Amazon takes ball, goes home — or somewhere

Been meaning to post something on this all day, so y’all can comment:

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 decision came shortly after state representatives rejected the tax break 71-47.

“People who think this is a bluff don’t know Amazon,” Lexington County Councilman Bill Banning said. “Too many other states want them.”

The partly finished center probably will be completed and then “put into mothballs,” he said.

Something, I mean, more penetrating than what I said on Twitter this morning: “So Amazon, having made South Carolinians jump obediently through one hoop (blue law), petulantly decamps when we balk at a second one…”

I didn’t mean that to sound quite so dismissive of Amazon, or of us. I mean, I’m sorry they’re leaving. I also suspect that, given the way it unfolded, there’s nothing — nothing legitimate and wise — that we could have done to stop them from leaving. Which is a shame. To Amazon, this is about bigger fish than South Carolina.

Or such is the impression I form from this rather dramatic action — abandoning a multi-million-dollar investment (which was either worth making or not) over the inconvenience of having to collect sales taxes (which ALL businesses should be required to do, whether they have a “nexus” or not).

But what do y’all think?

27 thoughts on “Amazon takes ball, goes home — or somewhere

  1. virginia

    I’m sure the projected 1300 jobs provided by the warehouse labor pool, the office staff, the part-timers etc. would make a small trickle in SC state coffers, compared to Sanford’s hemmorage of 80,000+ jobs lost.The distribution location provides more support to constituents of Sanford’s ilk,fantasies of living the life back on the plantation. The taxes collected on the literate SC public could be counted on this webblog. Obviously not a tremendous revenue infusion there. If there was no contract,(Sanford wasn’t particularly known for his word of honor now was he?)there’s just no big deal.

  2. Michael Rodgers

    Most of the talk about this issue is garbage, and what our legislators did is heinous. And the problem is that person who should have been leading on this issue, Gov. Haley, totally abdicated, which then enabled our legislature to do what they do best, which is to be totally and pathologically stupid.

    For the correct analysis, see the following.

    Tim Kelly wrote 16 days ago:

    “Here’s what we collect in sales tax from Amazon today: $0

    Here’s what we’ll collect in sales tax if Amazon doesn’t build its distribution center: $0

    Here’s what we get if we pass the Amazon deal:

    · Sales tax: $0
    · Capital investment: $90 million
    · Jobs: 1249 fulltime, 1751 seasonal
    · Annual local revenue for education: $1 million”

    Our legislators should have passed bill that exempted Amazon from having to collect the sales tax, so that our state could win.

    Then our congressional delegation should have worked in our congress to change the internet sales law to require all (including internet!) companies to collect state sales taxes, so that all states and all businesses are on a level playing field.

  3. Steven Davis

    Before you all go off the deep end, you need to take a look at what Amazon is doing in Texas. Texas wouldn’t extend the same tax breaks, so they’re closing the center and moving. Same thing would have happened in SC in 5 years. This is Mack Truck all over again.

  4. Scout

    I think this is not a surprising result to anyone that studied Amazon’s MO in other states. They built their business model on not collecting sales tax and have gone to great lengths to continue to not do so. I really think anyone that thought they were bluffing was not paying attention.

    I agree completely with Michael’s assessment – We should have given them the exemption for now since opposing it was futile, but worked on changing the law on the national level. That has been my position.

    If this was a victory, it was a Pyrrhic one.

  5. Barry

    I agree with Michael. I really don’t understand what we are fighting.

    Amazon doesn’t collect sales taxes now. SC gets nothing from them in sales taxes today.

    If they moved here, we would get nothing in sales taxes. If they leave, we will get nothing in sales taxes.

    I don’t see where we win by them leaving. I know they cancelled something over 40 million in local contracts for construction, design, etc in the last day or so from what I understand. That’s a ton of money for a construction market in South Carolina that is running below empty.

  6. Mark Stewart

    Thank you to the state legislators who voted no to Amazon’s overreach.

    Despite what some people seem to feel, this probably actually strengthens South Carolina’s economic development credibility. The message is we will go to great lengths to help a company become established here, but we will not legislate an unfair playing field.

    Businesses, like individuals, appreciate those who play fair and maintain proper boundaries.

    As the sun comes up and we begin to be able to see more clearly what went on, I believe Amazon is going to find its national repudation in tatters as more and more people come to understand the foundation upon which the business is really built. No amount of positive customer service can overcome the stink wafting from the back of the house.

  7. Ralph Hightower

    I’ve heard the pro and con commercials of the Amazon tax break.

    The “pro” advertisement says that Amazon is our “BMW” or “Boeing”. I say wrong. Boeing and BMW are manufacturers. Amazon is a distributor, they make nothing of value.

    I also say that the “con” advertisements are wrong. Among those protesting the sales tax exemption is Walmart. Well, Walmart is not a great influence on Main Street. When Walmart moves into town, Mom-and-Pop businesses disappear. That personal service provided by locally owned businesses disappears for “Low Prices!”

    Amazon is an Internet merchant; sales are made in Washington state. Amazon’s presence in Lexington County is a distribution center only! Stuff goes in, stuff goes out. It is similar in operation to the UPS hub at the Columbia airport.

    Unemployment in South Carolina is high on the “sucks level”. Amazon would’ve provided $15/hour jobs to a lot of citizens; but $15/hour is only $35,000 yearly.

    South Carolina needs jobs that pay $75,000 yearly. Technology oriented jobs can provide wages that high. It can be done in South Carolina. NCR, from 1975 through the early 90’s made the Midlands a technology magnet.

    This op-ed letter published in The State by Cathy Lanier, owner of Technology Solutions, a computer consulting company, illustrates the disparity in salary between the Amazon jobs and technology-oriented jobs:

  8. Doug Ross

    We may have lost all those jobs but at least our honor is intact. For those people without jobs, its best to eat your honor with a thin gravy.

  9. Greg

    I think my state representative voted correctly on this…he voted no. Though I don’t know why, he probably used the old adage, “Why should I vote yes for this when it actually hurts the possibility of state revenue, while it does nothing for my low tax-base rural district.
    Mr. Rodgers made the point unintentionally: $1 million revenue for LOCAL EDUCATION. Share the wealth, then maybe you’ll get our votes.
    I also contended all along that the deal that should have been made was to NOT make Amazon collect the tax, but have them give a list of all SC purchases to DOR, then they could pursue collecting the use tax we’re all supposed to pay on our Amazon purchases.

  10. Brad

    Scout says, “If this was a victory, it was a Pyrrhic one.”

    Barry says, “I don’t see where we win by them leaving.”

    Folks, we don’t win ANYTHING. It’s not a “victory” for anyone. It’s a shame; a sad situation. It’s sort of what the Bronx homicide guys in Wolfe’s Bonfire of the Vanities referred to as a “piece a s__t” case. No winners; nobody to cheer for, no good way out.

    It was like this all along, from the moment that Amazon held a gun to the heads of 1,200 workers and it was clear that they had no qualms about pulling the trigger.

    I hated to see them go. I also hated to seem them take the position they took. But I wasn’t going to pretend that what they were asking was a good thing.

    Doug scoffs at honor. Doug’s a cynic (except in some areas, where he’s an ol’ softy). I do NOT scoff at honor.

    But this was not about honor so much as good policy.

    I hated this issue from the start, and didn’t like taking a position one way or the other. It’s an abstract principle about sound tax policy versus a lot of potential jobs. That’s a bad situation — one in which there are not going to be any winners.

  11. bud

    Maybe I just missed it but what sort of agreement was worked out with Amazon in the first place and by whom? Seems like these details would have been in place before construction started. Does our government ever get anything right?

  12. martin

    By my count, 24 Democrats, mostly black, (of course that may not mean much in SC) judging by the names I’m familiar with voted no.

    Are they trying to help Haley look bad in her home county? Why in the world would they votes against jobs?

  13. Scout

    I agree it is not a victory, personally, which I qualified it with ‘if’. I was responding to the sentiment of some (though not stated in this thread directly, but I’ve encountered it a lot recently) who do seem think it is a victory.

    Mark seems to think it is some kind of victory for fair play, for example, but I fail to see what about this result changed the fairness of the playing field at all? Amazon is still selling to South Carolinians and not collecting tax as we speak.

  14. Barry

    This is simple – and Tim laid it out perfectly above

    “Here’s what we collect in sales tax from Amazon today: $0

    Here’s what we’ll collect in sales tax if Amazon doesn’t build its distribution center: $0″

    saying “no” to Amazon only hurts us. They move to another state that will gladly accept them, and we still collect no sales tax from them when South Carolina residents use Amazon (and many do including me).

    I see today that two companies that were likely to follow Amazon to Lexington County are backing out.

  15. Scout

    Bud, my understanding is the deal was made by Sanford and his commerce department during the summer after the legislature was no longer in session and after the previous provision creating this exemption had expired. The deal was supposedly that the commerce department would make a good faith best effort to get the legislature to reinstate the provision once they reconvened. So Amazon knew it was a question mark. They must have been willing to risk taking the loss of the preperations made thus far if it didn’t happen.

  16. Mark Stewart


    The sales tax exemption law that passed five years ago was always considered odious. I appreciate that the legislature recognized the path that it represented and continued to back its sunsetting. This was an act of good government – sensible governance. I’m not sure I would call it a victory, however.

    What concerns me is that we don’t yet have all the facts about what was going down with Amazon. They say they walked from a $52 million plus project because Amazon did not receive an estimated $12.5 million sales tax exemption on instate i-net purchases. At the same time this fulfillment center would give them a low-cost labor pool that could ship products tax-free to our much larger and more prosperous neighbors. The math simply does not add up.

    Either, Amazon actually saw the instate exemption as much more beneficial to them then stated, they are not actually on the hook for the construction costs of their 1 million square foot facility (and therefore the taxpayers of SC are), or Amazon really is just bluffing and throwing a corporate hissy-fit. The answer is one of the three. But which is it?

    Unless Amazon is not actually on the hook for the project, then Amazon has had their bluff called. As a corporation they are not known for their citizenship. Theirs is not a business based on competitive advantage, but on deceptive advantage.

    My experience tells me that we have not yet seen full disclosure; and that’s a very good reason to say “pass” to structurally unsound and unfair corporate giveaways. People may ring their hands over “1200” warehouse jobs, but I find it interesting that the other fulfillment centers Amazon has closed over tax disputes have employed less than 200 workers or so.

    When the spin cycle stops we will see what the facts are.

  17. Doug Ross

    How many Innovista jobs were created this week?

    I think we should expect the management of Innovista to provide statistics on what we’re getting for THAT “investment”.

    Real jobs filling a real facility gone from Lexington. No jobs in empty Innovista buildings = invest more.

  18. oldernowiser

    Why was Walmart so concerned? Amazon cuts their sales regardless of where the operate from. Probably has to do with loosing a lot of their best workers to Amazon, then having to hire and train new workers and even pay them a living wage.

  19. Kathryn Fenner (D- SC)

    I buy from Walmart when I need it fresh (groceries) or now, or it wouldn’t be worthwhile to ship. I buy specialized products from Amazon, and some shelf stable foods that are a lot cheaper. There is some overlap between products I buy on Amazon and those I buy at Walmart–mostly paper products like TP, which are quite cheap when bought by the case from Amazon.

    and you are quite right that Walmart is nowhere near as good an employer as Amazon!

  20. Steven Davis

    My question was who needs a case of toilet paper in a house of two? Is that like a decade long supply?

  21. Kathryn Fenner (D- SC)

    Yup–it’s really cheap by the case, and I get the really good stuff for less than the cheapo stuff….

  22. Kathryn Fenner (D- SC)

    uh, it keeps and you know you’re going to need it….why not save big bucks on it and not have to think about buying it….if you “subscribe and save” you save an additional 15% and it comes right to the door…and a case isn’t all that big, frankly.

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