Thursday, July 05, 2018
Thursday, June 28, 2018
South Dakota v. Wayfair Supreme Court ruling on interstate sales tax seems to be based on wishful thinking
In the recent case of South Dakota v. Wayfair, et al, the Commerce Clause of the US Constitution has been redefined by the Supreme to remove prohibitions on states to collect sales tax on interstate transactions where the buyer is within their state. I am thoroughly suprized by this ruling, as it overturns long held understanding of Commerce Clause. As best as I can tell from reading the ruling, it's based on the same touchy-feelingly arguments that have been pervasive among the states about "losing money" and "the Internet changes everything". The decision takes for granted that money must be owed just because their is a transaction and the state has a sales tax. The ruling dismisses the very real challenge for small business who now have to deal with the burden of over 5000 tax jurisdictions. The ruling simply lemented an edge-case consequence of the previous ruling rather than allowing Congress to address the edge-case through legislation.
In an effort to level the playing field, Supreme Court created a whole new unlevel field on a much larger scale. The ruling also goes into a state's sovereign power, but it ignores the fact that this ruling is at the expense of every states' sovereign power being eroded, as now one state can tax another state's business directly. Since a sale tax is a tax, does this now mean one state can tax the income of a business in other state for the money earned on the transactions within their borders? This would seem to further level the playing flat so that businesses in other states experience the same double taxation that businesses within the state experience already. [sarc]
This ruling also fully legitimizes Use Taxes, where the individual person must pay the sales tax directly to the state (rather than the business doing the collection), even though the transaction occurs in other state, like when you drive across state lines to buy something, then bring it back home.
Based on this ruling, states should not only have a right to tax transactions that occur outside of their state, but they should be able to tax transactions that occur in foreign countries now too. Additionally, since the Indian Tribes are specifically mentioned in the Commerce Clause, do they now have the right to tax businesses in the same new manner as now granted to the states, taxing businesses anywhere in the country (or the world)? This is going to be an annoying twenty or so years while the lower courts sort out this mess unless we can get Congress to enact something that addresses everyone's concerns. Since this is specifically an interstate commerce issue, Congress does have the right to set up a system that solves these problems and addresses states', comsumers' and business' needs.
For me the SCOTUS arguments are not convincing, based on wishing to make things fair by legislating from the bench without working through the consequences. I find myself agreeing with Justice Roberts' dissenting view. There were issues with the previous rules, but we've thrown out the baby with the bathwater (my words).
Ruling text, with pro and con arguments by SCOTUS: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf
Tuesday, June 26, 2018
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Saturday, May 19, 2018
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