Supreme Court ruling on State Sales Taxes – It Hits Home. Badly

Grok LogoSome new and nice things will soon be happening to GraniteGrok, chief amongst them being a new site with better security, newer features for authors to better get our message to you, better ways for readers to get feedback to us – lots of things to look forward to including items not in cyberspace (but more on that later). One thing that may not be coming soon, maybe not even at all, is a result of what Steve wrote about: SCOTUS Upholds South Dakota’s Right to Tax Online Sales From Retailers Outside the State.

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….

This will directly affect part of our future plans for what the ‘Grok offers to our readers. In short, in order to have an eCommerce site that would sell ‘Grok swag and other items of interest (hopefully!) to readers, I’d have to be able to take care of ANYONE buying ANYTHING from ANYWHERE.  That’s not the problem.  The problem is that I have NO idea of how to handle the taxes in over 11,000 (or more!) tax jurisdictions across the companies.  All that work, having to get it right, to sell a few hats and T-shirts?  Why would I bother putting up a retail environment?

True, I had planned on doing a lot more than that – a lot more.  That said, why would I risk my money and investment of time and energy only to see that the cost of compliance very much overshadows the economic benefit of me doing that? I would be doing this, like most sane people (Panera Bread being an exception and the other kooky Socialist communes that just HAD to learn the hard way that ignoring history means economic ruin) want to serve others’ wants and needs AND make a profit while doing so.

I probably won’t do it now.

Oh, we may have stuff to sell when we go to an event but that would be because we’d be in one of the few zero state sales tax States (not to mention, no County, city, or other local tax-greedy entities).  Just not on the Internet (or we could refuse to sell to those outside of NH, but that kind of defeats the purpose).

So, another aspiring retail startup killed in the womb because the Supreme Court decided that horizontal Federalism was as good as Congress seems to treat vertical Federalism. The basic notion that I thought was paramount is that one State couldn’t force an entity in another State to collect taxes for it.  Remember that kerfuffle a while ago (I know that a Grokster wrote it up but I can’t find it now) when Massachusetts was putting the screws to some NH border tire stores because their residents weren’t paying the MA mandated taxes on those tires personally so they tried to put the bite on the NH merchants?

Yeah.

So because people acted according to human nature – politicians wanting someone else’s money because they can’t control themselves in their effort to spend said other’s peoples money, how much MORE money will they not get from their own in-state startups-that-didn’t?  They never take into account what their actions are in affecting “the Invisible Hand”.

BONUS: for those people who value their Second Amendment Rights, The Truth About Guns has a post that this could lead, indirectly, to a gun registry (by following the tax crumbs)