Author Topic: Amazon closes distribution center in Texas  (Read 15250 times)

AZRedhawk44

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Amazon closes distribution center in Texas
« on: February 10, 2011, 10:00:50 PM »
http://news.yahoo.com/s/ap/20110210/ap_on_bi_ge/us_amazon_sales_tax_dispute

Quote
The Alliance for Main Street Fairness, a lobbying group for small businesses working to eliminate Internet sales tax loopholes, criticized Amazon's decision to close the Irving center.

"Texas retailers collect and remit sales taxes every day — whether the sale happens in a store or online," said Danny Diaz, a spokesman for the group. "Amazon.com was asked to play by the same rules, and has responded by eliminating hundreds of Texas jobs. Amazon could have chosen to collect the sales tax as Texas retailers do, but instead they opted to protect their special sales tax loophole to the detriment of hardworking families."

Screw you, hippie.

Online retailers have to compete with:
1.  No shipping costs at a store front
2.  The "get it now" mentality versus delayed gratification
3.  The inability to tangibly interact with a purchase and evaluate it
4.  They have to hire high-skill level jobs such as web administrators, warehouse managers, shipping distribution managers, marketing professionals and a myriad of other jobs.  Small retailers on "Main Street" hire people for sub-40 hour/week work to avoid having full time employees, and they're cash register monkeys at best.

The Internet would shrivel up and die if the States could charge sales tax on all internet transactions.  There's vendors with a presence in AZ that I deliberately don't do business with, because I want to avoid our asinine near-10% sales tax.

Screw you, States that charge sales tax.

Screw you, The Alliance For Main Street Fairness (why is "fairness" always a translation for someone else always paying more taxes? :mad:).

There's a place for both.  Quit trying to shut the "sales tax loophole."  Like the "gun show loophole," it makes sense when the famous Invisible Hand is really seen at work.
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MicroBalrog

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Re: Amazon closes distribution center in Texas
« Reply #1 on: February 10, 2011, 10:32:14 PM »
More and more "loophole" seems to be a keyword for "freedom".
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seeker_two

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Re: Amazon closes distribution center in Texas
« Reply #2 on: February 10, 2011, 10:44:57 PM »
I expected that Amazon would close up shop and hand the deed to Gov. Goodhair, saying "Here's your taxes, Ricky" and flip Texas the bird as they left.....

...nice to know that Texas Republicans stand for smaller gov't......  ;/
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Perd Hapley

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Re: Amazon closes distribution center in Texas
« Reply #3 on: February 10, 2011, 10:51:25 PM »
Quote
"Amazon.com was asked to play by the same rules, and has responded by eliminating hundreds of Texas jobs. Amazon could have chosen to collect the sales tax as Texas retailers do, but instead they opted to protect their special sales tax loophole to the detriment of hardworking families."

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mtnbkr

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Re: Amazon closes distribution center in Texas
« Reply #4 on: February 11, 2011, 06:49:07 AM »
I keep hearing sales taxes as an alternative to income taxes because you, as the consumer, get to regulate how much tax you pay.  Now it seems sales tax is evil too. 

Govt at some level is a necessary evil.  While we all like to fantasize about living in a govt-free world where we all are noble and treat each other with kindness and respect, there are some legitimate functions of govt that we all take advantage of from time to time.  If property taxes, income taxes, and now sales taxes are immoral, how  do we fund the legitimate functions of govt.

Don't recite the pat answer of "smaller govt", even if you trim all the fat, there are functions that need to be retained and those functions cost money. 

Chris

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Re: Amazon closes distribution center in Texas
« Reply #5 on: February 11, 2011, 06:55:20 AM »
Don't recite the pat answer of "smaller govt", even if you trim all the fat, there are functions that need to be retained and those functions cost money.

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seeker_two

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Re: Amazon closes distribution center in Texas
« Reply #6 on: February 11, 2011, 07:01:05 AM »

Govt at some level is a necessary evil.  While we all like to fantasize about living in a govt-free world where we all are noble and treat each other with kindness and respect, there are some legitimate functions of govt that we all take advantage of from time to time.  If property taxes, income taxes, and now sales taxes are immoral, how  do we fund the legitimate functions of govt.

Don't recite the pat answer of "smaller govt", even if you trim all the fat, there are functions that need to be retained and those functions cost money. 


True....but, you don't give a raging alcoholic more booze as a treatment....nor do you give a compulsive shopper more credit cards. You rein them in first.  And I don't support giving our TX (or Fed) gov't any NEW income until they show that they've adjusted their spending to a more responsible level.
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mtnbkr

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Re: Amazon closes distribution center in Texas
« Reply #7 on: February 11, 2011, 07:23:45 AM »
True....but, you don't give a raging alcoholic more booze as a treatment....nor do you give a compulsive shopper more credit cards. You rein them in first.  And I don't support giving our TX (or Fed) gov't any NEW income until they show that they've adjusted their spending to a more responsible level.

Who decides what a "responsible level" is?  It is my understanding that Texas doesn't operate under a deficit.  That seems pretty responsible to me.  But we're not talking about more in addition to what they're already supposed to receive by law.  This isn't a new type of tax. 

Chris

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Re: Amazon closes distribution center in Texas
« Reply #8 on: February 11, 2011, 08:16:37 AM »
From the comments:
Quote
Just so everybody understands, this isn't money that Amazon owns to Texas. This is money that the people of Texas own to their own state government. Texas just wants Amazon to collect it. By leaving, Amazon just gave the people of Texas a quarter billion dollar a year tax cut.

I think I know who is the good guy in this.

Gov Goodhair's spokecritter was neutral to pro-Amazon:
Quote
"We've had ongoing communications over the years encouraging Amazon to expand their business in Texas, and we recently encouraged them to stay in the state," said Katherine Cesinger, spokeswoman for Gov. Rick Perry. "We are always mindful of the tax burden on families and businesses in our state, and it is important that Texas clarify the laws regarding this issue to further strengthen the reliability of our tax system and to protect Texas jobs."

Also, "not operating under a deficit" =! responsible.  Two ways to make that happen: cut spending or raise taxes.

True....but, you don't give a raging alcoholic more booze as a treatment....nor do you give a compulsive shopper more credit cards. You rein them in first.  And I don't support giving our TX (or Fed) gov't any NEW income until they show that they've adjusted their spending to a more responsible level.

Ayup.
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makattak

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Re: Amazon closes distribution center in Texas
« Reply #9 on: February 11, 2011, 08:43:12 AM »
I keep hearing sales taxes as an alternative to income taxes because you, as the consumer, get to regulate how much tax you pay.  Now it seems sales tax is evil too. 

Govt at some level is a necessary evil.  While we all like to fantasize about living in a govt-free world where we all are noble and treat each other with kindness and respect, there are some legitimate functions of govt that we all take advantage of from time to time.  If property taxes, income taxes, and now sales taxes are immoral, how  do we fund the legitimate functions of govt.

Don't recite the pat answer of "smaller govt", even if you trim all the fat, there are functions that need to be retained and those functions cost money. 

Chris

Sales tax isn't evil. Sales tax on internet purchases might be. The ostensible reason for a sales tax is that the businesses make use of the infrastructure and services provided by the state/town. A company that has minimal physical presence and mostly uses roads and postal services from the state should not be charged with collecting the same sales tax that a brick and mortar store would.

Instead of trying to apply 19th century taxes to a 21st century business, perhaps we should come up with a new way to tax internet companies for the minimal government services they require. One that reflects that minimal nature. (If we should decide to tax them at all.)
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Re: Amazon closes distribution center in Texas
« Reply #10 on: February 11, 2011, 09:17:10 AM »
I keep hearing sales taxes as an alternative to income taxes because you, as the consumer, get to regulate how much tax you pay.  Now it seems sales tax is evil too.

To an extent, it is problematic; if I sell a $1 product for $1, the state gets $.0625 and the city gets $.02.  If I mark that product up to $100 and still manage to find a buyer, the state gets $6.25 and the city gets $2, but neither of them provides me with anything more for that extra money.

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Re: Amazon closes distribution center in Texas
« Reply #11 on: February 11, 2011, 10:03:28 AM »
If internet merchants can be required to report sales to residents of all stats and pay the sales tax on those sales, why couldn't other countries impose the same burden on the merchants?

In every state I know of, taxpayers are required to report out of state purchases on their state income tax forms, and effectively pay through "use taxes" the equivalent of the state, county or municipal sales taxes.

State governments are looking to have the internet merchants collect the taxes as a no-cost way for the states to have their use tax laws enforced. The merchants become the tax law enforcers, and bear the cost of enforcing the law.

If I'm going to be required to enforce the laws for every state, I want a badge and an MP-5 supplied to me, just like the IRS agents have. Oh, I'll take a grenade launcher, too.

Ned Hamford

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Re: Amazon closes distribution center in Texas
« Reply #12 on: February 11, 2011, 10:39:23 AM »
If property taxes, income taxes, and now sales taxes are immoral, how  do we fund the legitimate functions of govt.

My big problem is that the types of taxes increase exponentially with all connection to their purpose being cut.  /sarcasm Kudos to the courts for decided all government income is general funds and cannot be earmarked by source /sarcasm  Locally, we have a train system that runs to the city which is more expensive to use than to drive down and that includes the 11 dollar tolls.  The price keeps going up for tickets and the service keeps going down as the gov income from taxes and tickets doesn't stick to the trains, despite the law creating the trains saying it will; the dozen do nothing board of trustees making a quarter mil annual from their appointments is another problem...

My biggest gripe with our 'mixed economy' is that with the absurd labyrinth of subsidies and taxation, its impossible to know actual costs and determine true efficiencies.  There is too much illegitimate to sort out the legitimate.   =(
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AZRedhawk44

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Re: Amazon closes distribution center in Texas
« Reply #13 on: February 11, 2011, 10:55:16 AM »
I keep hearing sales taxes as an alternative to income taxes because you, as the consumer, get to regulate how much tax you pay.  Now it seems sales tax is evil too. 

Govt at some level is a necessary evil.  While we all like to fantasize about living in a govt-free world where we all are noble and treat each other with kindness and respect, there are some legitimate functions of govt that we all take advantage of from time to time.  If property taxes, income taxes, and now sales taxes are immoral, how  do we fund the legitimate functions of govt.

Don't recite the pat answer of "smaller govt", even if you trim all the fat, there are functions that need to be retained and those functions cost money. 

Chris

Innernetz companies don't use civil infrastructure.

They contract through UPS/FedEx, who perform the transportation duties just as if my dear aunt Tillie was sending me a box of cookies (and she would pay UPS a fee that includes appropriate taxes for transportation through whatever public infrastructure was necessary).

Governments aren't looking to tax them because they're using more than "their fair share."  Governments are looking to tax them because:
1.  It's an easy cash cow.
2.  It's biting into sales tax revenues from brick-n-mortar merchants.
3.  They're being lobbied by brick-n-mortar merchants such as our [whine] "Fairness" [/whine] friends above.


Simple economic facts, are that innernetz merchants have increased transportation/distribution costs to get a product to a consumer.  Not paying sales tax is the only way to offset those increased distribution costs.

It was cheaper for Amazon to operate a distro center in TX for certain regional orders, up until TX wanted to compel a sales tax.  Now, they'll just handle it out of their PHX center, or perhaps even their OR center.  Good-bye, TX jobs.  Now all those sysadmins and manager types that were making $75k a year can go out and get cash register jobs at "Main Street", making $21k on 30 hour work weeks with no health benefits.  Yay.  What a win for TX.  I'm so glad it's fair now. ;/
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mtnbkr

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Re: Amazon closes distribution center in Texas
« Reply #14 on: February 11, 2011, 11:46:56 AM »
Innernetz companies don't use civil infrastructure.

Quote
They contract through UPS/FedEx, who perform the transportation duties just as if my dear aunt Tillie was sending me a box of cookies (and she would pay UPS a fee that includes appropriate taxes for transportation through whatever public infrastructure was necessary).
Much the same as any business in a given area.  A distribution center does utilize local utilities, the roads to/from the center have to be maintained, etc.   There are a whole host of costs involved with having a distribution center there.  The only thing a distribution center doesn't have that a B&M shop does is customer traffic. 


Quote
Simple economic facts, are that innernetz merchants have increased transportation/distribution costs to get a product to a consumer.  Not paying sales tax is the only way to offset those increased distribution costs.
An B&M merchants have their own set of increased costs over an Internet retailer.  It's a moot point.

Chris

AZRedhawk44

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Re: Amazon closes distribution center in Texas
« Reply #15 on: February 11, 2011, 12:00:50 PM »
Much the same as any business in a given area.  A distribution center does utilize local utilities [which are taxed already], the roads to/from the center have to be maintained [the transportation provider pays that in their quoted delivery fees... Swift trucking, FedEx, etc.... vehicle licensing and transportation company taxes pay for that], etc.   There are a whole host of costs involved with having a distribution center there.  The only thing a distribution center doesn't have that a B&M shop does is customer traffic. 

An B&M merchants have their own set of increased costs over an Internet retailer.  It's a moot point.

Chris

B&M merchants order in smaller quantities, then have to decorate a pretty storefront because they're living in the same 19th century reality that makattak mentioned earlier.  They chose B&M because they wanted the nostalgia of "Main Street" rather than the economic reality of a combined internet and front door presence.

B&M merchants have a wider diversity of stocked items than most innernetz retailers.  They do that so that they increase "draw" to their store and get more individual customers, by drawing as many needs as possible into the store.  Innernetz retailers deal in specialization and volume sales.  The value of volume sales goes out the window with sales tax added to shipping.

B&M merchant economic constraints are self-inflicted.  They can shift models any time they want and start selling to people in other States, any time they want to.  They're not compelled to collect sales taxes for non-TX sales when operating out of TX.  I've bought stuff from TX online vendors and not paid TX sales tax.  Instead of entering into the economic shark pool and raising the bar for themselves, they pull chickenscat things like whining about "fairness" and try and tax their competitors harder.  It's economic protectionism, plain and simple.  They could increase their available market to 49 other states, rather than hindering the ability of customers to shop with other vendors.

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mtnbkr

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Re: Amazon closes distribution center in Texas
« Reply #16 on: February 11, 2011, 12:19:20 PM »
They could increase their available market to 49 other states, rather than hindering the ability of customers to shop with other vendors.

Yet they would still be compelled to collect sales tax on sales to Tx Residents (assuming they remained in Tx themselves).

Nobody except Mak has yet answered the question of how govt is going to be funded if Sales Tax isn't acceptable. 

Quote from: makattak
Instead of trying to apply 19th century taxes to a 21st century business, perhaps we should come up with a new way to tax internet companies for the minimal government services they require.

Probably the best suggestion I've seen.

Chris

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Re: Amazon closes distribution center in Texas
« Reply #17 on: February 11, 2011, 12:50:25 PM »
tx.gov is stepping on its richard for chump change.  The tx.gov bureaucritters running off Amazon are nitwits or doing the bidding of locals with clout.

Many, many transpo, trucking, logistics, & other companies that had to move lots of merchandise used to maintain warehouses in places like Little Rock, AR, and OK City, OK, due to Texas's old trucking regs. 

As soon as TX streamlined those regs, the satellite warehouses started to close and TX got the benefit of those facilities and jobs inside Texas...and the new TX facilities now serve AR, OK, etc. as well as TX.

Besides, internet retailers already pay for shipping, the only bit of gov(taxpayer)-provided infrastructure they use for such a transaction (roads & airfields via fuel tax cost in shipping). 
Regards,

roo_ster

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Re: Amazon closes distribution center in Texas
« Reply #18 on: February 11, 2011, 01:12:11 PM »
B&M merchants have a wider diversity of stocked items than most innernetz retailers.

Since when?  If I want variety, the easiest place to get it is online, and not necessarily just because I can use Google Shopping to check throusands of retailers in less time than it takes to get in the car, but because, without the requirements of maintaining a sales floor, an internet retailer can have an entire warehouse full of stock at my fingertips.  For that matter, a lot of them work with suppliers who will drop ship, eliminating the need to even have the item in stock at the retailer.

AZRedhawk44

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Re: Amazon closes distribution center in Texas
« Reply #19 on: February 11, 2011, 01:45:12 PM »
Since when?  If I want variety, the easiest place to get it is online, and not necessarily just because I can use Google Shopping to check throusands of retailers in less time than it takes to get in the car, but because, without the requirements of maintaining a sales floor, an internet retailer can have an entire warehouse full of stock at my fingertips.  For that matter, a lot of them work with suppliers who will drop ship, eliminating the need to even have the item in stock at the retailer.

There are vendors that only sell stereo wiring harnesses for automobiles.  No stereos, no speakers, no washing machines, no computers.

There are vendors that only sell nuts/bolts/fasteners.  No hammers, no windows, no kitchen remodeling services.

There are vendors that only sell bulk ammo.  No guns, holsters, slings, magazines.


A consumer WILL go to those vendors for specific needs.

But only while it is economically viable for him to do so.

When Audio Express charges him $25 for a wiring harness adapter to put an Alpine stereo into his GMC pickup, but he can get it from an online vendor for $9.95 + $7 shipping, he'll do it.  Arguably, he'd still do it if sales tax were being charged, I guess.

I put in orders at Wideners, Midway or Grafs fairly often.  I tend to buy right around the $150-$200 level whenever I do, because it seems to wind up being the optimized price point where I save enough on sales tax to offset the shipping costs, gas costs and drive time to go down to Sportsman's Warehouse, Bass Pro or the local gun shop to buy my stuff.

On average, there seems to be about a 25% cheaper rate for just about anything purchased online.  About 10% winds up getting needed to pay for shipping.  The B&M people are losing business due to the 15% overall cheaper cost of things online, and they want to apply sales tax to as many potential lost sales as possible so that the 15% becomes 5-8% and their prices look better to the consumer.

THAT is the push for this.

The State is not being hurt by losing out on innernetz sales taxes.  The loss of Amazon to a non-crazy State results in the loss of hundreds of jobs, many of which were reasonably high paying.  Assuming the state sees 5% of the income via income taxes, and another 5% of that "non-taxed" income via realized sales tax purchases of these employees and an average wage of $35k for 1000 future jobs and 500 current jobs, then  TX just said good-bye to 5.25 million in tax revenue when Amazon left, and a total of $52 million dollars of wages for citizens in the workforce of the State.  Plus the ancillary effects on other businesses supported by those 1500 employees and their incomes.

Something tells me that the $269 million that TX demanded from Amazon is an imposed sales tax on either:
1.  All internet sales of Amazon across the US, or;
2.  All internet sales of Amazon that were serviced by that one TX distribution center.

Assuming TX has a sales tax of 8%, i have a hard time believing that Amazon did $3,362,500,000 in total sales ($269 million / 0.08 as a sales tax figure) in the state of TX.  That makes them doing somewhere in the vicinity of $100-150 billion across the country.

http://money.cnn.com/2007/02/01/news/companies/amazon/index.htm

Amazon appears to do about 3.5 to 4.0 billion a quarter, internationally.  That comes out to approximately $15 billion a year.

Why TX thinks it's entitled to 2% of Amazon's gross sales internationally is a mystery to me.
« Last Edit: February 11, 2011, 01:59:04 PM by AZRedhawk44 »
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AZRedhawk44

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Re: Amazon closes distribution center in Texas
« Reply #20 on: February 11, 2011, 01:46:41 PM »
From the above article:

Quote
The Seattle-based online retailer reported net income of $98 million, or 23 cents a share, for the fourth quarter ended Dec. 3, down from earnings of $199 million, or 47 cents a share, a year earlier.

They have a net profit of $100-$200 million a quarter.  For all operations, across the US and globally.

And TX wants $269 million in sales tax for last year?

Get real. ;/
"But whether the Constitution really be one thing, or another, this much is certain - that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist."
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I reject your authoritah!

Monkeyleg

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Re: Amazon closes distribution center in Texas
« Reply #21 on: February 11, 2011, 02:27:05 PM »
Quote
They have a net profit of $100-$200 million a quarter.  For all operations, across the US and globally.

And TX wants $269 million in sales tax for last year?

Get real.

Try to explain that to a legislator and you'll get a blank stare.

Brad Johnson

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Re: Amazon closes distribution center in Texas
« Reply #22 on: February 11, 2011, 03:00:10 PM »
Texas requires collection of sales tax from any TEXAS-based business who sells a product to a consumer located in TEXAS.  That's easily circumvented by Amazon shipping the item in question from any of their warehouses located out-of-state.  Given the very high likelyhood that Amazon has huge flat-rate contracts with major shippers and that USPS charges the same rate regardless of destination, there is no change in the shipping expense.

The financial part of the decision had nothing to do with sales tax.  That's either the excuse or some reporter's SWAG on it.  With flat-rate shipping contracts assuring across-the-board shipping expense, Amazon can pull their operations back into fewer, larger divisional fulfillment centers.  Larger, heavily automated single centers are more cost effective and more efficient than multiple smaller ones, both in terms of capital investments and personnel costs.

Also, any TEXAS resident who orders from an out-of-state business is require by law to disclose the item and pay a sales/use tax on it.  Does anyone?  No.  Does the state police it actively?  No.  But that doesn't mean it isn't still the law.

Brad
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Re: Amazon closes distribution center in Texas
« Reply #23 on: February 11, 2011, 03:08:47 PM »
Texas has sued for $269,000,000 in back sales taxes extending back over a period of several years.

Amazon has counter-sued Texas, in effect saying "YOU came up with the number - YOU show us the audit details of exactly how you came up with that figure."
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Re: Amazon closes distribution center in Texas
« Reply #24 on: February 11, 2011, 03:12:13 PM »
Try to explain that to a legislator and you'll get a blank stare.

...The same kind of blank stare you'll get as when you ask them, "How much tax revenue will Texas make from all those ex-Amazon employees who are now on 99 weeks of unemployment insurance? "...
Impressed yet befogged, they grasped at his vivid leading phrases, seeing only their surface meaning, and missing the deeper current of his thought.