In June 2018 the United States Supreme Court, in the case of South Dakota v. Wayfair, ruled that the Constitution’s Commerce Clause allows state governments to force out-of-state businesses to collect state sales taxes. This decision overturns the court’s precedent that a state could require only businesses with a “physical presence” in the state to comply with state tax laws. At first, this new taxing authority may seem plausible, but in the final analysis it goes against the idea of the founding fathers which is “no taxation without representation.”
If you live in the State of Nevada and sell something online to someone in another state, you must collect the sales tax of that other state. If you are the consumer who lives in Nevada and orders something online from the State of South Dakota, the Supreme Court has ruled that you must pay the sales tax on the product that you buy to the State of South Dakota. The problem with this can be seen in an example.
The State of South Dakota can change the amount of sales tax any time they want to change it. Suppose they decide that the new sales tax in South Dakota should now be twenty-five percent. Since you are not a resident citizen of South Dakota, you cannot vote against the draconian sales tax (25%). You have no State lawmaker in South Dakota that represents you because you live in Nevada. This is a clear case of “taxation without representation.”
Internet Sales Tax Burden