In a classic case of a special interest carving out an exemption for itself in the law, large online retailers like Amazon.com have for years avoided charging the same state sales taxes that brick-and-mortar stores are required to levy. This “Amazon Loophole” has denied states much-needed revenue. As one example, in 2011 alone, Wisconsin lost an estimated $127 million in uncollected sales tax on purchases made online.
Over the past year, South Carolina lawmakers, incensed that this loophole was letting massive online retailers get away with a special tax exemption, attempted to change the tax code so that companies like Amazon would lose their special status. Yet Amazon and other online retailers flooded the state with their lobbying dollars, and the web giant was granted an extension of its status and not required to collect sales taxes until 2016.
South Carolina’s The State reports on the massive amount of money Amazon and other retailers spent in the state:
Online retailer Amazon spent just over $156,000 — mostly for lobbyists — in winning a sales tax collection exemption from the Legislature last year over the opposition of other merchants.
Its six lobbyists were paid nearly $137,000 in a battle whose outcome will bring 2,000 jobs to the Midlands by the end of 2013, according to reports available Wednesday. The remainder was for office expenses.
The State goes on to note that “tax break is expected to cost up to $2.5 million a year,” although Amazon claims that jobs it will keep in the state will provide the state with a revenue boost. This comes at a time when ordinary South Carolinians are feeling the effects of huge cuts in education funding and senior prescription drug coverage assistance.
The online retailer has in the past taken drastic measures to avoid playing by the same tax rules as brick-and-mortar stores. After Texas lawmakers demanded that Amazon pay past-due sales tax last year, the company promptly announced that it would be shutting down all operations in the state.