Amazon offers California 7,000 jobs if it drops online sales tax

SAN FRANCISCO (Reuters) - Amazon.com Inc has proposed a hiring spree of 7,000 jobs in California if state leaders put a recently enacted online sales tax on hold for two years.

The offer comes as California contends with the second-highest unemployment rate among U.S. states and broad anxiety about the national economy.

The tax, which took effect on July 1, requires retailers outside of California to collect sales taxes on online orders made through California-based affiliates. If it is not enforced until 2014, the largest Internet retailer also would drop its effort to put a measure to California voters that would repeal it.

Democrats who control the legislature will not accept Seattle-based Amazon's offer. They pressed in state budget talks earlier this year for new revenue to help balance the state's books, which require closing a $10 billion shortfall.

Lawmakers closed the gap in June, largely with spending cuts that Democrats reluctantly backed after having supported deep cuts in previous budget cycles.

Details of Amazon's offer emerged on Thursday after a meeting on Tuesday between representatives of Amazon and member companies of the California Retailers Association and a group in the office state Senate Republican Bob Dutton in Sacramento.

The association of brick-and-mortar retailers, which backs the online sales tax, was quick to reject Amazon's offer. Large and small retailers in California have long complained they are disadvantaged by having to collect sales taxes while out-of-state retailers could avoid doing so.

"Our people came back and said this isn't legitimate," said Bill Dombrowski, the association's president. "It's unacceptable."

He said California's Democratic lawmakers would snub Amazon's offer despite the urgency over job creation that has seized Sacramento in recent weeks.

Lawmakers have largely backed the online sales tax as it has the support of small and large businesses, local governments and public employees, whose ranks are being thinned in response to weak state and local revenue.

OTHER JOBS PLANS IN MIND

Democrats are in no mood to negotiate with Amazon. A spokeswoman for Senate President Pro Tem Darrell Steinberg said he instead aims to garner support for a bill to thwart Amazon from bringing its referendum to undo the online sales tax.

Referendum campaign spokesman Ned Wigglesworth declined to comment on Tuesday's meeting and Amazon's offer. But he said campaign staff are confident they will have more than enough voter signatures by a September 27 deadline to qualify the referendum for next year's November ballot.

To get a reprieve from the sales tax, Amazon offered to build distribution centers in California to spur badly needed job growth.

California's jobless rate stood at 12 percent in July and forecasters expect it to remain in double-digits through next year, an election year in which new legislative districts and term limits could create volatile political dynamics.

California's leaders have their own job growth ideas.

Steinberg and fellow Democrats Assembly Speaker John Perez and Governor Jerry Brown last week unveiled proposals for tax breaks for businesses, including tax relief for companies that buy new manufacturing equipment.

Steinberg and Perez on Thursday announced an agreement on bills, backed by the California Chamber of Commerce and the California Manufacturers and Technology Association, to ease regulation and create an economic development office.

"We've often heard from the private sector that there's a perception state government is too complex," Steinberg said in a statement. "This legislation implements concrete reforms that will change that perception, instill confidence for investors and send a strong signal that California is open for business."

(Editing by Dan Grebler)

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