by Horatio Bunce
The Supreme Court of the United States (SCOTUS) has ruled today that they were completely wrong in 1992 when they ruled that states could not collect sales taxes for sales that didn’t occur in their state (gee, what a concept). Unless of course the seller has some sort of building in the purchaser’s state – even if the item you are importing does not exist in the state you reside in, in that building the seller owns. Now, they say that states can force their own tariffs for items imported from other states, aka a “trade war” to correct their “trade deficit” with our neighbors. It seems that the money involved is just too tempting to let go, independent states be damned – whether there is any real burden imposed or services required as a result of these foreign sales imports “for the public good” which is supposedly the only reason to collect taxes in the first place. The justification from tax-and-spend Republicans Haslam, Corker and Alexander has always been couched in a “marketplace fairness” argument, that it is unfair of you to import goods from another state of your choice instead of purchasing the same items from a brick and mortar store within the state. Supposedly, you are the bad guy for avoiding paying your fair share of high TN sales taxes – and covering the high taxes on the brick and mortar store. I say they must be high because, well, how else does the state that is near the bottom on cost of living (implying wages are in the lowest quartile too) explain losing out to other states where you import your goods from? After all, there must be a real brick and mortar business in that other state you purchase from. Of course, the same tax-and-spend Republicans offer corporate welfare to businesses like Amazon in the form of not collecting sales taxes despite having an in-state presence and not paying property taxes. Somehow this is “marketplace fairness” in their minds I guess. Some of them even claim to have “grave concerns” about President Trump’s tariffs on foreign imports – while salivating at the idea of creating their very own tariffs on other Americans. I guess raising the gas taxes (another bump coming next month!) and vehicle registration taxes just isn’t enough for the tax-and-spend Republicans in Tennessee. They are hungry for more.
As I have written before, the states have no right to taxes on imported goods from other states. According to the U.S. Constitution, where the SCOTUS finds its reason for existing at all, the states can only collect taxes on imports with permission of the U.S. Congress.
Article 1, Section 10 of the U.S. Constitution states in part:
“No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.”
The states don’t get their permission from the SCOTUS. It comes from the Congress. Any net proceeds beyond the cost for inspections are supposed to go to the federal treasury. All those tax laws are subject to revision and control of the Congress.
Welcome to the federal sales tax.
So, I’d like to know, was the SCOTUS wrong in 1992, today or both? Sounds like a great gubernatorial debate question to me. And since the SCOTUS HAD to be wrong at least once on this issue (and in recent times – not 200 years ago when we “couldn’t foresee the power of the internet”), why are we automatically inundated with their latest decisions as the “correct interpretation” that cannot be questioned?