Amazon Offers To Hire 7,000 If California Waits On Sales Tax | Hacker News Reader

Amazon Offers To Hire 7,000 If California Waits On Sales Tax

forbes.com

14 pointszackbelow30 comments

http://www.forbes.com/sites/ericsavitz/2011/09/02/amazon-off... is the correct link

thanks!

On top of the ridiculous sales tax bill have you seen the Babysitter bill? http://www.theunion.com/ARTICLE/20110830/BREAKINGNEWS/110839... It is a bill being considered that says that if you hire a babysitter, you've got to provide breaks every 2 hours (which means you've got to hire another babysitter), plus pay for workman's compensation and keep track of taxes.

I agree that it's a stupid bill, but don't be so sensational. The bill only applies to babysitters over 18, which are typically professional care givers (i.e., nannies).

"which are typically professional care givers"

There's nothing sensational about calling that bill ridiculous. Not everyone who is over 18 and watches children on occasion for money is a professional care giver. Most of my friends have a 20-something friend that will watch their kids for them on date-night. They prefer the 20-something friend to a much younger babysitter because of maturity and responsibility. This person has a day-job, but they don't mind watching their friends' kids from time to time.

Your friends ask you for money to watch your kids? Wow.

It's perfectly acceptable. In my experience, it's better to exchange money for labor in certain cases because it helps to define an activity away from the friendship and so prevents it from becoming precedential.

can you imagine getting sued by the babysitter? "HEY MAN I WANT MY 2 HOUR BREAK AND I WANT BENEFITS. ALL OF THEM. PWNED."

I don't have kids, but if I asked someone to take time out of their life to watch my children, I would insist that they receive something in exchange.

I wonder if there isn't a hidden threat there, too... That they'll pull jobs from California if they don't get their way?

They're obviously able to choose where the jobs go, or this offer wouldn't make sense at all.

That's not a hidden threat; that's been an open threat for ages. Amazon has a history of pulling out operations in states that try to pass similar laws and they said they'd do the same in California. This offer was an attempt to avoid that.

Unlikely to deter the tax. 7000 added jobs not much compared to the hundreds of millions California projects to earn from the ecommerce tax.

It's a whole lot more than the zero California will earn from the ecommerce tax. California still has no authority to enforce a sales tax outside its borders. Amazon now has no physical presence in California. So far the only effect of the tax is to lose jobs in California.

It's a sad day when corporations can openly blackmail the government.

This might be characterized as a bribe, but how could it be blackmail?

Oh come on. This isn't blackmail, it's offering an exchange that's win-win. California wants - actually, badly NEEDS - jobs; Amazon wants to avoid or at least delay the sales tax. They have every ethical and legal right to make the proposal.

If I'm selling burgers for $5, and you give me $5 for one because you're hungry, am I "blackmailing" you to get your cash?

Perhaps I'm missing something? If so, please point it out.

They're "blackmailing" the politicians by making it look like they don't want jobs in California. That's a pretty sensitive subject to be voting against...at least when Amazon frames the argument that way.

The reality is that the jobs brought in will amount to about 2% of the sales tax revenue that would be brought in. But do you think the public will understand the math, or the phrase "voted against job creation"?

How do you get the 2% number? From what I found, the Governor's office expects $200million in extra tax revenue per year from doing this [0]. 7,000 jobs [1] is $350million per year, if the jobs pay about $40K/year (which means the cost to the employer, after payroll taxes and overhead, is at least $50K... 7K * 50K == 350mill.)

[0] http://jan.ocregister.com/2011/06/29/amazon-terminates-deal-...

[1] http://www.forbes.com/sites/ericsavitz/2011/09/02/amazon-off...

The 2% was from an NPR Marketplace story I heard on the radio last night.

http://marketplace.publicradio.org/display/web/2011/09/01/pm...

"The state estimates sales tax would bring in around $83 million from Amazon alone -- $317 million from all Internet retailers. Income tax from Amazon's promised 7,000 jobs might add up to 2.5 percent of that."

What we're comparing here is how much sales tax California would pull in from online retailers vs how much income tax those 7,000 new workers would pay to CA. You can't compare the gross payroll amount to the sales tax.

Thanks for explaining. I guess it's hard for me to think of these things in isolation. Tax revenue is one factor in the equation; employment levels are another.

One thing the state presumably would like to do with the tax revenue is promote job creation. Having 7,000 extra jobs available would bring all sorts of great benefits to California - some of which are easy to quantify, and some of which aren't.

The whole situation reminds me of a little skirmish recently between the San Francisco board of supervisors, and Twitter. Twitter was willing to move its main offices to a slightly run-down section of San Francisco in exchange for some city tax breaks; otherwise, they'd relocate to (I think) Burlingame instead. Twitter was going to have those jobs SOMEWHERE; the only question was whether it was going to be in SF, or somewhere else. And it didn't make economic sense for them to set up shop in SF without the tax breaks.

Providing jobs in an area, as well as the local business benefits of those people spending their salary in that location, was expected to bring enough benefit that the tax breaks were given, and Twitter decided to stay [0]. A lot of people were howling about corporate subsidies, though.

This whole subject is near and dear to my heart. One primary goal with my own startup is to create jobs that help financially support people and their families.

And on that note, back to work ;)

[0] http://venturebeat.com/2011/04/22/twitter-san-francisco/

There are two things you're missing.

First, Amazon has studiously avoided any effort to collect state sales tax. They use a variety of clever dodges to raise doubt that their design and development shops in CA amount to a business presence in CA. The "affiliates" program, recently shut in CA, was another such dodge. Same with the distribution centers being a "separate" company.

Then, when the state decides to go ahead with collecting something that is theirs to collect, Amazon tries to deflect it by raising a totally different matter (jobs in the state). The fact that they're not arguing their sales tax case directly, but threatening to pull jobs, is another aspect of the case you're missing.

I don't see how this is "win-win".

Here's a summary of the TX situation:

http://www.internetretailer.com/2011/05/16/texas-moves-ahead...

Featuring this choice quote which is replete with doublethink:

"We're committed to growth in Tennessee because the people here have demonstrated their commitment to Amazon jobs and investment," says Dave Clark, vice president of Amazon North America Operations.

It seems to me this is not blackmail, but rather a perfect analogue to The Prisoner's Dilemma in game theory.

The fact that Amazon is posturing is inconsequential; the State is doing the same thing, and it doesn't really change the core question.

Why? It is fair play. The government has been openly coercing and blackmailing private individuals and businesses since the beginning of governments.

Government agents have guns. Amazon does not. Who's really threatening who? The only card Amazon has to play is to leave.

Exactly. Texas called Amazon's bluff. Amazon folded.

It was just a few weeks ago I was watching Steve Jobs give his pitch for Apple's new campus in California -- at one point Jobs broke out the idea that the benefit to the state was Apple paying their taxes. In other words the way a company is a good corporate citizen is by increasing the tax base. What's sad here is that Jobs was talking about payroll tax, not even sales tax. The right thing for Amazon to do is to collect that tax instead of cheating the kids of California. Also special deals for big companies (be it Amazon or Walmart) are always unfair to small companies that don't get the same breaks. If you're going to give a sales tax holiday to anyone it should be startup companies in California that can use the boost.

State governments do not have the right to collect sales tax from companies that have no presence in their state.

Interesting that you think it's Amazon that is cheating the kids in CA and not the politicians (or other huge lobby siphoning money from the CA tax payers).

With that said, state sales tax has always been about collecting tax if the business has a presence in the state. This works for Amazon all the way down to the mom and pop that sells across the internet to people in another state.

Most (all?) states have a line item on their tax forms where the tax payer can write in a value on items they purchased out of state and need to pay taxes on. I'm guessing very few people fill that line in. It touches on another problem that no one wants to pay taxes (they always want someone else to pay), yet they want more and more services from the government.

In a state like CA which manages to be on the brink of bankruptcy despite pulling in the largest amount of tax revenue in the US, I think the solution is cutting spending, not throwing more money down the drain.

California is also the most populous state in the US. Looking at one figure without the other is rather silly.

Per capita, California does not bring in the highest amount of revenue of any state. In 2008 (the latest year I could quickly find data for), its #8 (#9 if you include DC). As a portion of personal income, CA is #11 or #12 (with DC).

Sources: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

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