Supreme Court News

Posted on December 2, 2013 by

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Two Federal appeals have been addressed by the United States Supreme Court today.  First, the Court refused to hear an appeal from Amazon.com which had argued that it should not be required by the State of New York to collect sales taxes the same way as physical retailers do since it does not have a “physical presence” in New York. The physical presence test had arisen in a 1992 Supreme Court case of Quill v. North Dakota.  That case was based on the Commerce Clause and basically asserted that the Federal government was the best (correct) venue for tax statutes affecting interstate commerce.  That case sounds pretty reasonable, and Congress hasn’t taken any action since.  New York courts however ruled that a physical presence could be indicated by the in-state existence of some sort of affiliate creating a “nexus” between Amazon (or Overstock.com) and the state. In refusing to hear the appeal that upheld the state statute, the Court has left online retailers and consumers in an ambiguous position.  Will other states now rush to tax on the same theory?  I don’t know, but I say probably, because frankly, governments love revenue, wherever it comes from.  The bigger question is whether online markets should be taxed at all.  The main argument in support of taxation is that it isn’t fair to physical retailers to make them collect sales taxes while not requiring online retailers to do so.  But that is a false argument.  While physical retailers in a state are collecting sales taxes for services rendered to them, online retailers without any presence are simply collecting taxes for nothing in return.  And consumers are also paying those taxes even though it costs the state no money to service those retailers or to provide any extra service to the consumer.  This is nothing but revenue raising without any benefit. We will see what happens in the states, but I am not hopeful.

The other case was an appeal from Liberty University seeking clarification regarding the Obamacare individual mandate.  The Supreme Court refused to take the case. This decision was not surprising.  Last summer the Court had held the mandate to be constitutionally permissible, so the Court probably reasoned that an appeal was useless.  It could have been an opportunity to reverse what must be called a really bad opinion in that earlier Sebelius case, but alas, the Court failed to seize it.  But there are other differently grounded cases coming, so the Liberty case is no reason for despair.  In the meantime there is some hope that Obamacare will collapse on itself.

The “take away” from these cases is:  Don’t put too much weight on appealing to the Supreme Court.  It only takes a very few appeals and even when it does, it all too often disappoints.  The electoral route is still the best, though how much longer, no one can know.  And for Christians, remember who is ultimately sovereign. 

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