After Gutting Education And Health Care Spending, Perry Vetoes Legislation Ending Amazon’s Tax Dodging

As ThinkProgress previously reported, online retailers like are using a loophole in state tax codes to avoid collecting sales taxes. This loophole is denying states millions of dollars of tax revenue. For example, in “2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online.”

In Texas, state lawmakers — overwhelmingly conservative Republicans — decided that they couldn’t tolerate Amazon’s tax dodging at a time when the state cut $15 billion from important social services, health care, and education in the name of deficit reduction. Seizing on an earlier ruling by state comptroller Susan Combs that said Amazon owed the state “$269 million in sales taxes it failed to collect from 2005 to 2009,” the legislature passed a bill that would tighten sales tax rules and force many online retailers to begin collecting sales taxes just like any other business.

This morning, Perry quietly vetoed the bill, protecting Amazon and other large retailers’ tax-dodging:

Gov. Rick Perry has vetoed legislation that was aimed at tightening the state’s rules on when online retailers must collect sales taxes on Texas transactions, the bill’s author said this morning. Perry had earlier criticized Comptroller Susan Combs for moving to collect $269 million from for uncollected sales taxes.State Rep. John Otto, R-Dayton, said Perry’s office told him the governor had vetoed the measure, House Bill 2403, but did not tell him why. However, Otto said the measure also was included in the fiscal matters bill that is on the agenda for the Legislature’s special session that begins today.


Combs has estimated in the past that Texas “loses $600 million a year from untaxed online sales.” When Combs originally demanded that Amazon collect sales taxes just like any other retailer, the online giant actually threatened to leave the state. More recently, Amazon CEO Jeff Bezos falsely claimed that collecting sales taxes from his company would be unconstitutional.