The Trump administration is looking at forcing online retailers to pay the same taxes that their brick-and-mortar competitors must pay.
The Trump administration on Monday urged the Supreme Court to expand states’ authority to collect sales tax on internet transactions, joining a chorus of state officials seeking to overrule a 1992 precedent exempting many online retailers from having to add taxes to a consumer’s final price.
This is a mistake.
- This question is a political matter, not a legal/judicial one. If the administration thinks online retailers should pay the same taxes as brick and mortar retailers, then they should offer a bill to Congress (and State governors to their State legislatures) that fills in any gaps in existing statutes that allow online retailers to not pay. Judges cannot make law, as Art I, Section 1, makes clear—even if this is honored egregiously in the breach.
- If governments are worried that online retailers are competing unfairly by not paying the same taxes as their brick-and-mortar competitors, the far better solution is to lower the taxes charged the brick-and-mortar companies so they can compete. After all, that’s what was done with the Federal corporate tax rates, both for domestic consumption and to improve competitiveness with foreign competitors, and it’s working quite well.