Creating Jobs in Tennessee

David Williams

May 16, 2011

Tennessee is in the middle of a taxation battle as the state legislature figures out what to do with an agreement that former Governor Phil Bredesen agreed to and current Governor Bill Haslam intends to honor which would exempt Amazon (the mega Internet seller of books and other goods) from paying state taxes, if it builds distribution centers in Tennessee.  Any legislation that invalidates this deal would be harmful to the Volunteer State and its residents.

With the proliferation of the Internet, imposing taxes on online purchases is a tempting way for states to raise money.  In reality, trying to increase revenue through Internet taxation is fool’s gold and, in the case of Tennessee, could hinder economic recovery.

Many argue that allowing Amazon to avoid the state taxes and construct the distribution centers in Tennessee would actually boost tax revenues in a more meaningful way.  More Tennesseans would find employment and be able to earn money and become taxpayers, boosting state revenues through payroll taxes.  Moreover, the augmented employment numbers would likely increase the standard of living and potentially reduce spending on some social services.

While local retailers are the most vocal group opposed to the Amazon deal, their businesses will not be negatively affected if the online retailer constructs job-creating distribution centers.  A Tennessee consumer won’t be able to simply walk into an Amazon distribution center and purchase a product.  Instead, they have to pay shipping and handling and then wait for Amazon to package and ship the product to a consumer’s home.  In other words, the shopping experience isn’t changing from how it exists now.

Advocates of big government are concerned they won’t be capturing every last penny of private money they can, but it has never been “bad business” to let a company (or person) keep more of their own money rather than throwing it into the government’s bureaucratic black hole.

If the state legislature overturns the agreement by taxing Amazon purchases, the company would most likely find another state to set up the distribution centers (and create the jobs).  According to the Chattanooga Times Free Press in May 2011, “Amazon is spending $139 million to construct two fulfillment centers — one in Hamilton County, the other in Bradley County — that will employ an estimated 1,400 to 1,500 full-time employees and several thousand more part-time workers.”

Government has a responsibility to do what is best for its citizens.  Overturning the deal that was made with Amazon will hurt the Tennessee economy and the state’s workforce.  Allowing Amazon to open the distribution centers will create much-needed economic activity, putting more money into the pockets of the people.