Grover Norquist has responded to today’s decision by the Supreme Court. Some of the stuff he raises would not have occurred to me. Could be a tough outcome for those fleeing CA and other high tax states.
New tax ruling might have far-reaching implications
As for the European stuff, I cannot even wrap my head around that right now!
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I imagine it was inevitable. The sales tax revenue lost when online crushed local retail had to be made up somewhere.
I’d honestly prefer it rather than have unbounded liabiiity for unpaid use tax for the rest of my life.
I think this is the proper link: Norquist Statement on South Dakota v. Wayfair - Americans for Tax Reform
It seems unjust that this comes about now, after Amazon and others have been allowed to grow (and compound that growth) at the expense of the tax treasury for 20+ years. I’m not sure what we should do about that, but it doesn’t seem right.
Yeah.
Now that Amazon has grown to a unstoppable retail behemoth partially funded by tax free sales, we’re going to pull that rug out from under anyone else who tries to follow in their footsteps.
Very well analyzed. I failed to think of that aspect on my own, but I should have thought of it. So true.
As for the other, related, considerations, those issues raised by Norquist (see OP), it appears to be a minefield going forward now that the camel’s nose is beneath the tent. I honestly do not know how today’s young people are gonna survive in the out years. There is so much debt already on the books. Huge amounts of money will be needed in the future, and today’s decision opens up multiple paths for the politicians of tomorrow to raise that money.
BTW, stare decisis only exists when the people are trying to overturn court decisions favored by the government elites. Then earlier decisions matter. But with something of this nature which mitigates in favor of more government and more taxation, then earlier decisions may be cast aside with abandon. What an unmitigated sack of crap! 
Finally drilled down sufficiently to where I found the voting on this one. It is incredibly unusual. In a five to four decision, the dissenting justices were (now get this):
Chief Justice Roberts together with Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor
Even more shocking . . yeah . . Ginsberg was on the other side, voting with the likes of Thomas and Alito in the majority!!
The earth has spun off its axis!!
This is a Commerce Clause case, it isn’t about more government vs less government. It’s about federal government vs state government. It’s why a lot of people may be surprised about the sides - they’re thinking about it as a tax case, but it isn’t as much a tax case as it is a state powers question.
Well, the term “more government” can include the notion of more state government. The states are adept at wasting our tax monies, too, not just the Feds.
But if you read the Norquist opinion you will realize this ruling has implications far beyond Wayfair. It opens the door to future government seizures of remarkable proportion. Norquist’s comments might appear hyperbolic today. But just you wait. This is only the beginning!!
Following up just a bit, and not so much about the sales tax because that aspect is well covered in another thread. However, the Norquist article (see OP) correctly states:
“If physical nexus is no longer required, as the Quill vs. ND case demanded, for sales taxes then it is no longer required for personal or corporate income taxes.”
The states of California and New York are notorious for collecting income tax from former residents who have moved out of state . . . . to escape high taxation. The example best known to me is that of a good friend who finally took refuge in CANADA, specifically in the Province of New Brunswick!! He had worked many years in California and of course he paid his CA income taxes while resident there. But he had earned a pension in the course of that CA employment. Apparently the CA authorities believe it is their prerogative to tax pensions which have come as a result of one’s employment in CA. This regardless where the person might be living following retirement!
In the wake of this latest SCOTUS decision, I can foresee such foolishness as this becoming widespread among the states as they reach for more and more income to support their welfare societies. There will eventually be no refuge from such taxation remaining in the USA. Canada or other such foreign venues? I dunno.
The article is full of incorrect information, but there is not a physical presence requirement for income taxes. After Quill, no one really knew whether physical presence would be required for a state to assert income tax liability.
Many states of course argued that it only applies to sales and use taxes. Then came the Geoffrey case which reached SCOTUS just one or two years after Quill. The state Supreme Court held that the physical requirement of Quill only applied to sales and use taxes, not income taxes. The Supreme Court refused to grant cert in the case.
Since then many cases have been fought in many states, but now its generally accepted in the industry that states have the power to impose income taxes on companies which lack any physical presence in the state (except where PL 86-272 applies). Not all states do, but they generally have the power to. So, this decision is unlikely to have any effect on states’ ability to impose income taxes.
There’s a federal law that specifically addresses state taxation of retirement income.
So not sure what exactly was going on with your friend, but it probably isn’t a Commerce Clause question.
I appreciate your comprehensive approach to Norquist’s writing. But I believe most participants here would have far greater focus on income taxes imposed on individuals, and less on those imposed on companies.
I concede the passage I lifted earlier mentioned companies, which opened up that topic . . . . unfortunately. But, at least for myself, that is not the outrage. What clearly is outrageous and ridiculous is a state attempting to tax a former resident on an individual basis. My reaction to that, were it to happen to me, would be GFY. After that I would advise them to re-think the insane welfare state policies giving rise to such avarice and cupidity.
Again, this is already the case. Look at nonresident partnership withholdings. States are not going to be able to tax a nonresident individual on income which has no connection to the state. This decision will not change that.
As for the retirement income, look at 4 USC 114.
Thank you for your valuable post. I wondered why you did not go into detail. Then I found out why, here:
Taxation of out of state pensions is complex stuff
Apparently that law covers many kinds, but not all kinds, of pension income. The article does mention California and New York specifically. However, as you wisely pointed out, this has been a settled matter for a long time . . . . I guess until now.
So is Norquist correct? Does this week’s SCOTUS ruling re-open this matter and offer avaricious states taxation opportunity previously foreclosed by law?
I dunno. Opinions on that question appear to differ.
It’s a federal statute. The Court can’t overrule a federal statute unless its unconstitutional. I haven’t seen anyone actually argue that the ruling would have any affect on federal statutory law. Put another way, if the US now passed a law saying that physical presence is required for states to impose SUT obligations, this ruling would not serve to allow states to override the federal law. Inherent in Wayfair is the fact that there is no federal statutory law outlawing the states from imposing the SUT obligations.
I am respectful of your thinking as expressed in your writing.
States like NY and CA, though, are so hopelessly in need of funds that I believe leaders of such failed states as those (and there are others) would try anything, would seize any opportunity, would twist any law, to raise money. Hence I am very circumspect when it comes to casting aside completely Norquist’s views and analysis. There are things happening in America today I would have found inconceivable even twenty years ago. And circumstances, especially in the very liberal states, are not improving.
Have to imagine B&H Photo is about to see a massive drop in revenue and sales.
“weird” vote breakdowns between the justices happens more often than the press wants us to believe. The media has made justices binary, but there’s nuance there. For example, on the matter of criminal procedural rights, Scalia was often out on his own because of his views on the constitution. It created a lot of “strange” votes like this one.
(I edited the quote, but wanted to show what I agreed with - to all reading, this is not the full quote)
I deal with both of these states on a weekly basis, and could not agree more. For the record, I also deal with a lot of “red” states and they are no different. I would say that CA and NY are among the most aggressive I’ve seen.
There is no analysis in that article though. I’m not even sure he understands how state taxes work. Nothing against him, a lot of people, even in the tax field, don’t understand it (even the Maryland high court in Gore).
What I’m saying is that what Norquist appears to be afraid of is already the case today. And it’s fair to disagree with whether states should be allowed to impose income tax without physical presence nexus, but since it’s the present law, Wayfair isn’t going to change that.