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Long explains Amazon vote

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Long explains Amazon vote

Last week’s Amazon decision was the single most difficult vote I have taken as a legislator. In the end, putting people to work and food on their table is an immediate need and requires immediate attention. However, it does not fix the longer, real job creation act of tax reform. 

Amazon means jobs

At the last moment, Amazon significantly sweetened its offer to locate its distribution facility in Lexington County by guaranteeing 2,000 jobs and increasing its investment in South Carolina from $90 million to $125 million with an economic benefit to the state of more than $1.1 billion. 

My first and foremost commitment is to create jobs and grow South Carolina’s economy. There is strong evidence that to turn down this new Amazon deal would harm our state’s ability to attract new business and industry. We have already heard from companies elsewhere who were closely watching this vote; a rejection of the Amazon deal would send them packing to North Carolina, Georgia, Kentucky and other southeastern states. That’s a loss we can’t afford.

Foothold

If they come, it’s likely that Amazon’s Lexington distribution facility will be a foothold in our state. There are indications Amazon is looking to expand to other parts of South Carolina with similar distribution facilities as they have in other states. Potentially, that means thousands more direct and indirect jobs. Hopefully, Amazon will come to South Carolina and serve as a beacon in attracting other companies from around the country.

What’s the new deal?

Many of the details of the original deal were murky and unknown to me and other legislators at the time of the original vote three weeks ago. Fortunately, since the first vote defeating the sales tax exemption, Amazon’s feet were held to the fire and improvements were made. 

Here’s a recap of the “deal points” in the new Amazon deal:

• The terms of the legislation are very specific and require Amazon to meet its promises, or it forfeits the safe harbor sales tax exemption.

• The legislation increases Amazon’s minimum guarantee from 1,249 to 2,000 full-time jobs at an average salary of $33,000 per year, with health benefits.

• Amazon upped from $90 million to $125 million its minimum capital investment guarantee.

• The economic benefit from the Amazon deal is $1.1 billion, according to an economic analysis done with the same methods as the Boeing deal.

• Amazon will not be opening retail shops in our state. The Lexington facility is only a distribution center to speed deliveries throughout the Southeast.

• The safe harbor sales tax exemption ends on Jan. 1, 2016. This is not an open-ended deal.

• More on the cost-benefit analysis (based on the 1,249 jobs number) shows the estimated revenue “loss” by the Amazon deal is $2.6 million in sales tax to the state. The Amazon jobs will bring $5.3 million in income tax revenue. This gives the deal a positive of $2.6 million to the state general fund.

The kicker

If the incentives were not approved, Amazon would still never pay sales tax in South Carolina and will still be selling items to people in our state, but Amazon would not provide the 2,000-plus jobs to our residents. 

This bill means Amazon will begin paying sales tax in 2016, which actually puts Amazon on a track toward leveling the playing field with other businesses in our state.

This was a promise made to a company by the Sanford administration. Other projects across the state have stalled because of the delay on the Amazon deal. As state business recruiters strive to bring businesses to South Carolina, it’s critical they have the confidence of those potential businesses so they can negotiate in good faith. I certainly don’t agree with the way this deal was negotiated. I hope our new governor and commerce secretary will keep that disapproval in mind. 

In the meantime, approving this new deal was the right thing for the thousands of families across the South Carolina who will be able to find solid, well-paying jobs. 

Jobs first! Jobs first! Jobs first!  

I hope the Senate concurs with the House and thousands of our neighbors are soon employed. 

 As always, thank you for the privilege of serving you.