast and watch Amazon pull out and take the $269 million with then.

Then what? One possible result might be that other large companies could follow Amazon’s lead. From this crime writer’s perspective, it sounds like corporate blackmail. Suppose other 500 pound gorillas in business suits decided Texas (or any other state if you think about it) would write off major amounts of past-due taxes if the company threatens to move commerce and jobs elsewhere.

I don’t know how this will play out. Like a good mystery novel, we have a beginning and a middle and will have to keep reading to see how the ending comes out.


Mark W. Danielson said...

Sounds like the same blackmail scheme NFL teams have been using for years -- build us a new stadium or we're gone. Every state has to get tough if they're going to survive. Some states are further ahead than others.

Bill Kirton said...

Another demonstration of 'all power corrupts and absolute power corrupts absolutely'. Amazon is calling the tune in too many areas - corporate, legal and artistic.

Earl Staggs said...

You're so right, Mark. When Baltimore didn't cave in, the Colts moved to Indianapolis. When Jerry Jones didn't get what he wanted from the city of Irving, he took the Cowboys next door to Arlington and got his $1.2 billion Taj Mahal. Players do it, too. There's one who's not happy with his $16 million salary and wants to be traded. There are two worlds out there, one where big money rules, and one for the rest of us fools.

Earl Staggs said...

Yes, Bill, that's for sure.

Jean Henry Mead said...

I think Amazon is shooting itself in the foot. Individual states are struggling to prevent bankruptcy and greedy corporations don't seem to care.

Earl Staggs said...

You may be right, Jean. It'll be interesting to see if Amazon goes too far in some way.