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Supreme Court Rules States Can Require Online Retailers To Collect Sales Tax (npr.org)
New submitter zippo01 shares a report: Online shopping will soon become more expensive after the U.S. Supreme court ruled Thursday that states can require internet retailers to collect sales taxes. The 5-4 decision broke with 50 years' worth of legal rulings that barred states from imposing sales taxes on most purchases their residents make from out-of-state retailers. The decision was a victory for South Dakota, which had asked the court to uphold its recently passed law imposing an internet sales tax. "Our state is losing millions for education, health care and infrastructure, and our citizens are harmed by an uneven playing field," said Marty Jackley, South Dakota's attorney general.
Sales taxes distort markets, income taxes do not.
For a 10% income tax If a product costs $9.50 to make and can be sold for $10.00 the transaction will occur a profit of $.50 will be generated which can then be taxes for $.05.
For a 10% sales tax. If a product costs $9.50 to make and can be sold for $10.00, the tax will be $1.00 and revenue only $9.00. As such the transaction will not occur
You ask. Cant we just lower the sales tax to %.5? Sure, however, given the large variety of margins generated in the whole of the market, it is impossibly impractical to customize sales taxes so they do not create these market distortions.
Purely looking at market dynamics, all sales taxes should be abolished and replaced by income taxes. It would increase market efficiency substantially.
It's not nearly that simple.
There is an area in Illinois (around Chicago + some) where a Snickers bar gets taxed less than a package of Starbust, because anything that contains flour does not qualify for the "candy" tax. There are strange laws on sales taxes in many municipalities all across the country. Don't think for a second that they don't expect those to all be followed to the letter.
This ruling makes collecting sales taxes in America just as complicated as managing tariffs for international shipments. Hopefully minus most of the corruption.
The only problem I see with the state taxing online purchases is that small online retailers will have extra overhead to meet tax requirements for all states.
The South Dakota statute in question only required collection/remittance of South Dakota sales tax if the online retailer had more than $100k in sales in South Dakota and/or more than 200 annual transactions in South Dakota. The Supreme Court specifically discussed those thresholds in its analysis, which will be a signal to other states that if they follow suit, they'll need to have some sort of reasonable minimum threshold as well. It would be hard for a truly small retailer to exceed that threshold in a single state in the first place, and then if they did it would only apply to transactions in that state.
Which should have exactly ZERO bearing on the constitutional issues involved. The government doesn't get infringe on your right to speak, or assemble, or defend yourself - and not only when you only do it a little, or a lot. Those principles are one size fits all. Phoning, faxing, driving, mailing, or app-submitting an order to a retailer should have nothing whatsoever to do with whether that business is obligated to act as an agent of an out of state government where the business's owners don't even have a vote.
Don't disappoint your bird dog. Go to the range.