The Sacramento Bee published an article describing Amazon’s new offer to California’s Governor Brown and the Legislature. Amazon is apparently offering to spend tens of millions of dollars on new distribution centers in California and hire 7,000 people in exchange for the state delaying until 2014 a law requiring out of state retailers to collect sales tax for the state.
The law could mean that Amazon has to collect $200 million in sales taxes for the state. But the status of the law is uncertain. Amazon refuses to collect the sales tax.
As a result of the new law, Amazon terminated business relationships with 25,000 small businesses based in California to protect itself from having to to collect the sales tax. This has cost the state lots of jobs and lost income taxes as well.
In addition, Amazon claims the law is unconstitutional and has started collecting signatures for a June referendum that would overturn the law.
According to the Mercury News, when Amazon submits signatures for its referendum by Sept. 27, the law requiring Amazon to pay taxes will be stayed until the June election. That would mean no revenues could be collected.
So on one side, Amazon spends lots of money in California to build distribution centers and creates 7,000 jobs and on the other side California will probably get nothing or at best only some part of $200 million.
The Democrats running the state are not that interested in Amazon’s offer and only seem interested in trying to collect more taxes. Their most recent maneuver is to try to bypass a vote by citizens on Amazon’s referendum by passing the law again but this time with a two thirds majority. Republicans don’t seem interested.
Unless the Democrats can make their end-run around the democratic process work, Amazon will have won the PR battle. When the citizens get to vote on the law, they will know for certain that this law and our representatives in Sacramento have killed at least 7,000 certain jobs.