The Commerce Clause must not prefer interstate commerce only to the point where a merchant physically crosses state borders. Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this Court’s precedents. This Court should not prevent States from collecting lawful taxes through a physical presence rule that can be satisfied only if there is an employee or a building in the State….
In a 5-4 ruling upholding a South Dakota law challenged by Wayfair Inc, Overstock.com Inc and Newegg Inc, the justices overturned a 1992 high court precedent that had barred states from requiring businesses with no “physical presence” there, like out-of-state online retailers, to collect sales taxes.
Shares of online retailers fell sharply following the ruling, which opened the door to a new revenue stream to fill state coffers – up to $13 billion annually, according to a federal report. Because many e-commerce companies do not collect state sales taxes on purchases, they have had an advantage over brick-and-mortar businesses that do collect it. The ruling also likely will result in many consumers paying more for online purchases.
And check out how this came down. It was 5-4 but not like you’d imagine.
The Court overruled prior holdings that required a physical presence, ruling that such a physical requirement rule was developed prior to the internet as we know it today. the Kennedy opinion is joined by Thomas, Alito, Ginsburg, and Gorsuch. Thomas and Gorsuch have concurring opinions. Roberts dissented, joined by Breyer, Sotomayor, and Kagan.
We’ll have more to say on this, soon.