Sci-tech

Supreme Court tax ruling a "victory" for local businesses

Supreme Court tax ruling a

They instead suggested that Congress should pass legislation simplifying online sales tax to create a level playing field.

The court upheld a 2016 South Dakota law requiring some online merchants - those with more than $100,000 in annual sales to state residents or 200 transactions with state residents - to collect the South Dakota sales tax, which is 4.5 percent.

How will this affect your wallet? States had no viable way to track down everyone who wasn't paying their sales tax, which is why they wanted to force retailers to collect it regardless of where they were located.

In pre-internet times, there was a certain logic to this: Offline tax collection was complex and burdensome - especially since sales tax is often levied not just by states but by municipalities - and consumers did the vast majority of their shopping at brick-and-mortar stores anyway.

Shares of Amazon, Etsy, and eBay dropped after the ruling, though it's too early to tell if this will deter shoppers from purchasing online, which is unlikely considering how fast e-commerce is growing.

The Illinois law takes effect on October 1, and it's built on legislation passed in South Dakota that is the focus of the recent Supreme Court decision. In areas where there is a local 1 percent option tax, retailers will be required to collect that as well.

Blair says the Senate Finance Committee has been watching and studying the online tax issue for over a decade.

The case also stemmed from a challenge from the state of North Dakota, which argued that it was losing an estimated $50 million in taxes because of the previous rules.

The ruling is sure to elate the state's small retailers. Now, rivals will be charging sales tax where they hadn't before.

Historically, the burden has been on the consumer in IL to keep tabs on what "use tax" - essentially the same thing as a sales tax - he or she owes when purchasing online goods from a remote retailer and later hand the money over to the government accordingly - hardly a surefire sales-tax collection policy.

"It's a small part of the total sales and use tax revenue, but it's significant", he said.

The new revenue the state collects as a result of the decision will be ongoing, year after year, not one-time money, he said.

Senate Finance Chair Craig Blair says he agrees with Justice from that standpoint. "When our local businesses suffer, so do we", he added.

"I want to stress that we're not looking at this as an additional revenue stream". That rule "prevented market participants from competing on an even playing field", Kennedy wrote.

Kasow's wife, co-owner of the bookstore, had been involved with efforts advocating a change in Vermont law.

"For local business I think it's actually a really positive thing and that's because sometimes people will pick online over a local business even if the prices are the same", Parham said.



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