Broadening or Redefining the Base
July 6, 2009
A recent Op-Ed in the Los Angeles Times makes the claim that “Amazon Taxes” are just a broadening of the tax base:
A better approach would be to make the sales tax requirement broader. Not to require more or higher sales taxes, but to require any online seller that sells to Californians to add the appropriate tax instead of leaving it to the buyer to add it up and pay it separately.
Amazon taxes represent an attempt to do more than broaden the base but to fundamentally redefine that base. The standard determination of sales tax liability has been based around the physical presence determination. This understanding has been upheld by the Supreme Court through the 1992 decision in Quill Corp. v. North Dakota.
Taxes which redefine the base to include the taxation of non-voting out-of-state business create greater complexity, less neutrality and distort economic decision making. All this and they might violate the Constitution.