Let’s juxtapose some Eugene O’Neill and George Harrison — “The Taxman Cometh,” and we’re not talking about April 15.
A decision by the U.S. Supreme Court has a lot of online shoppers grumbling unprintable things under their collective breaths; online retailers clutching their worry beads; and conventional brick-and-mortar stores and state governments waving pom-poms and cheering.
The court in a 5-4 ruling said states can collect sales taxes from online retailers — and many have been revving their engines waiting for this decision, with laws in place just waiting for the go-ahead.
South Dakota, the plaintiff in the case, wanted to collect taxes from online retailers who had posted more than $100,000 in annual sales or recorded at least 200 transactions in the state.
The problem was a Supreme Court decision in 1992 that barred states from requiring online sellers to collect sales taxes unless they had a physical presence there.
Last week’s ruling overturned that precedent, calling it “unsound and incorrect” given how ubiquitous online shopping is today compared to a generation ago.
So what’s going to happen moving forward?
—As noted, cash-strapped states whose residents view new taxes in about the same light as a raging case of bubonic plague have long been eyeing this existing revenue source that could total billions of dollars. (Alabamians have long been required to pay sales taxes when shopping online; 99 percent of them just take the Bart Simpson approach — “I didn’t do it, no one saw me do it, you can’t prove anything” — and lie on their tax returns.)
—Other than confirming South Dakota’s law, the court left it up to states to set their individual tax policies on online sales. That’s fully in line with federalism, but could be a recipe for chaos in the real world. (The decision noted that Congress and lower courts might have to intervene if discrepancies got out of hand.)
—Specifically, it could burden online retailers who potentially could have to set up a system, without much notice, to distribute the tax money it collects to 45 different states (five states don’t have sales taxes) in 45 different ways. It won’t impact the monoliths like Amazon and Wal-Mart an iota; it could be a massive change and disruption for folks on eBay or Etsy. States should show some consideration and offer some help as those sellers try to make this work, instead of sticking their hands out and screeching “gimme.”
—Brick-and-mortar stores who have been pleading for an even playing field could benefit somewhat, but this won’t be a complete cure for their issues. For every cheapskate focused completely on the bottom line, there’s another shopper who likes going online because of the product selection most local places can’t match, paired with cheap (if not free) and quick shipping.
—We also question just how massive an impact this will have on consumers. According to USA Today, most of the top 20 online vendors already collect sales taxes on purchases, and the top 100 sellers have been submitting close to 90 percent of the taxes owed. If you’ve been shopping online, most likely you’ve already been paying up. The Supreme Court’s decision just means everyone else will, too.
About 10 percent of shopping in the U.S. is done online, according to USA Today, to the tune of $500 billion annually. Closing this loophole won’t dent that.
People may grumble, may falsely call this a new tax — but the lure of the shopping app is just too strong.
—The Gadsden Times, June 25, 2018
