Image by Flickr user 30 Lines
Update May 1, Haley's sans Sanford: Post and Courier columnist Brian Hicks has penned a solid column that makes a case for why the Amazon deal was fair and how Haley's abandonment of it shows she's quite different from Sanford.
But I probably like the piece as it reflects much of my opinion from below: comparing an Amazon distribution center to the local bookshop or WalMart isn't the same thing, and that Amazon is still getting the tax break.
In related news, we posted yesterday about how the scuttling of the deal may be chilling economic development in the state; read that here.
Update April 29, follow: Just a quick follow for some context on this one.
Originally Gov. Haley said she wasn't taking a stance one way or the other but has come out in support of not giving Amazon the incentives, saying, in part, that the pulling of the deal is part of South Carolina's "fair competitive marketplace to do business."
You can see all of her comments in the YouTube vid up top or here.
Meanwhile The Post and Courier has a follow article with a nice rundown on how and why local reps voted; read that here.
For a list of Amazon's distribution centers (including closed ones) head here.
Update April 28, deal's off: The deal seems all but dead after the S.C. House voted 71-47 to not give the tax breaks and Amazon sent around a note saying they're pulling out.
Hard to tell if one side thinks the other is bluffing, but unless the climate changes in the next few days, 1,250 jobs and millions in tax dollars just left the state and Amazon will still be delivering tax-free goods to South Carolina.
For some insight into the factors at play (and my reasoning) check out the prior piece below.
First reporting: What's 6%? The difference between $11 million and $2.6 million, or right and wrong, depending on which camp you're in.
If you haven't been following, the scenario is this: Online store giant Amazon pledged to build a distribution center to employ some 1,200 near Cayce in South Carolina's Midlands in exchange for a pledge by South Carolina to not be charged state sales tax for having a "physical presence" in our state.
And to outgoing Gov. Mark Sanford that made the deal, it apparently seemed pretty straightforward: The state would be giving up an estimated $2.6 million in sales tax collections for an estimated $11 million in payroll and property tax plus the usual "economic impact" bonus of 1,200 jobs.
But when Nikki Haley took the reigns, the debate shifted. Haley was supposed to be a small business champion, and here she was aiding a 6% discount to South Carolina business competitors?
Well the deal seems to be plugging along for now but the rhetoric is heating up in a very public way (check out this report in today's edition of The State.)
And with both lines of thinking in mind, I'd like to draw two points:
We're probably stuck with the deal
Like it or not, it's probably a good idea to see this one through.
First there's the $2.6 million v. $11 million argument from above — even if it isn't "small biz friendly", it's a good deal for all of South Carolina and a pretty standard economic incentive. And plenty of other states have struck similar deals with Amazon as an overall plus, even if they are quite unpopular.
There's also the flip side of that $2.6 v. $11 argument. If we threaten to tax Amazon, they'll likely just walk away from South Carolina altogether, and we don't get the job money or the sales tax money, as the store won't have a physical presence in South Carolina.
We've also made a deal; not only would it be in poor taste to back out, but it never looks good to other big business you're trying to court when you break economic incentives.
What's the right thing to do?
The second thread of this debate is about what's right. What's fair to small business?
Is it a good idea to promote an effective 6% (or more when including local taxes) discount to shop online when so many small businesses are struggling?
While Amazon has been making some same-day local delivery moves, you can't compare small business and what is, effectively, a catalog operation.
First, like I mentioned above, we're probably stuck with this 6% discount — if we try to force it, they'll just up and leave.
And I suppose it's time I mention that I shop with Amazon a lot. That said, it also gives me unique insight into the differences. It's not for the 6% (though that's quite nice), but it's also because I buy different things.
My produce, clothing, personal gifts, and the like I still buy from local small business. These things are unique or the need is instant. Who does see less shopping from me is Best Buy, Wal-Mart, and other big box retailers. Online shopping is generally cheaper in sticker price alone. Also, it's easier to compare prices, and I don't have to get hassled by long checkout lines or aggressive salespeople of the big biz stores.
And I'd be surprised if there was much in the way of batteries, blenders, and cameras at South Carolina small businesses. However, I also have to wait two days or more to get that Amazon goodie; there's no hopping into the car and having it 15 minutes later.
If retail business and online shopping are apples and oranges, small business and Amazon are apples and watermelons.
That said, the argument against the sales tax seems reasonable, so if we're trying to not hurt and maybe even help South Carolina businesses, we still have some options. If we really expect to come out more than $8 million ahead in the tax collection game, that's a lot of cash we can dedicate to beautifying downtowns and promoting small businesses.
It might not be perfect, but it sounds like a win-win compromise.
And even in a one-party state, maybe we can compromise our big business love without hurting the little folk passions.