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In a 5-4 decision in South Dakota v. Wayfair, the Court threw out a longstanding precedent that prevented states from reaching beyond their borders to regulate businesses that have no connection to that state, such as having employees or a storefront in that state. Chief Justice John Roberts authored a powerful dissent, highlighting the need for congressional action in this area.
In this ruling, the Court abandoned a rule stretching back to 1967 that required a company to have a physical presence in a state to be subject to its sales taxes. The Court maintained its physical presence rule against a previous challenge in 1992, offering an impetus to the fledgling e-commerce industry in the early 1990s. Since then, the internet retail market has grown to almost $500 billion in 2018.
Adding uncertainty about sales taxes and changing the way that the e-commerce market operates could seriously hamper the growth of the industry. As Roberts pointed out in his dissent, “E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule.” E-commerce giants like Amazon and Walmart will not suffer from this ruling, as they already collect and remit state sales taxes due to having a physical presence in states across the country.
Unfortunately, small businesses will suffer the most from the Court’s recent ruling. Roberts explained:
One vitalizing effect of the Internet has been connecting small, even ‘micro’ businesses to potential buyers across the nation. People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country – but probably not if they have to figure out the tax due on every sale.
Most small business are not equipped to handle being subject to every taxing authority in every location where they have a customer. There are more than 10,000 state and local taxing jurisdictions in the country. And these jurisdictions have different tax rates, rules governing tax-exemptions, product category definitions, and standards for determining whether an out-of-state seller is subject to sales tax in the first place. Roberts pointed to a few examples of how confusing state taxes can be:
New Jersey knitters pay sales tax on yarn purchased for art projects, but not on yarn earmarked for sweaters…Texas taxes sales of plain deodorant at 6.25 percent but imposes no tax on deodorant with antiperspirant…Illinois categorizes Twix and Snickers bars — chocolate-and-caramel confections usually displayed side-by-side in the candy aisle — as food and candy, respectively (Twix have flour; Snickers don’t), and taxes them differently.
Further, the cost of compliance is beyond the means of most small businesses. Implementation and integration of software to calculate taxes in all these jurisdictions alone is estimated to cost up to $250,000.
The good news is that, under its authority to regulate interstate commerce, Congress has the power to fix this problem. Congress is the branch of government best able to consider the competing interests at stake, not unelected federal judges. Congress should codify the physical presence rule to protect small businesses from being subject to mandates from states where they have no physical connection and whose policymakers face no accountability for the tax and regulatory costs that they impose on out-of-state businesses. If state borders truly do matter, Congress must limit states’ ability to reach beyond their borders to place regulatory burdens on out-of-state businesses.
Proving once again—if any further proof was needed—that no slight is below his notice or unworthy of a response, Donald Trump decided to start the morning by attacking the Red Hen restaurant. The owner of the Red Hen, informed that Press Secretary Sarah Sanders was there by employees that were upset by her presence in the midst of national outrage over the policy that Trump enacted and Sanders repeatedly lied to defend, politely took her aside and asked her to leave. But the people who just went all the way to the Supreme Court to insist that a business owner has the right to refuse service over an innate feature of a person’s biology, have been outraged that a business owner refused service to someone who daily dishes out cruelty and lies with a side of sarcasm.
As the Washington Post reported, the owner of the tiny restaurant came in after receiving a call from his concerned staff. Upset over not just Sander’s defense of child separation, but her defense of policies that harmed gays and transgender people, the employees wanted the owner to ask Sanders to leave.
“I was babbling a little, but I got my point across in a polite and direct fashion,” Wilkinson said. “I explained that the restaurant has certain standards that I feel it has to uphold, such as honesty, and compassion, and cooperation.
Which, of course, meant that Sanders was out. But in his morning tweet, Trump accused the Red Hen of being unclean, stating that the restaurant has “filthy canopies, doors and windows” and that it “badly needs a paint job.” The Red Hen building is brick. Trump stated that “if a restaurant is dirty on the outside, it is dirty on the inside.”
And dirty restaurants are something of a Trump specialty. After all, the Miami Herald notes that his Mar-a-Lago resort was cited for 15 violations by health and safety inspectors. And it’s not the first time. Just before the Japanese prime minister was due for a visit …
… inspectors found sushi fish ready for consumption without the obligatory treatment for parasites and cited the club for storing food in two broken down coolers at temperatures that spoiled fresh ingredients.
Driven by impotent rage, political extremism, and their own frustration at President Trump’s ongoing foreign and domestic successes, the establishment media had its worse week in years last week surrounding their now-debunked border separation hoax.