Thursday, April 28, 2011
South Carolina calls Amazon.com's bluff.....and loses
I thought South Carolina was smarter than this....
From McClatchyDC -- Amazon all but told South Carolina goodbye Wednesday after the online retailer lost a legislative showdown on a sales tax collection exemption it wants to open a distribution center that would bring 1,249 jobs to the Midlands.
Company officials immediately halted plans to equip and staff the one million-square-foot building under construction at I-77 and 12th Street near Cayce.
“As a result of today’s unfortunate House vote, we’ve canceled $52 million in procurement contracts and removed all South Carolina fulfillment center job postings from our (Web) site,” said Paul Misener, Amazon vice president for global public policy.
The story said that a coalition including tea-party activists had succeeding in stopping legislation that allowed corporate tax rates for Amazon. That doesn't make any sense....tea party activists in favor of taxes?
As I understand supply-side economics, which isn't very well, it holds that when you cut tax rates across the board, more people have jobs and pay taxes and have money to spend in the economy. This economic activity and employment counter intuitively increases tax revenues to the feds because the additional income, sales, FICA, etc taxes paid by employed citizens is greater than the corporate taxes given up in tax breaks, less the unemployment compensation and welfare payments to otherwise unemployed citizens.
I'm surprised and disappointed that South Carolina only saw the short-term tax revenues they could extort from Amazon rather than the greater, long-term benefits of 1300 more people employed by giving Amazon a tax break.
If Amazon would like to relocate elsewhere, take a look at Alabama. We've given Mercedes Benz, Kia, and Honda tax breaks to locate here. We'd love to give Amazon the same deal if South Carolina won't.