Significance of Wayfair vs South Dakota
In a recent Supreme Court ruling the Supreme Court ruled that online retailers have to charge sales tax because "it is unfair for in person stores to have to compete with retailers not charging sales tax online". The vote was split 5-4 with every liberal and conservative being split except for Clarence Thomas and Anthony Kennedy who flipped. States may charge sales tax on out of state customers even if the seller does not have a physical presence in the taxing state. This ruling overturned the previous ruling in Quill Corp. Vs North Dakota in 1992, which said that states can only charge online sales tax if the merchant has a physical presence in the state. Say if I owned Barney's, I am based in New York, I sell something to someone in California. I was not required to collect sales tax before this ruling. Now some states like Oregon still do not collect sales tax. But some other states now are free to start taxing online purchases. With this ruling it might help to bring some more retail stores back, but it might not affect that much. People still will love online shopping.
This is super interesting! I like how you added the example of what you would do if you owned Barney's. I had never heard of this case before this blog post, so I think it is really interesting. I'm a little confused on what it means to charge sales tax to out-of-state customers. Does it mean that say someone living in England who tried to buy something at an online store located in California would be required to pay a sales tax, just because they live internationally?
ReplyDeleteThis is an incredibly intriguing supreme court ruling. It is odd that a current conservative supreme court would allow an expansion of the government into economics. Commonly, conservatives have been against "big government" and have favored capitalism. Obviously, this is not a socialist economic principle but it conflicts with their ideology of capitalism and survival of the fittest. However, one of the different factors of this case is that it takes into consideration the online institutions and their effect on our economy.
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