By all accounts, President Trump’s nominee to the United States Supreme Court, Judge Neil Gorsuch of the 10th Circuit Court of Appeals, is a well-qualified and brilliant jurist. Advocates of limited government should be especially excited about Judge Gorsuch’s willingness to reexamine Chevron USA Inc. v. National Resource Defense Council (Chevron).
In Chevron, decided in 1984, the Supreme Court held that courts must give deference to administrative agencies’ interpretations of authority granted to them by Congress when a two-part test is met. Specifically, if the intent of Congress is ambiguous, and if the agency’s interpretation was “reasonable or permissible,” courts must defer to the agency. This wide deference to administrative agencies has given free marketers and fiscal conservatives enormous heartburn. Nevertheless, it has been the law of the land for over 30 years.
In 2016, however, Judge Gorsuch called into question Chevron’s compatibility with the Constitution’s separation of powers. In Gutierrez-Brizuela v. Lynch, the 10th Circuit was faced with a murky immigration statute and the Department of Justice’s interpretation of the statute. In concurrence, Judge Gorsuch wrote,
“There’s an elephant in the room with us today. We have studiously attempted to work our way around it and even left it unremarked. But the fact is Chevron … permit[s] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design. Maybe the time has come to face the behemoth.”
This is music to the ears of those who believe the administrative state has grown unwieldy and is inimical to the separation of powers.
While relatively few tax cases come before the country’s highest court, there is a fight brewing in state legislatures all across the country over the Court’s 1992 holding in Quill Corp v. North Dakota. Quill held that, pursuant to the Dormant Commerce doctrine, states cannot require remote sellers to collect and remit sales taxes unless the seller has a physical presence in the state. In legal parlance, this physical presence requirement is known as “nexus.” The Supreme Court noted that Congress could change this requirement at any time. To date, however, Congress has prudently not permitted states to tax remote sellers outside their jurisdiction.
Spendthrift states, always searching for new revenue, have begun passing laws that chip away at “nexus” with the goal being to tax out-of-state businesses on sales made over the Internet or through catalogues.
In a 2016 case, Direct Marketing Association v. Brohl, the 10th Circuit was faced with determining whether a state law imposing reporting requirements on out-of-state sellers who do not collect and remit the state’s sales and use taxes was consistent with the Supreme Court’s Quill decision. In essence, the law required remote retailers with annual sales in the Centennial State exceeding $100,000 to report three things: first, a notice to purchasers in Colorado that they may be subject to the state’s use tax; second, a summary of purchases and the dates of purchases to any Colorado citizen who spent more than $500 in a year buying goods from the retailer; and finally, a report to the Colorado Department of Revenue essentially detailing the purchases made. The 10th Circuit upheld the Colorado law and Judge Gorsuch wrote a nuanced concurring opinion essentially implying the scope of the Quill decision is narrow.
Given the legislative stalemate on Capitol Hill over the fate of various online sales tax schemes, Judge Gorsuch’s views on Quill are of utmost importance. Senators should carefully review Judge Gorsuch’s record and ask him to elaborate on his opinion in Direct Marketing as well as Quill.
Note: this article originally appeared in the Washington Examiner: http://www.washingtonexaminer.com/fiscal-conservatives-should-be-optimistic-though-cautiously-so-on-gorsuch/article/2613661