The Supreme Court passed a ruling today that will redefine how states are allowed to collect tax from online retailers.
Naturally, states are ecstatic.
Tax hawks, as you can imagine, are having panic attacks.
From US News:
Thursday ruled that states can charge out-of-state retailers sales tax even if the retailers don’t have a warehouse or store in the state.
The court’s 5-4 decision in South Dakota v. Wayfair Inc. is a victory for the states and means shoppers may have to pay sales tax when making online purchases. According to the majority opinion written by Justice Anthony Kennedy, states have been losing billions of dollars a year, largely due to a 1992 decision in Quill Corporation v. North Dakota that largely exempted online retailers from sales tax collection. South Dakota loses an estimated $48 to $58 million a year, the court’s South Dakota decision stated.
While states might be rejoicing over this ruling, others weren’t so happy. Including Americans for Tax Reform.
“Today the Supreme Court said ‘yes—you can be taxed by politicians you do not elect and who act knowing you are powerless to object.’ This power can now be used to export sales taxes, personal and corporate income taxes, and opens the door for the European Union to export its tax burden onto American businesses—as they have been demanding.
If physical nexus is no longer required, as the Quill vs. ND case demanded, for sales taxes then it is no longer required for personal or corporate income taxes.
Not sure where ATR jumps from sales tax to income tax. This ruling will allow states to charge sales tax from companies—even if they don’t have a physical building in the state. How is this a major problem? It only applies to residents of the state who are shopping online. It’d be no different if you were buying a product at a local store.
Nobody likes to get more taxes. But this ruling just might level the playing field for local retailers against the juggernauts that are Amazon and others. These companies were able to avoid paying sales tax, if they didn’t have a building in a state. It gave them a tremendous advantage over local retailers who were already burdened with traditional overhead.
Even though in most states, Amazon is already charging sales tax, this will close any other loopholes.
Or do you want to see your local shops shut down, depriving your communities of jobs and opportunities? Perhaps we should buy everything from Amazon, which sells us cheap crap from China that falls apart immediately after its used?
This might not be the most exciting win, but it will have serious ramifications for our economy. Some good and some bad.