The Amazon.com Deal With State Of Tennessee: Confusion Now, Hurt Feelings Later

Tennessee weathered (and is weathering) The Great Downturn in much finer form than many states. One reason is that recently departed governor Phil Bredesen, although a loyal Democrat, was no fire-breathing leftist ideologue. Budgets balanced, cash reserves were maintained, and he aggressively recruited businesses to the state, such as Nissan and Volkswagen. Much credit is due him for this.

However, there is some confusion about what exactly was promised to Amazon as inducement to locate warehouse distribution centers in Tennessee.

It's a lot of of jobs to be created, and real wealth can be built from these facility locations. However, Amazon claims they were promised exemption from collecting Tennessee sales tax on sales to Tennessee customers, and claim the transactions actually occur in Washington State. Present Governor Haslam feels honor-bound to abide by the word of his predecessor, to preserve the reputation of the state. The legislature is, on the one hand eager to see the jobs move in, and other other catching real flak from small businesses who compete with Amazon, and are obliged to charge and collect tax. That gives Amazon a 9.5% price advantage at full retail price.

They have a point. The local MainStreet bookstore here is keeping the doors open, but as a small operation, they have no leverage to compete on price with Amazon. OS understands how they would be highly unhappy with the state government just now.

It is a tough call, and someone will end up very unhappy after the smoke clears.