The U.S. Supreme Court’s ruling today in South Dakota v. Wayfair cuts against the longstanding American ideal of “no taxation without representation.” This ruling will devastate many small online businesses, likely result in a tax hike on Americans who buy online, and leave us with fewer choices and less money in our pockets.
The Competitive Enterprise Institute filed an amicus brief in support of Wayfair in this case. Associate Director of CEI’s Center for Technology and Innovation Jessica Melugin gave the following statement about the court’s disappointing ruling:
“Stopping state regulatory and tax power at each state’s border should be the default rule for online commerce, but the Supreme Court has chosen to set state tax authorities loose on small online businesses and their customers across the country.
“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.”
Appellate attorney and lead counsel on CEI’s brief, Erik Jaffe, also commented on the ruling:
"We are disappointed the Supreme Court today, in allowing states to extend their taxing authority beyond their borders, passed up an opportunity to reassert the horizontal federalism principles of the Constitution. Rather, adopting mistaken notions that state sovereignty extends beyond state borders and that the purchasing power of state citizens are assets belonging to the state, the court fundamentally subverts federalism.
"Instead, the only check on state overreach is now the court’s legislative judgment under a dormant commerce clause jurisprudence that gets both the commerce clause and the judicial role in enforcing it wrong. Hopefully, Congress will see the folly of this approach and act to constrain state encroachment on interstate commerce."