In an attempt to persuade Amazon.com to build a distribution center there that would employ 1,400 people, the state of Tennessee “offered a package of economic incentives that included free land, job-training assistance and more than $12 million in property-tax breaks.”

But it wasn’t enough, according to a Seattle Times report by Amy Martinez, who says the company wanted the state to throw in one more thing: to relieve it of the obligation to “collect sales tax from Tennessee customers once the warehouses are up and running.”

As Martinez notes, it would give the online retailer “a significant price advantage over the local brick-and-mortar stores” in the state. Which, of course, is why the company has been conducting a relentless campaign against having to collect sales taxes.  As Martinez observes,

Amazon long has tried to minimize its sales-tax obligations.

Founder and Chief Executive Jeff Bezos told Fast Company magazine in 1996 that he started Amazon in Seattle partly because Washington is a small-population state, meaning he’d rather collect sales tax here than in California or New York.

“In the mail-order business, you have to charge sales tax to customers who live in any state where you have a business presence,” Bezos said. “We thought about the Bay Area, which is the single best source for technical talent. But it didn’t pass the small-state test.”

But many states have opposed Amazon’s strategy as unfair competition, and some have cited a 1992 Supreme Court decision that says “a state cannot require Internet retailers to charge sales tax on its behalf unless they have a physical presence in that state” to demand collection. Amazon countered that by “physical presence” the court meant “stores.” But five states where Amazon maintains a physical presence countered that the court meant what it said, and Kansas, Kentucky, New York, North Dakota and Washington have all forced the company to collect sales taxes. On top of that, the state of Texas “recently hit Amazon with a $269 million bill for four years of unpaid sales taxes.” And the National Retail Federation is also fighting Amazon’s advantage, and has called for the federal government to intervene — and according to Martinez, “the retail federation believes it’s finally making some headway with Congress.”

It doesn’t look like Tennessee is going to stand up to join in, however. Despite the fact that the millions in neglected sales taxes would be vastly greater than the income the new facilities would generate for the state, Tennessee’s newly elected Republican governor, Bill Haslam, “who once ran the e-commerce business of Saks Fifth Avenue,” is strongly in favor of giving Amazon what it wants. “That’s a huge priority for us,” he says.