Perhaps the Internet finally has lost its new-car smell.
The Supreme Court's ruling Thursday that will force most online retailers to collect sales tax is a sign of just how much e-commerce and digital interaction have grown in the last 15 years. The case will have far-reaching implications for consumers.
The 5-4 decision involved South Dakota's attempt to collect taxes from Wayfair, the popular home goods site that boasted about not charging taxes. The case was a campaign to overturn a 1992 ruling that costs states and local governments billions of dollars in revenue by requiring Internet retailers to collect sales tax only if they maintained a physical presence in a state. In overturning that case, Justice Anthony Kennedy, in the majority opinion, said the earlier ruling distorted the nation's economy by putting local sellers at a competitive disadvantage.
The dissenting justices said Congress had the power to change the bricks-and-mortar loophole but didn't. Now Congress must provide clear rules to allow Internet sales to flourish but make tax-collection requirements uniform.
While some Internet retailers, including Amazon, charged sales tax in New York, in part because they had a physical space there, many others did not. The local revenue boost from the decision could be significant. The Long Island Regional Planning Council recently estimated that the region loses $100 million a year in revenue island-wide from Internet sales where no sales tax is collected.
The decision also could level the playing field a bit for traditional brick-and-mortar retailers, especially on items with larger price tags, since there will no longer be a tax incentive to shop online. But the ruling also might signal a much larger message, serving as yet another sign that online businesses, no matter which industry and no matter how large, might no longer operate in their own free-for-all universe.
Editorial on 06/24/2018