Justices May Not Disturb Status Quo When It Comes To Sales Tax For Online Purchases

Apr 17, 2018
Originally published on April 18, 2018 2:43 am
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ARI SHAPIRO, HOST:

In 1967 and again in 1992, the U.S. Supreme Court ruled that companies don't have to collect sales taxes for out-of-state purchases. That was before the Internet revolutionized the economy. This year, the high court decided to revisit the issue. And today, contrary to expectations, a narrow majority of justices signaled they may not be willing to disturb the status quo. NPR legal affairs correspondent Nina Totenberg reports.

NINA TOTENBERG, BYLINE: The test case comes from South Dakota, which passed a law requiring out-of-state companies, including online companies, to collect sales taxes. Today, state Attorney General Marty Jackley said that allowing online companies to avoid collecting sales taxes costs states billions of dollars in revenue and unfairly harms local small businesses who do have to add those taxes onto their prices.

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MARTY JACKLEY: That small business on Main Street is losing its sale. That's not fair. That's not right, and that should not be constitutionally sanctioned.

TOTENBERG: But George Isaacson, representing Wayfair, countered that reversing the old decisions would force compliance with 12,000 state and local tax rules across the country and would be so expensive it would drive small companies and startups out of business.

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GEORGE ISAACSON: It would really be a wet blanket on the electronic commerce economy.

TOTENBERG: Inside the court chamber, the justices seemed to concede that the court's prior decisions were wrong. But a majority said Congress would be better equipped to deal with the problem. South Dakota's Jackley objected, noting that the states have been trying to get Congress to pass legislation for 26 years, and Congress has turned a blind eye.

Justice Kagan suggested that in failing to address the issue for so long, Congress has in fact made a choice. It likes the status quo. Justice Alito added, do you have any doubt that states that are tottering on the edge of insolvency have a strong incentive to grab everything they can? And Justice Breyer suggested that even if major changes in the law are needed, Congress can craft a better law than the court can.

Justice Kennedy, however, had a blunt assessment. The assumption of many of these questions is that our prior decision is incorrect but that that doesn't make any difference, and I'm suggesting it does. Justice Ginsburg called the old decisions obsolete. As I see it, she said, everybody should have the same tax collection obligation. Justice Gorsuch - why should this court favor a particular business model that relies not on brick and mortar but mail order?

Betting on the outcome of Supreme Court cases is a bad idea. But counting up the votes today, it looked as though the decision in the online tax case will be 5 to 4 with the odds slightly favoring the online companies' tax-free status.

SHAPIRO: And Nina is still here in the studio with us. I want to ask you, Nina, about another case, one that was decided today involving immigration. This could make it harder for the Trump administration to deport a small number of noncitizens.

TOTENBERG: That's right. The court invalidated part of an immigration statute that requires deportation of lawful permanent residents who are convicted of a crime of violence.

SHAPIRO: What were the facts in this case?

TOTENBERG: Well, there was a Filipino immigrant who'd lived here for 25 years. The court's decision today overturned his deportation order for two burglary convictions. Now, the law on deportation defines a crime of violence as one involving actual force or a substantial risk of force. And today's decision follows one written by Justice Antonin Scalia in 2015. It says that the language in this statute is so vague that it invites arbitrary and discriminatory enforcement.

SHAPIRO: And a lot of people have noted that the deciding vote here was cast by Justice Neil Gorsuch, a Trump appointee, joining with the more liberal justices. Can we draw any conclusions from that?

TOTENBERG: Not really. I suppose you could note that in this case, he's agreeing with not just the court's liberals but with conservative icon Scalia. But he did write separately to say that the Constitution looks unkindly on any law so vague that reasonable people cannot understand it. Still, this is just one vote in one case from a justice who otherwise has a very consistently conservative record. So at least as of now, you really can't draw any conclusion.

SHAPIRO: That's NPR legal affairs correspondent Nina Totenberg. Thanks, Nina.

TOTENBERG: Thanks, Ari. Transcript provided by NPR, Copyright NPR.