Online sales to be taxed

The share prices of firms like Etsy, Ebay, Overstock and Amazon—which has Nevada facilities—dropped like a rock on June 21 following the U.S. Supreme Court ruling in South Dakota vs. Wayfair.

That decision overturned a 1992 ruling by the court and widened the reach of sales taxes for online sales. The older ruling said firms needed to collect sales taxes only in states where they had a physical presence—warehouses, stores or a corporate headquarters.

Some analysts said Amazon is likely to be hurt less than other websites because it already collects sales taxes in all states. Not surprisingly, one of those who gets this wrong is Donald Trump, who has attacked Amazon on the matter: “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt—many jobs being lost!” read one inaccurate Trump tweet.

Ebay sent messages to its regular customers urging them to sign a petition saying “these new Internet tax burdens could permanently damage U.S. small businesses.” In 2017, Ebay had revenues of $9.7 billion.

Wayfair, Inc., previously called CSN Stores, began as a two-person operation in Boston selling home furnishings. It now operates in four more countries. Wayfair and two other retailers were sued by the South Dakota state government for not collecting a 4.5-percent sales tax required of companies that reach a certain threshold of sales or revenues in the state.

The ruling also reversed a 1960s Supreme Court decision involving mail order catalogs that said states cannot require businesses elsewhere to collect on their behalf. Legal scholars said the new ruling recognizes changing times and the evolution of the economy.

The lineup of justices was unusual. The five-justice majority is composed of Anthony Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch, leaving John Roberts, Stephen Breyer, Sonia Sotomayor and Elena Kagen in the minority.