Supreme Court Invites Chaos with Decision in Internet Sales Tax Case

Today, the United States Supreme Court dealt a significant blow to taxpayers and internet entrepreneurs with its decision granting states greater tax power in the landmark case of South Dakota v. Wayfair. The National Taxpayers Union Foundation filed an amicus brief in the case, authored with former Solicitor General and prominent Supreme Court litigator Paul Clement, urging the Court to strike down South Dakota’s law and uphold the important precedent that a business must have a physical presence in a state before it can be required to collect its sales tax.

The following statement can be attributed to Andrew Moylan, Executive Vice President of the National Taxpayers Union Foundation and head of the organization’s Interstate Commerce Initiative, which seeks to address the growing problem of states taxing and regulating outside their borders.

Today, the Supreme Court applied bacon grease to the slippery slope of states taxing and regulating outside their borders. 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.

The internet is vast, powerful, and borderless. With today’s decision, the Supreme Court has effectively handed states tax power that is similarly vast, powerful, and borderless. The result will enrich state tax collectors and auditors at the expense of retailers, startups, and consumers across the country. This decision threatens to dim the lights of America’s vibrant, shining internet economy.

As it did after the Supreme Court’s erroneous decision upholding Obamacare’s individual mandate, Congress must now act to contain the fallout. Absent Congressional action, aggressive states will seize this newly-granted power and move the goalposts in an effort to trample even further on taxpayers’ rights. Congress should immediately move legislation along the lines of Rep. Jim Sensenbrenner’s No Regulation Without Representation Act, which would establish in statute the common sense standard that a state cannot impose a tax or regulatory burden on an entity outside its borders.

The Supreme Court has created a massive new problem that will endanger the livelihoods of internet entrepreneurs across the country and hurt consumers in every state. Congress must act quickly to protect the thriving internet economy that was built over the previous decades of common-sense commerce policy.