Errors of Enchantment is still digesting the deep awfulness that is the U.S. Supreme Court’s majority ruling in South Dakota v. Wayfair, Inc.
Yesterday, think tanks, lobbying groups, trade associations, and publications weighed in, offering a number of perspectives well worth reading:
● Americans for Prosperity: “The Supreme Court made clear in Quill v. North Dakota that subjecting online retailers to thousands of new taxing jurisdictions is not only bad for our economy, but it is unconstitutional. Only Congress has the authority to regulate interstate commerce.”
● Citizens Against Government Waste: “With this decision, states and local governments now have the ability to force companies to take on the burdensome task of acting as tax collectors for more than 10,000 separate tax jurisdictions, regardless of where the company and any of its facilities are located.”
● Competitive Enterprise Institute: “It is essential that Congress now clarify and reinforce the principles of physical presence and state tax competition to protect online commerce, smaller online businesses, and consumers. Hopefully, this unfortunate decision is the call to action that members of Congress need to provide these critical parameters for economic freedom.”
● National Taxpayers Union: “For centuries, states have threatened the free flow of interstate commerce by attempting to tax and regulate businesses all across the country, regardless of location. By validating South Dakota’s law today, the Supreme Court has granted states the power to tax any business, anywhere in the country, simply for daring to use the internet to access a nationwide market.”
● American Catalog Mailers Association: “This opens the door to more than 12,000 separate taxing jurisdictions who are now free to impose virtually any requirement on businesses nationwide. Gone too are the protections from unreasonable and countless compliance burdens on companies without a physical presence; in fact there may be no end to what politicos attempt to impose on those who do not vote for them.”
● Americans for Tax Reform: “We fought the American Revolution in large part to oppose the very idea of taxation without representation.”
● The Wall Street Journal: “The Court’s decision in effect declares open season for rapacious politicians to tax online commerce.”
Wayfair won’t have an immediate impact on most citizens of the Land of Enchantment. The state imposes a “compensating tax” — in other states, it’s referred to as a “use tax” — to “protect New Mexico businesspeople from unfair competition that would otherwise result from the importation of property … without payment of the gross receipts tax.” But statutorily, the New Mexico Taxation and Revenue Department is barred from enforcing the levy on “purchases of property for nonbusiness purposes.”
That exemption has never sat well with many members of the legislature, regardless of party, and with the High Court’s blessing, look for Santa Fe to embrace an Anthony Kennedy-approved scheme (“single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules”) to enhance and extend the state’s taxing authority.
For the reasons outlined above, Wayfair was a terrible ruling. But Errors of Enchantment has a perspective that we have yet to see presented. At its core, the court’s determination is a victory for political buck-passing. Whether it is called a use tax or a compensating tax, state governments already posses the authority to grab revenue from cross-border transactions. But forcing their citizens to comply, each time they order something online, is politically risky. Voters wouldn’t like doing that, and they’d be less inclined to reelect pols who impose such a burden. It’s much, much easier to seek an end run in the courts, and have a majority of black-robed activists force vendors — not buyers — to remit the tax.
Wayfair was always about the cowardice of legislative careerists — and their buddies in the other branches of government. They want the money, but they don’t want taxpayers to revolt. The ruling is a new low for greedy government at all levels. Let’s hope that Congress reasserts its legitimate role in the regulation of interstate commerce, and fixes the High Court’s blunder.