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News SC Politics "The Amazon Beast That Won't Die!"
News SC Politics "The Amazon Beast That Won't Die!"
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16 May 2011
More from The Azar Newsletter
The Amazon Beast That Won't Die! (5-13-2011)
Yes, this beast will not die. It wants all our money and give nothing in return. It wants every advantage possible at the expense of everyone in our state. It wants unfair advantage so it can kill its competition and then raise prices. And it has no loyalty or allegiance to anyone except itself and its selfish owners. This beast is Amazon, and it cares for no one, not even its customers. Let's look at it.
1) Amazon does not care for SC. Amazon does not care about our educational system or the education of our people. Most of sales tax goes to education, 5 cents of it. SC is always in the bottom 10 states in the US, usually in the bottom 3. Our schools are already complaining that more money is needed for critical areas. In the meantime our state revenues are down, meaning less for education. Take away sales tax and we lose a lot. Add to that the children that Amazon brings and we add to the cost of running schools. What difference is it to Amazon to collect sales tax if they really cared and planned to be a permanent part of our state? If they had long term plans and cared about SC, they would willingly collect the tax to help the place they locate. They would put people and quality of life at least equal to profits.
But they are not. All they want is more profit, not the benefit nor advancement of our state. This should give you an idea of their true commitment to SC and long term plans, or lack of, to remain in SC long after the sales tax exemption is gone in 5 years. (The exemption is for 5 years only, not forever.) Who will offer them more sales tax free environments? Where will they go after 5 years? With the money saved from all the incentives we are giving, they will make far more than enough to pack up and move to another state and build a new warehouse.
If Amazon cared about SC education, they would collect the tax, obviously.
2) Did other companies really turn away because of Amazon? Or are they bluffing for more incentives too? Did Amazon collude with them to say that so that more pressure would be put upon the state? We have everything any company needs to be successful and make good profit. If companies are serious about success, they would come. I find it difficult to believe that the Amazon situation would push companies away. It really tells me these are weak companies and are not good risks for our incentives. It is quite clear that other national/international companies do not feel this way as there have been many announcements, large and small, of companies the Haley administration has welcomed to SC over the recent 5 months. These are good companies offering more than conveyor jockey jobs.
3) We just heard that SC is being considered for the international headquarters of Sears, as they are looking to leave Illinois. They would bring 6000 jobs, according to news reports, 5 times Amazon. These jobs are more than conveyor jockey jobs. They would bring people that have a greater interest in community as this would be their home. It is well known that where the headquarters and top brass are, the community benefits far more than any branch office; ask any of our economic development people. Look at towns with corporate headquarters; Atlanta, Charlotte, Seattle, NYC, Austin, etc., to get a good idea of what happens. Better educated, higher paid employees add to quality of life in far greater ways.
But if we give Amazon all these breaks plus sales tax elimination, do you not believe Sears will ask for it too? Of course they will, and so will every other retail seller that would move here. Then what happens to our schools, cities and counties? With the incentives (which are either tax reductions, tax credits, or cash outlays for infrastructure and land) we give plus the added burden placed upon an area, who will make up for the shortfall? YOU, of course. You, the taxpayer, will have to make up for what is not being paid into the system to support the additional needs. Just look at the current problems when new subdivisions are built. Our cities and counties are quite often unable to provide properly. We can see with midlands governments the water and sewer problems, the road and traffic problems, the policing problems, the increased crime, overcrowded schools, pollution, and so many more. The rest of the sales tax goes to local issues, and property tax all goes to local issues.
I asked on Facebook what the true cost was of Amazon. No one ever answered. Everyone is blinded by $60,000,000 but never stops to ask what the cost of that money might be. Out of the $60M, federal and state tax must come out. So with social security. Then there is fed and state unemployment. Now what do we have left? Maybe $40M? Of course, there is probably health insurance coming out of that and going to insurance companies out of state. That probably means another $5M or so going out of state. Since we have plenty of new and older houses available, there probably will be few new homes built for Amazon workers. But those that are sold, new or existing, will probably have mortgage money flowing to an out of state company. If I remember correctly, typically 25% of yearly income is spent on shelter, so there is another $15M. Then there is a $3250 credit SC is giving Amazon for every person it employees. That means a loss of roughly $4M (1250 jobs) to state coffers, and that has to be made up somewhere (look in the mirror to see where), so that takes money out of the market place, essentially offsetting $4M from Amazon. Students have to get taught, and I have seen various estimates up to $9000/year to educate a student. If Amazon brings in 300 new students at $8000 each, there is another $2.4M offset to the $60M. Add to that all the other local costs and what is left? And Amazon even gets a reduction in property tax, another 33%.
So does Amazon pay, or cost?
4) Amazon's goal is to drive out of business as many as it can. Those many are the specialists, the small businesses of America that employ more than %60 of all Americans. These are the people that can guide you to the proper purchasing decision in the beginning, saving you 3 or more purchases to get it right. The small business specialists, whether a Silicon Solutions, Mann Tools, Upstairs Audio & Video, Shuman Owens, Good For The Sole, etc., can provide you with more knowledge of what to buy for your needs, and how to use it. They also can fix it when needed. Buying from our specialists saves many repeated purchases to get it right.
Look at it another way. The specialists of America seek the best products, and that usually means a small company making better product. Small companies cannot buy advertising like the large ones, so they are heavily dependent on specialists to educate the buyer and sell. Amazon cannot really do a good job with small, state of the art manufacturers as they cannot be face to face with product in hand. If we kill our small specialists, we kill our small manufacturers, and with them dies our innovation, a serious issue. America is losing too much of this to overseas. Consider that the vessel for the SCE&G nuclear plant cannot be built in the US. Nor are most of our antibiotics. Or vessels for hydrogen fuel cells. Or bulbs for lamps. And the list marches long. When we are all buying material in a commune like fashion, where will our country be?
5) Yes, Wal-Mart said it would add $400M to its presence in SC and far more jobs than Amazon. Yes, Wal-Mart's goal is also to shut out competition. Yes, it has hurt small business, and I try to find any small, local business to buy from before I go to Wal-Mart. But they do have local presence and surprisingly are a good community citizen as they do contribute to many causes. I know firsthand. And they will be here a long time. Give Amazon tax exemption and Wal-Mart will demand one as well. So will all other companies doing mail order sales in SC
6) Amazon pays sales tax in 5 states. Why not SC? rather than giving them unfair advantage, we should sue them as have other states, and we should push Congress to create laws that level the competitive field regarding national payment of sales tax. Let us make it fair for everyone!
I could talk on and on, but these points are enough to show the folly of granting Amazon special exception. In the long run it may cost us much more in taxes on each of us to make up the shortfall, and it may turn away other companies should we not allow them the same demand. Call your national congressman and ask them to require any cross border sales to be taxed at the rate of the sending location, and for that tax to be charged uniformly nationwide.
That is the real solution!