It’s a part of the shopping process that is always frustrating for consumers. After finding all of your chosen items in a brick-and-mortar store, you step up to the register where you are charged sales tax from a complicated percentage that would be next to impossible to estimate without a calculator. This is the way shopping has been for a long time, but thanks to modern technology, a strange dichotomy has occurred. When buying many products online, no sales tax is charged at all. However, that all may be about to change.
For years this has been a major benefit for consumers and online businesses. The price you saw was the price you would get, and with lower shipping costs, something bought online could be cheaper than that found in a physical store. On the other side of the coin, this creates a disadvantage for physical stores, especially small businesses who do not sell their products online. It also affects state and local governments that rely on sales-tax revenue for budgets and programs.
After years of debate, a final decision on the outcome of this dilemma is now in the hands of the U.S. Supreme Court, in the case of South Dakota v. Wayfair. This is a very clear-cut case for both sides, as South Dakota has no income taxes, relies on sales taxes for revenue, and says it loses millions in taxes every year to online retailers. These retailers cite former cases from the Supreme Court that ruled companies without a physical presence in the states they are selling to do not have to collect that state’s sales tax.
The Supreme Court previously ruled in the 1992 case Quill v. North Dakota that a mail-order catalog company from Illinois could not be forced to collect North Dakota sales tax on orders made by the state’s residents. However, this was before the era of major online sales, and many in the country have felt that change is long overdue. Congress has attempted to pass laws on the subject, and many states ask citizens to voluntarily report online sales taxes with little success.
Online sellers claim they are within the bounds of the law, and point out the complexities of tax codes around the country. These vary not just between states but between cities and towns. Only large businesses with many resources would actually be able to properly account for these taxes, they argue, and forcing sales tax compliance on small internet businesses could potentially hurt them.
On-the-ground businesses large and small have been for years disadvantaged by their online competitors’ lack of having to collect sales taxes, and this case is seen as an opportunity to finally put online and physical sales back on a level playing field. States and other authorities are also watching to see whether they will earn back an income stream threatened by these new online developments.
Whatever the Supreme Court’s decision may be, I hope they respect the impact this issue has on all parties involved. This is an important decision to make, and the arguments should be weighed carefully. Congress should also be taking action on the question of online sales taxes. Efforts to legislate them at a federal level have often failed, but our representatives have a responsibility to address this situation as it affects so many people throughout the country. In a republic such as ours, we as citizens also have a responsibility to know about problems such as this and make our voices heard. We’ll have to see what the reaction is after the justices have made their decision.
Connor Kockler is a student at St. John’s University. He enjoys writing, politics and news, among other interests.