Amazon Figures Out How To Funnel California Sales Tax Back Into Its Own Pockets

Amazon has been battling against having to pay state sales tax for awhile, and now it seems to have dreamed up the perfect scheme: It’ll pay sales taxes in California starting next fall, but by setting up shop in two cities, it’ll manage to funnel that money right back into its own pockets.

Here’s how it all boils down, as reported by the L.A. Times: Two fulfillment centers will open in San Bernardino and Patterson, sending sales taxes to those cities. Because the cities will be so darn pleased at all the jobs created in their communities, they’ll reward Amazon with the money gleaned from the sales taxes. Which yes, means Amazon loses nothing and still is doing right by the law.

Because sales to Amazon customers throughout the state will go through those two fulfillment centers, sales taxes earmarked for local government operations will be sent to the cities. It’s going to be a nice chunk of change, at about $8 million a year initially. That’s a very nice way to say thank you to the e-tailer giant for bringing business to the region.

The so-called sales-tax rebate discussion is in its early days, but local officials seems prepared to do whatever it takes to help out their cities.

“This is huge. This is monumental, not only for the city but for the county and the region,” Mayor Luis I. Molina of Patterson said. “We’re up to 20% unemployment, and this is going to make a dent.”

Critics are worried that such a move will set an example for other retailers to ask for similar concessions, even when cities are trying to figure out holes in their budgets. And hey, should Amazon get rewarded for not collecting sales taxes for all those years?

“The tax is supposed to be supporting government,” said Lenny Goldberg, executive director of the California Tax Reform Assn. “Instead, it’s going back into Amazon’s pocket.”

Amazon poised to get a cut of California sales taxes [L.A. Times]