ANOTHER CLASH OF GIANTS IN TEXAS

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 Amazon.com 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, Amazon.com 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.