SCOTUS rules states can collect taxes from online shopping transactions
The Supreme Court ruled Thursday that state governments to compel retailers beyond their borders to collect sales-tax revenue from consumers – a move which could rock online shopping.
The court’s 5-to-4 decision could have an impact on millions of Americans almost immediately. Some estimates claim that sales tax avoidance was a great benefit to shopping online — possibly worth $8 billion to $33 billion in uncollected taxes per year.
Chief Justice John Roberts wrote the dissent. He said the court should not be doing the work of Congress, even if its earlier precedents were wrongly decided.
“E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule,” he wrote. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress. The Court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago.”
Roberts was joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.
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Major online retailers’ stock prices dropped. The biggest online retailer, Amazon.com, took a small hit, even though it already collects taxes on its sales in all states.
“With today’s ruling, all businesses will compete on a level playing field,” said South Dakota Gov. Dennis Daugaard (R), whose state brought the challenge to the Supreme Court.
President Trump praised the ruling via Twitter: “Big Supreme Court win on internet sales tax – about time! Big victory for fairness and for our country. Great victory for consumers and retailers.”
Neil Saunders, managing director of the research firm GlobalData Retail, predicted that consumers could pay as much as $15.2 billion a year in additional taxes. “The challenge for smaller players will be significant, and the concern here is that complexity could stymie innovation and entrepreneurialism,” he said.
Sites such as eBay and Etsy, which serve as a marketplace for individual merchants and small businesses, said that having to collect taxes across the country would put their sellers at a disadvantage.
“More than three quarters of Etsy sellers are businesses of one. They have very different needs and challenges than larger online retailers,” Josh Silverman, the chief executive of Etsy, wrote on the company’s website. “We believe there is now a call to action for Congress to create a simple, fair federal solution for microbusinesses.”
Here’s the email to Ebay sellers:
The U.S. Supreme Court has announced their decision on the S. Dakota v. Wayfair case, overturning the long-standing rule that states could not tax businesses or sellers outside of that state’s borders. Now is the time for Congress to act on legislation that protects small businesses.
And we need your help.
We are asking you to join us and digitally sign our petition to show our political leaders that you stand against new Internet tax burdens that could permanently damage U.S. small businesses like yours. The petition takes less than a minute to complete. We will soon be delivering this petition to President Trump, key members of Congress, and select state governors so we need you to participate now.
eBay has always supported tax policy that is fair to entrepreneurs, artisans, and small businesses. Rest assured that eBay will continue to fight this battle on your behalf!
Sincerely,
eBay
photo/ Donkey hotey
