Lion of the Blogosphere

South Dakota v. Wayfair (2018)

This is one of the strangest Supreme Court decisions ever.

First of all, there is the oddness of two Justices, Kennedy and Thomas, overruling themselves. They were both on the other side of the issue in Quill v. North Dakota (1992).

And then you have the conservative wing of the Court (1) ruling in favor of more taxes; and (2) ruling against stare decisis.

Meanwhile, except for the strange cross-over of Ruth Bader Ginsburg, the other liberals on the Court, Breyer, Sotomayor and Kagan, sign on with Chief Justice Robert’s dissenting opinion in which he writes:

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. Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.

Conservatives see their decision as supporting states’ rights.

How would I have decided if I were on the Court? I would have decided with Roberts and the three liberal Justices. I don’t buy into the states’ rights angle at all. I support states’ rights more than most, but the right to tax E-commerce businesses in other states is not something that anyone was thinking about when the Constitution was written.

I think that the situation we had before Wayfair was economically stupid and unfairly discriminated against local bricks and mortar businesses, but the judicially imposed cure is even worse. If every state is allowed to impose its own weird sales tax rules on very small-time merchant, it will create a nightmare of compliance issues. And what happens if merchants just ignore it and don’t remit any sales taxes? How will the states ever know about it?

I think that the conservative thing for the Supreme Court to do is to not try to solve every problem that Congress refuses to deal with.

Written by Lion of the Blogosphere

June 25, 2018 at 2:12 PM

Posted in Law, Taxes

8 Responses

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  1. This decision and net neutrality is all about avoiding opening the can of worms called anti-trust. If Amazon can be broken up online then Walmart can be in the real world.


    June 25, 2018 at 3:19 PM

    • John D. Rockeller profited immensely from the break up of Standard Oil. He had interest in all the companies that were the successors of Standard and their values rose of time. The sum of the parts was more valuable than the whole. As a stockholder, I can only hope for such a move so long as my shares are diluted to the successor organizations.


      June 25, 2018 at 11:14 PM

  2. “the conservative thing for the Supreme Court to do is to not try to solve every problem that Congress refuses to deal with” — which is exactly the argument for the Court’s decision in Wayfair — it is easier for Congress to forbid this taxation than to allow it over the forbidding SCOTUS ruling.


    June 25, 2018 at 4:01 PM

  3. I agree that, in a perfect world, it should have been left up to congress. But Bezos is now worth over 140B and owns a major newspaper that is completely in the tank for the Dems. They would have never voted to raise taxes on e-commerce.

    So, while I may agree with you in theory, I’m not too upset about this in practice.


    June 25, 2018 at 5:04 PM

    • Congress could still reverse the Supreme Court if they wanted to.

      Lion of the Blogosphere

      June 25, 2018 at 5:59 PM

    • That’s not how it works with big mature industries and companies. Amazon and Ebay would love to be regulated into permanent monopolies. Turning e-commerce into an impenetrable thicket of tax accounting and regulatory compliance would have Amazon breaking out the champagne. Nobody could ever start up and challenge them.


      June 25, 2018 at 6:40 PM

  4. Quill, the earlier rule was judicially imposed. It, Quill, was a bad decision and needed to be over-ruled. Now the states can legislate tax policy to include retail sales using the mail.


    June 25, 2018 at 6:24 PM

  5. Remember ordering from catalogs? Mom did it all the time. I don’t see how ordering online is fundamentally different in a relevant way. Why should tax rules be different?

    June 26, 2018 at 8:00 AM

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