New Jersey shows how to deal with Amazon

One of the big fights in the state legislature last year was over Amazon’s offer to build a distribution center in Lexington County (investing $90 million) and hiring 1249 employees.  In exchange the state would not require Amazon to collect sales tax on any purchases from South Carolina customers for five years. 

The South Carolina Small Business Chamber and some other organizations fought hard against this proposal arguing that it would create an unfair competitive advantage for Amazon compared to the state’s other businesses. 

Although we lost this fight, our opposition forced Amazon to sweeten the deal by pledging to invest $125 million and create 2000 jobs.  Unfortunately, our small businesses will be harmed by Amazon’s sweetheart no-sales-tax deal. 

But our state legislators said that they would lose the economic development of Amazon if they didn’t give into its blackmail.  Our elected leaders didn’t agree with us that Amazon was not going to walk away from building the distribution center that was already under construction.

One year later, say hello to New Jersey and this headline in today’s New York Times:

Amazon to Build New Jersey Warehouses and Collect State Tax

That’s right.  New Jersey and Amazon have reached an agreement for the online retail giant to build two distribution centers (an investment of $130 million) and create 1500 new jobs.  PLUS Amazon will start collecting the state’s 7% sales tax on New Jersey customers starting July 2013 that will result in $30 to $40 million more money for that state.  (Amazon failed to get a 22 month reprieve on collecting the sales tax.)

What did New Jersey promise in return for Amazon’s investment, new jobs and sales tax collection?  The same thing that we gave Amazon—tax incentives.

The opponents to the S.C. Amazon deal have been vindicated.  But that’s little consolation for our state’s small businesses that are seeing Amazon steal their sales courtesy of our General Assembly.