That loud lip-smack on the cheek you heard echoing from Indianapolis last week was the sound of Gov. Mitch Daniels kissing off on what amounts to another sweetheart deal between Indiana and Amazon.com, the online retailing giant.
The occasion was Daniels’ announcement on Monday, nine days into 2012, that Amazon had agreed to collect Indiana 7 percent sales tax on its in-state online sales — beginning in 2014.
While Daniels portrayed that move as magnanimous on Amazon’s part, praising the company’s “willingness to work with us,” it was actually a second occurrence in five years of Indiana’s trading jobs from Amazon for a special deal.
In this deal, Amazon first gets to pick a two-year delay in sales tax collection, based on its hope that the feds will, by the end of that time period, have passed a law requiring all online merchants to collect sales tax in all 50 states. Indiana, as it should be, is among the states pushing Congress for such a law, but given that body’s inability to do much of anything of import, good luck with that.
Amazon also benefits in that Simon Property Group, the nation’s largest mall owner and a major player in Indianapolis circles, agreed to drop a lawsuit it had filed against the state claiming Amazon’s exclusion from collecting sales tax was unfair to so-called brick-and-mortar merchants who have, as far as we know, never had a legal choice about whether to collect sales tax. As Tribune-star stories over recent months have reported, that extra 7 percent hits local merchants hard when a would-be buyer comes to a Main Street or Mall Lane store, tries out the product and then leaves to order it online.
Simon’s suit arose from five years ago when the state — blindly, ill-advisedly, wrongly — agreed not to require Amazon to collect sales tax. That bit of horse-trading was in exchange for Amazon’s opening large distribution centers near Indianapolis.
Jobs: Good. No tax collection: Bad. No tax collection meant would-be taxes were not disbursed to local communities such as Terre Haute and Vigo County.
Simon, in its suit, had labeled the no-taxes deal as “an illegal and unconstitutional subsidy.” Unfortunately, Simon’s dropping the suit means that issue will not be adjudicated.
The deal announced Monday does promise to bring $20 to $25 million a year to Indiana, starting in two years, based on the $35 billion in company sales in our state. That is far from chump change, but we find ourselves siding with the Indiana Retail Council in thinking that 24 months is too long to wait to get the tax funds flowing.
As the Retail Council’s Grant Monahan said, “Amazon has enjoyed a five-year moratorium on collecting the sales tax. Why should they get two more years?”
Those two more years will have given Amazon seven years without sales tax collection, and at $20 million a year, will have cost Indiana, more or less, $140 million in tax funds it could have used to benefit its citizens during the worst economy since the Great Depression.
This newest deal with Amazon is far better than no deal, but let’s not be overly impressed. It seems to be too little, too late.
Editorials
EDITORIAL: A sweet deal for Amazon.com
Some grace on sales tax issue OK, but two years is too much
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