September 2, 2011

Amazon Offers Jobs For Tax Cuts In California


Online retailing giant Amazon has proposed hiring 7,000 workers in California if state leaders put a recently enacted online sales tax on hold for two years.

With the second-highest unemployment rate among US states, California must weigh finding jobs for its citizens against broad anxiety about the national economy, Reuters is reporting.

Taking effect on July 1 of this year, the tax required retailers outside of California to collect sales taxes on online orders made through California-based affiliates. If it is not enforced until 2014, Amazon promises to drop its effort to repeal the measure.

However, facing a $10 billion shortfall, Democrats, who control the legislature, will not accept Seattle-based Amazon´s offer. They have been pressed to close budget gaps by almost any means necessary.

Amazon´s offer came to light on Thursday after a Tuesday meeting between representatives of Amazon and member companies of the California Retailers Association (CRA). The association of brick-and-mortar retailers, which backs the online sales tax, was quick to reject Amazon´s offer.

Large and small retailers in California have long complained they are disadvantaged by having to collect sales taxes while out-of-state retailers could avoid doing so. “Our people came back and said this isn´t legitimate,” said Bill Dombrowski, the association´s president. “It´s unacceptable.”

Questioning whether the Amazon proposal will really help, the CRA complains that physical stores haven´t been able to compete with “e-tailers” that have enjoyed a price advantage when they don´t collect the sales tax. The difference has resulted in layoffs.

“There´s really no net increase in jobs because between now and 2014, the bricks-and-mortar retail will continue to lose jobs,” Bill Dombrowski, president and CEO, of the CRA, told Reuters.

As much as Democrats would love to claim the creation of 7,000 jobs, losing millions from the online sales tax that would go into the state budget deficit is too much of a trade off, ABC News affiliate KABC in Sacramento reports. “I don´t think we can afford to just say Well, let´s set $400 million aside,” said state Senator Darrell Steinberg (D-Sacramento), senate president.

George Runner, a member of the Board of Equalization and an Amazon ally, said he´s encouraged that talks are proceeding. “Whatever comes out of it has got to be about jobs,” said Runner, whose agency is in charge of collecting sales tax from retailers. “How can we help Amazon create a bigger presence in California?”

More than 2 million Californians are out of work, though, enough for Governor Jerry Brown to at least read Amazon´s proposal. “I´m open to any good constructive idea to create jobs,” said Brown.


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