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Time to Reverse Corporate “Constitutional Rights”

April 7, 2020 by staff

By Representative Pramila Jayapal
February 5, 2020

This past fall, Amazon challenged the proudly progressive character of my home city, Seattle, pouring $1.5 million into its City Council elections.

In doing so, Amazon placed not just a thumb but also a fistful of cash on the scales of our democracy. Thanks to immediate organizing on the ground and the speaking out of elected officials, the cynical and last-minute corporate spending on elections backfired: Nearly all of the Amazon-backed candidates lost their races.

However, on this 10th anniversary of the US Supreme Court ruling in Citizens United v. Federal Election Commission that catalyzed our current era of super PACs and corporate power, the clear danger posed by money in politics is real. Citizens United vastly expanded the rights of corporate entities and the super-wealthy to spend or invest their money to influence political elections and deepened the corrupting electoral influence of big money.

In the 10 years since Citizens United, we’ve seen newly created super PACs and “dark money” political nonprofits spend staggering sums, taking in unlimited donations without having to disclose them. While they cannot coordinate their spending with specific candidate campaigns, they can spend on political attack ads and other forms of political influence. From 2010 to 2018, super PACs spent roughly $2.9 billion on federal elections while dark-money spending rose from $129 million in the period from 2000 to 2008 to $964 million from 2010 to 2018.

It is important to note that Citizens United was not the first time political money in elections has been equated with “free speech” and corporations have been equated with people with constitutionally protected rights. The claim that corporate entities are legal persons with constitutional “rights” has been around for over a century.

Political money as free speech originated in the 1976 Buckley v. Valeo decision, while corporate political free speech rights began with the 1978 First National Bank v. Bellotti ruling.

But corporate constitutional rights extend beyond First Amendment free speech rights. Corporate constitutional rights began in the 1880s when Supreme Court Justices hijacked the Bill of Rights and the 14th Amendment—intended to guarantee equal protections for black Americans—claiming the rights of people also applied to corporate entities. Courts also interpreted sections of the original Constitution to protect corporate “rights” over those of people and communities, even though corporate entities are not mentioned anywhere in our Constitution.

The collective consequences of this have been devastating.

The corporate First Amendment “right not to speak” means that consumers may end up knowing less about what’s in the food they eat. The corporate First Amendment religious “right” granted in the 2014 Hobby Lobby decision gives a for-profit corporation the right to deny reproductive health care coverage based on religious belief.

The corporate Fourth Amendment search and seizure “rights” prevents warrantless inspections of many businesses to ensure safe working and environmental protections.

The corporate Fifth Amendment takings “rights” defines certain corporate regulations that protect private land as a “taking,” with the corporation being justly compensated for lost current and/or future profits.

Therefore, any full remedy to the questions of money into elections must address not only the immediate effects of Citizens United but also the entirety of corporate constitutional rights.

That is why in 2019, I introduced House Resolution 48, the We the People Amendment calling for ending all corporate constitutional rights—as well as political money as free speech.

The flood of money into elections following Citizens United and other court decisions has eroded public trust in our elected leaders to seriously address issues like health care, climate change, wealth inequality, guns, and infrastructure. Only by ending all of these corporate constitutional rights and the corrupting influence of political money as “free speech” can we have a government that represents all of us rather than only the interests of the super-wealthy.

The We the People Amendment (HJR 48), co-sponsored by 67 of my House colleagues, enjoys widespread support with the American public. The national group Move to Amend has been educating and organizing citizens across the country, building an authentic, grassroots movement seeking a systemic solution to address the harms of Citizens United.

The American people urgently want us to return our government back to the people instead of the highest bidders. It’s up to all of us to make that happen.

Pramila Jayapal represents Washington’s 7th District in the United States House of Representatives.

Dying to Vote (And a Warning for November)

April 7, 2020 by staff

By Jeff Milchen
April 7, 2020

Three years ago today, Mitch McConnell and the Republican Party completed the heist of the century — confirming Neil Gorsuch to occupy a U.S. Supreme Court seat held open for more than a year. Now Gorsuch’s decisive vote is forcing thousands of Wisconsin citizens to make an unconscionable choice: sacrifice your vote or risk your life to be counted.

Accurately describing yesterday’s malicious ruling by the Court is almost impossible to do without sounding hyperbolic. By a 5-4 vote, the Justices ruled that voters who requested an absentee ballot, but have not yet received it (at least several thousand citizens), must line up with masses of people to vote in-person. This despite a statewide order banning non-essential travel and gatherings of more than 10 people. So people not only are forced to choose between being disenfranchised and risking COVID-19, but must violate a State order to go to the polls!

The SCOTUS sided with Republican Party plaintiffs in reversing a U.S. District Court ruling that extended the deadline for absentee ballots — it gave voters one week after today to receive and return absentee ballots. This follows Republicans refusingd to approve a plan to send ballots to all registered voters. Instead, citizens had to request ballots individually, and more than one million did, leaving the State completely unable to fulfill the requests.

The Republicans’ disenfranchisement tactics aren’t motivated by intra-party primaries, but a hotly-contested State Supreme Court contest and other “non-partisan” races.

Extreme gerrymandering enabled Republicans to control the Wisconsin legislature despite being beaten by 10 percent of total votes in the 2018 elections. A State Supreme Court not dominated by Republican judges would likely strike down those gerrymanders, driving the imperative to close the circle by suppressing likely progressive voters.

Governor Tony Evers convened a special session of the legislature in hope of forging a bipartisan agreement to postpone the election and enable voting by mail, but Republicans refused to consider any action.

As if being forced to vote in person during a pandemic isn’t hellish enough, Milwaukee will open no more than five out of a normal 180 polling places today. It seems most poll workers weren’t eager to risk their lives for some extra pocket money. With projected turnout, 10,000 or more voters could jam the locations, making safe “distancing” impossible.

In Milwaukee County, more than 1300 residents have COVID-19 cases and 45 have died. As of Friday, 81 percent of the dead were black, while black and Hispanic residents vastly outnumber whites in the City.

In a separate legal fight that could have eliminated the need for the SCOTUS ruling, Wisconsin Governor Evers issued an executive order yesterday suspending in-person voting until June 9 due to the severe public health threat. But Republican legislators immediately challenged the order with the Wisconsin Supreme Court. In a 4-2 ruling, the Court blocked Evers’ decree and opened the door for the SCOTUS to strike down the absentee voting extension.

No Justice signed their name to the SCOTUS’ majority opinion, which is no surprise to anyone who reads the wafer-thin reasoning. The majority declared extending the date by which absentee ballots could be received and counted violates the Constitution because it “fundamentally alters the nature of the election” too close to Election Day. Apparently, voters failing to receive a ballot does not rise to the level of election-altering.

The majority opinion by Justices Roberts, Alito, Gorsuch, Kavanaugh and Thomas mentions the COVID-19 pandemic only in closing and slinks away from the fundamental issue by saying, “the Court should not be viewed as expressing an opinion on the broader question of whether to hold the election, or whether other reforms or modifications in election procedures in light of COVID–19 are appropriate. That point cannot be stressed enough.” Don’t forget: these Justices cancelled hearings as of April to ensure their own safety.

The denial of responsibility directly echoes Bush v Gore, but this time, some voters get to catch a virus and die.

Of course, the Republican tactics not only are an assault on democracy in Wisconsin, but a warning for our national elections this fall. Donald Trump repeatedly has attempted to undermine confidence in elections, raised baseless claims that mail-in voting would invite voter fraud, and endorsed numerous schemes to disenfranchise poor people and minorities.

Map of states with mail-in voting — Graphic by DailyKos

And five Supreme Court Justices have proven they’re willing to ignore clear evidence of discriminatory impacts to poor and minority citizens — at least without video of the perpetrators confessing racist intentions.

While most Americans already are challenged by the daily grind of staying afloat financially while surviving a pandemic, planning to thwart corruption like Wisconsin’s in the November election is essential. One place to start is checking to see if your state has (at least) no-excuse voting by mail and, if not, loudly demanding it (or universal vote-by-mail). Publicizing potential pitfalls with mail-in-voting is also essential to plan ahead.

And while it won’t be achieved this year, those of us who value democracy need to stop solely playing defense against the endless array of vote suppression tactics devised by Republicans. We should shift significant energy toward driving an affirmative right to vote into the U.S. Constitution via Amendment. Working to place it in each state’s Democratic, Green and other party platforms this year is a fine first step in that process.

Jeff Milchen founded Reclaim Democracy! He is an organizer, speaker and writer helping advance entrepreneurship, grassroots democracy and self-reliant communities. Engage him on Twitter at JMilchen

Recommended Resources:

Books
The Hidden History of the War on Voting by Thom Hartmann
Election Meltdown by Richard L Hasen

Current Articles
Trump Won’t Steal the Election, but Your Governor Might by Elie Mystal
We’ll Need Vote-by-Mail in November. And It Could Be a Legal Nightmare by Edward B Foley
Trump is Wrong About the Dangers of Absentee Ballots by Rick Hasen
Protecting Our Elections During the Coronavirus Pandemic by Elizabeth Warren
The cycle of disenfranchisement in Wisconsin is detailed well by columnist Will Bunch
In Election Law Blog, Richard Pildes of the right-wing Federalist Society defends SCOTUS’ Wisconsin ruling

The Arbitration Gambit: The Corporate Takeover of Our Justice System

April 7, 2017 by staff

It used to be anybody who forged a banking transaction would end up in deep legal trouble. Not anymore – at least if you’re a banker. You might get fired as four senior Wells Fargo managers were recently. But the police won’t be looking for you.

What’s worse, if you are a victim of the fraud, there maybe little you can do about it, because the corporations have come up with a new legal “get out jail free card” they can use to insulate themselves from responsibility for a wide variety of crimes in almost any line of business.

The fired Wells Fargo executives were implicated in a scheme in which the bank created up to two million phony accounts in the names of its customers without their knowledge. The company then charged the legitimate accounts of those customers for fees created by the fake ones. This went on for about a decade until it was exposed last year.

Although the bank paid a federal fine, no one at Wells is being prosecuted. The CEO, John Stumpf, retired with $124 million in stock and other benefits — on top of his generous salary.

The bank did fire 5300 workers who created fake accounts under intense pressure to meet sales goals not achievable through ethical sales practices. Yet the supervising executive in charge of the branches, Carrie Tolstedt, retired at the end of last year after being paid $27 million dollars over the last three years (not including stok bonuses).

So what about the customers who were defrauded? Although the amount each of them lost was relatively small, usually about $25, many of them are understandably outraged and have sued the bank. Ordinarily, no one could afford to take on a large corporation for a $25 fraud claim. Instead the lawyers for the bank’s victims used a “class action lawsuit” in which they can represent large numbers of clients in a single case.

But buried in the agreement customers signed when they opened their accounts was a phrase stipulating all disputes with the bank would be settled through binding arbitration, in which the parties argue before a supposedly independent arbitrator who makes the decision. The arbitrator’s ruling typically cannot be appealed to a public court.

© Mike Luckovich, Atlanta Journal-Constitution

In practice, arbitration favors the corporation contracting the arbitration firms, since those companies depend on repeat business from their corporate clients. However, the arbitration rules don’t offer any protection from these potential conflict of interests.

The problem for the victims of Wells Fargo’s fraud isn’t just that they are unlikely to get a fair shake in arbitration. They won’t get a hearing at all because almost all of these agreements prohibit any kind of class action. Instead each individual has to bring his or her case on their own. This would mean spending thousands of dollars and huge amounts of time to seek restitution for a $25 theft. And if the arbitrator rules against them, they may be liable for a big bill from their lawyer and the arbitrator.

These binding arbitration agreements have spread like a plague since a pair of Supreme Court decisions in 2011 and 2013. They affect just about any business one does with a large corporation including Amazon, Netflix, Travelocity, eBay and DirecTV, AT&T and countless others.

According to a multipart series on arbitration in the New York Times, the legalization of the binding arbitration gambit was the goal of a “Wall Street-led coalition of credit card companies and retailers.” In 2011 the Court handed down the first of the two crucial decisions, AT&T LLC v. Concepcion, that made get out of jail free a reality. By that time one of the lawyers who worked with the coalition, John G. Roberts Jr. was the Court’s Chief Justice.

The Roberts Court overturned a California state court decision declaring AT&T’s arbitration agreement an “unconscionable contract” because it exempted the “party with superior bargaining power” from “responsibility for [its] own fraud.” In doing so, the California court’s decision was in keeping with a centuries-old legal tradition concerning unfair contracts.

But the Supreme Court twisted the meaning of a 1925 federal law that simply established the legal standing of arbitration agreements except as long as they don’t violate the legal standards applicable to contracts in general. Instead, the Court decided the law placed the goal of “efficient, streamlined procedures” to solve disputes ahead of any concerns about fraud.

The lower courts responded by throwing out hundreds of class action suits and the number of cases brought by consumers and small businesses dropped precipitously. Then in a 2013 decision, American Express Company v. Italian Colors Restaurant, the court denied a claim by a restaurant owner that an arbitration clause the company inserted into its credit card contract violated antitrust laws. The dissenters on the court made it clear what this decision meant: “The monopolists gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.”

Forced arbitration is also a threat to individual victims of corporate crimes who are not part of class action suits. According to the Times, arbitration has impeded legal redress for people dealing with private schools and colleges, doctors, home construction firms, cemeteries and nursing homes.

Binding arbitration is also becoming common in employment contracts. The Times described the experience of a doctor who sued the medical group that employed her for workplace discrimination. When she showed the company had destroyed evidence, the arbitrator fined the company $1,000 and then billed the doctor $2,000 for the time he spent looking into it. When the arbitrator decided in favor of the employer, the doctor was stuck with a $200,000 legal bill, including $58,000 she owed the arbitrator.

Wells Fargo recently agreed to a $110 million settlement with customers victimized by the phony account scheme. It did so despite having successfully played its get out of jail card in court because its management decided to counter the bad publicity. As the bank’s new CEO Tim Sloan explained, the settlement is “another step in our journey to make things right with customers and rebuild trust.”

With forced arbitration, individual citizens as well as small and medium-sized business are being rendered legally powerless against the hostile corporate takeover of a large part of our civil justice system. But there is a silver lining in all of this. The Supreme Court’s rulings rest on the slender reed of a single law. The federal government could nullify those rulings by enacting a new law making it clear the Federal Arbitration Act does not support “unconscionable” contracts.

Getting such changes passed will not be an easy task in the current political environment. On the other hand, the arbitration gambit also creates an opening for a counter move. This issue affects almost everybody who is not extremely wealthy regardless of their race, religion, class or political belief. They can demand that their representatives fix this law. Regardless of whether or not the fix is enacted, a broad cross section of citizens will find out who in Washington is working on their behalf and who isn’t.

Jeffrey Kaplan writes from the San Francisco Bay Area

Snuffing Runaway Corporate Power at the Source: Our Money

June 22, 2014 by staff

“If you don’t like the growth of giant corporations, stop giving them your money,” said Jeff Milchen (Reclaim Democracy’s Executive Director at the time) in 1997. While this does not suggest exercising our power as consumers is sufficient by itself to solve the problem of runaway corporate power, we too often find the importance of our spending choices overlooked or diminished in the work to revitalize democracy. Since most of the world’s largest corporations sell directly to consumers, we certainly do have much to gain by finding opportunities to decentralize power with our own purchases.

Milchen later went on to found the American Independent Business Alliance (AMIBA), a non-profit organization helping communities build vibrant local economies based on independent community-based businesses rather than absentee-owned companies. It also builds a genuine pro-small business / pro-community voice to counter the corporate advocacy of entities like the U.S. Chamber of Commerce, which often pretend to speak for small business. While AMIBA focuses heavily on providing direct support to the community organizations that comprise its membership, it also coordinates two national campaigns each year.

Independents Week is a campaign that occurs the first week of July each year. While AMIBA provides a wide array of templates and support material, the campaign is executed through community organizations and individuals around the country. Independents Week engages citizens in celebrating entrepreneurial spirit and the freedom to control one’s own livelihood, rather than being dependent corporations. It also emphasizes the importance of local ownership and control for communities and affirms citizens’ role in shaping their community’s future.

We encourage readers to recognize both the value of integrating a pro-local business perspective with work to revoke illegitimate corporate power, and make clear that one can be an active advocate for community-based businesses while working to stop corporations from wielding illegitimate power.

Taking advantage of the ready-made tools for Independents Week is one simple step that just might spark interest in more ambitious initiatives, such as starting an Independent Business Alliance to differentiate between the interests of Wall St. and Main St., and help your hometown businesses prevent corporatization of your community.

Exxon CEO Now Concerned About Local Fracking Impacts…In His Community

March 2, 2014 by staff

By Dr. Walter Brasch

Rex W. Tillerson, a resident of Bartonville, Texas, like many of his neighbors was upset with his city council. That’s not unusual. Many residents get upset at their local governing boards. And so they went to a city council meeting to express their concerns that the council was about to award a construction permit.

The residents were upset that the Cross Timbers Water Supply Corp. planned to build a 160-foot tall water tower. That tower would be adjacent to an 83-acre horse farm Tillerson and his wife owned, and not far from their residence. The residents protested, and then filed suit to stop construction. The tower would store water to be sold to companies that needed it for high-volume horizontal fracturing of oil and gas wells, the process known as fracking.

Each well requires three to nine million gallons of water, up to 10,000 tons of silica sand, and 100,000 gallons of toxic, often carcinogen, chemicals. The process of horizontal fracking, about a decade old, to extract oil and gas from the earth presents severe health and environmental problems.

The residents, all of whom are in the visual distance to the water tower, said that construction of the water tower would impact their views. They argued that during construction and after the tower was built, there would be excessive traffic and noise.

Michael Whitten, who represents Tillerson, told the Wall Street Journal his client was primarily concerned about the impact the tower would have upon property values. The plaintiffs bought their homes so they could live in an “upscale community free of industrial properties, tall buildings and other structures that might devalue their properties and adversely impact the rural lifestyle they sought to enjoy,” according to the suit.

Rex W. Tillerson isn’t your typical resident. He’s the CEO and the chairman of the board of ExxonMobil, the third largest corporation in the world, and the company that leads all others in exploring, drilling, extracting, and selling oil and gas. It’s also a company that has had more than its share of political, social, and environmental problems. Tillerson was an engineer when the Exxon Valdez fouled the western shore of the United States in 1989. By 2004, he was the company’s president.

In 2012, Tillerson was given $40.3 million in compensation, including salary, bonus, and stock options, according to Bloomberg News. His company had $453 billion in revenue for the year, and a net income of $45 billion.

When you have that much money, every million or so dollars matters, especially if a large ugly tower impacts not just your view but your quality of life and the value of your property.

Large ugly rigs, the kind that go up when ExxonMobil and other companies begin fracking the earth, also affect the people. The well pads average about eight acres, mostly cut from forests and agricultural areas. Access roads, some of which upset or destroy the ecological balance of nature, need to be built. Other roads receive heavier-than-normal damage because of the number of trucks, often more than 200 a day, that travel to each well site.

As early as 2010, a PennDOT official told the Pennsylvania state legislature that the cost, at that time, to fix the roads was over $260 million. Increased diesel emissions, concentrated in agricultural areas, also affect the health and safety of the people.

The noise from the traffic and from around-the-clock drilling affect the people, causing stress and numerous health issues, according to psychologists Diane Siegmund and Kathryn Vennie, both of whom live in the Marcellus Shale part of Pennsylvania.

When the rigs go up, property values decrease. Banks and mortgage companies are refusing to lend money to families who wish to take out second mortgages or who wish to buy property that has wells on it or is even near a well pad. Insurance companies are not writing policies, even if the homeowner opposes drilling but whose home is near those well pads.

In 2012, Rex W. Tillerson said that opponents of fracking are manufacturing fear, and then laid out a corporate truth when he said that his company has in place “risk mitigation and risk management practices . . . to ensure [oil and gas development] can be developed in a way that mitigates risk—it doesn’t eliminate it, but when you put it into the risk versus benefit balance, it comes back into a balance that most reasonable people in society would say, ‘I can live with that.’”

Thus, the energy industry is telling the people there will be accidents. There will be deaths. There will be health and environmental consequences. But, they are acceptable because “mitigation” allows a corporation to accept errors, injuries, illnesses, environmental destruction, and even death if they believe there is a “greater [financial] good” that outweighs those risks.

It is the same argument that Ford used in the 1970s when it decided not to recall and repair the Pinto because it estimated the cost to pay compensation for injuries and deaths from faulty construction would be significantly less than the cost of a recall.

There is something more about Rex W. Tillerson. He’s proud of his association with the Boy Scouts. He’s a former Eagle Scout and was president of the national Boy Scouts of America. (Both the Boy Scouts and ExxonMobil have their headquarters in Irving, Texas.)

Part of the Scout Oath is to “do your duty to God and your country.” A partial interpretation of that is “by working for your country’s good and obeying its laws, you do your duty to your country.” Within the past six months, ExxonMobil has paid more than $5 million in fines and penalties for not obeying the country’s laws.

The 12th part of the Scout Law is to be reverent. A widely-accepted interpretation of that law, according to Scouting Trail, is: “As a Scout experiences the wonders of the outdoors, stormy weather and calm blue skies, pounding surf and trickling streams, bitter cold and stifling heat, towering trees and barren desert, he experiences the work of God. . . . We need to play the role of steward rather than king—tending and caring for our world instead of taking all we can for our own comfort.”

Protesting the construction of a water tower because it might lower property values, even for selfish purposes, is Tillerson’s right as a citizen. But, destroying God’s world to maximize your profits is not his right.

Guest commentator Dr. Brasch, an Eagle Scout and an award-winning journalist, is the author of 20 books. His latest book is Fracking Pennsylvania, an in-depth investigation of the economic, political, environmental, and health effects of fracking.

Amazon Plays Hardball on Tax Avoidance in Texas

November 30, 2012 by staff

The following is excerpted from “Lines Blur as Texas Gives Industries a Bonanza,” part of a series on corporate tax incentives in the New York Times. Published December 3, 2012

Tarik Carlton gathered with other workers in February 2011 to hear the bad news: Amazon was shutting its distribution center in Irving, where he loaded trucks for $12.75 an hour.

Business had been strong, but the online retailer did not want to pay a $269 million tax bill from the state comptroller. A standoff with the state ensued, and Amazon laid off the workers. “They didn’t have our interests in heart, truth be told,” Mr. Carlton said.

Amazon opened the distribution facility in 2005 in Irving, near Dallas-Fort Worth International Airport, and local officials awarded the company tax breaks on its inventory.

Positions at the warehouse included product pickers, dock crews and truck loaders. The employees were typically on the young side, and some had served in the military. The warehouse churned through workers because many could not meet the quota of products they were supposed to move each day, according to Frankie Lloyd, who helped Amazon find temporary workers to fill many of the jobs.

“It’s all about what you can do physically,” Ms. Lloyd said. “Like manufacturing, but without the great pay.”

The distribution business grew as manufacturing moved overseas and online shopping boomed. It is big in the Dallas area because two main train lines run here from Long Beach, Calif., where goods arrive from Asia.

The work is highly physical. One Amazon worker wore a step counter that logged five miles during one shift, according to Mr. Carlton, who only recently found a new job. He was among 12 former Amazon workers, including two warehouse managers, who agreed to be interviewed.

There was no air-conditioning in the warehouse, and Mr. Carlton and others said the temperature could reach 115 degrees. They said it was difficult to take breaks given the production quotas.

The pay was typically $11 to $15 an hour, Ms. Lloyd said. Amazon gave out small shares of stock and some bonuses, but the amounts were minimal, she said.

Amazon said it had been working to upgrade its warehouses, which it calls fulfillment centers. The company has installed air-conditioning in all its centers over the past year, said Dave Clark, the vice president for global customer fulfillment.

Mr. Clark said workers always received breaks, and sometimes free ice cream when the facilities did not have air-conditioning. He said the quotas were akin to “expectations that go along with every job, mine included.”

“I really do think these jobs get a bad rap,” Mr. Clark said. “They’re great jobs. They’re safe jobs.”

Mr. Carlton said he had no idea the company was being partly subsidized. “If you give them money, I think more should be expected,” he said, adding that Amazon should have been required to hire more people to handle the heavy workload.

John Bonnot, the director of business recruitment for the Irving Chamber of Commerce, said the city did not impose wage or benefit requirements on companies that received incentives. Irving had required that Amazon create only 10 jobs to receive the tax break.

Mr. Bonnot said Amazon “would have nothing but praise” for the original assistance from the state and the city, which outsources its economic development to the local chamber.

Things began to slide downhill in late 2010 when the state comptroller, Ms. Combs, demanded that Amazon pay the $269 million sales tax bill. The retailer had never charged its Texas customers the tax, giving it an advantage over on-the-ground competitors.

The company hired three powerful advocates with ties to the governor, according to state lobbyist disclosure records. One, Luis Saenz, had been the director of Mr. Perry’s political operation. Days after the warehouse closed, Mr. Perry said he disagreed with the comptroller’s decision to demand the taxes.

As it was battling with the comptroller, Amazon began negotiating with the Legislature, which was debating whether online businesses should be required to charge sales tax. The company told lawmakers that it would create up to 6,000 jobs in exchange for delaying sales tax collections, similar to a compromise it had struck in states like South Carolina and Tennessee.

The lawmaker with the most power in the decision was John Otto, a Republican member of the Texas House of Representatives. Like all Texas legislators, Mr. Otto’s government job is part time. He also works at Ryan LLC — a job that is not disclosed on his legislative Web site.

Mr. Otto drafted legislation that said online retailers like Amazon would not have to charge sales tax as long as it did not have distribution facilities in Texas. By then, the company had already shut the Irving warehouse.

Mr. Otto and Mr. Saenz declined to comment about the legislation. Amazon would not comment on its negotiations with Texas.

In July, Amazon began collecting sales tax from customers in Texas after the comptroller agreed to release the company from most of its $269 million bill. The company has also promised to open new distribution facilities and hire 2,500 workers. Amazon will owe the state a $1 million penalty if it fails to deliver.

[pullquote] For Texas to give up more than $250 million in tax revenues in exchange for 2,500 jobs amounts to about $100,000 per job.[/pullquote]

The math on the new deal angers former Amazon workers, especially those who are still unemployed. For Texas to give up more than $250 million in tax revenues in exchange for 2,500 jobs amounts to about $100,000 per job. Most distribution workers are paid $20,000 to $30,000 a year. The rest benefits the company’s bottom line, which generally increases executive bonuses and shareholder returns.

King White, a consultant who helps Amazon choose locations, would not comment on the online retailer but said that companies in general had come to view incentives as entitlements. “Everybody thinks they deserve something,” Mr. White said. “ ‘If I’m creating jobs, what’s in it for me?’ ”

The deal on the sales tax did not require Amazon to reopen the Irving facility. That touched off the latest state competition to win over Amazon.

Last month, the city of Schertz beat out neighboring San Antonio for one of Amazon’s warehouses. The company is currently in negotiations with Coppell, outside of Dallas, about an additional center. Like Schertz, Coppell has offered Amazon a deal to keep a part of the sales tax it collects there, among other incentives.

If Amazon accepts, it will be located near Irving and many of its former workers. Sharon Sylvas, 47, had moved from Kansas seven years ago to help Amazon set up the Irving facility. She lives nearby in a one-bedroom apartment with her partner, daughter and two grandchildren.

After Amazon closed, she was out of a job for over a year. With limited options, Ms. Sylvas took a temporary position in October at another company’s distribution center. It is a tougher job than the one at Amazon, and it pays less. For $11 an hour, Ms. Sylvas moves heavy inventory and other items.

She said that if Amazon returned to the area, she would work there again, despite the rigors of warehouse jobs. “It’s real miserable,” Ms. Sylvas said. “But you do it to make a living.”

Image courtesy of John Stich via Diesel.

See also
Amazon Bolts Texas (Columbia Journalism Review)
Amazon Picks U.S. State Sales-Tax Winners (Business Week)
Amazon’s Physical Presence in U.S. and the Sales Tax Battle (American Independent Business Alliance)