The South Dakota law breaks both with Supreme Court precedent set in the 1992 case of Quill vs. North Dakota and the Internet Tax Freedom Act (ITFA) enacted by Congress in 1998. These protections shelter small businesses from the demands of 46 state tax auditors covering 12,000 local tax jurisdictions.
A ruling for South Dakota to remove protections and reverse over 60 years of precedent will devastate small businesses from Topeka to Toledo.
Those seeking to overturn Quill – including President Donald Trump – think this is a way to force large internet retailers like Amazon to pay more sales taxes. They are gravely mistaken. Amazon has physical presence across all states and therefore is already required to remit sales tax. Nineteen of the 20 largest e-retailers do the same.
Rather, the debate over Quill is about small internet retailers, often operating out of the owner’s home. Laws like South Dakota’s will stifle these small retailers trying to make ends meet, squashing Amazon’s next competitor before it gets off the ground.
Policy arguments aside, we expect the Supreme Court to see the range of constitutional issues with the South Dakota law, from due process to the commerce clause. We expect the Supreme Court to see the importance of respecting court precedent. Judges should not act like lawmakers.
Only Congress can write laws regarding taxes on interstate commerce – and it has done so. Between 1998 and 2016, Congress and successive presidents have re-affirmed eight times that e-commerce should be protected from the kind of discriminatory state taxes in the South Dakota law.
We hope Congress will seize the chance to do so again by enshrining Quill’s physical presence protections in legislation.
There’s no doubt that our current physical presence protection standard has enabled billions of dollars of economic growth. Time and again, Quill and the ITFA have stood up to legal and legislative challenges that threatened the digital economy.
The Supreme Court should recognize this on Tuesday, and leave our vibrant e-commerce ecosystem intact, while leaving it to Congress to make our nation’s laws.
Commentary by Steve DelBianco, president and CEO of NetChoice, an association of eCommerce businesses and online consumers who share the goal of promoting convenience, choice, and commerce on the net.
For more insight from CNBC contributors, follow
@CNBCopinion
on Twitter.
Be the first to comment