Our Opinion: 'Wayfair' decision benefits state, traditional retailers
For internet shoppers all over America — including in Massachusetts — the tax-free party's over. The decision is a victory for brick-and-mortar stores and should bring needed revenue into the state's coffers.
Last Thursday, the U.S. Supreme Court, in a 5-4 decision, found in favor of the state of South Dakota by ruling that states have the authority to tax online sales whose destinations lie within their borders (Eagle, June 22). "Wayfair," as the decision is known (taken from the name of the Boston-based online retailer that was the defendant in the case) is significant because "nexus," an esoteric term that describes the point at which a state can impose its sales tax-collecting authority, was redefined to include even virtual sales through websites. Previously, "nexus" required a brick-and-mortar presence or employment of a resident in a state by a retailer also doing online business there. The ruling opens the door for Massachusetts and other states to collect sales taxes from on-line retailers..
Massachusetts has been attempting to jury-rig laws enabling it to collect from on-line retailers, and indeed Amazon has been remitting Massachusetts sales taxes thanks to a deal crafted during the Patrick administration. Writing for the majority however, Justice Anthony Kennedy observed that "Statutes of this sort are likely to embroil courts in technical and arbitrary disputes about what counts as a physical presence." The decision by the Court creates a cleaner playing field.
Because of Wayfair, state government officials could close an estimated gap of $169 million to $279 million in tax revenue that had been lost to sales by companies operating over the internet. Less apparent to the average Massachusetts taxpayer, but just as important, is the effect that the Wayfair decision could have on a compromise agreed to by stakeholders and the Legislature last week. This came in the wake of a state Supreme Judicial Court ruling that the proposed "Millionaire Tax" ballot question was unconstitutional for technical reasons (Eagle, June 19). That tax would have imposed an additional 4 percent levy on earnings over $1 million, and it was being counted on to offset yet another ballot question that would have lowered the 6.25 percent sales tax to 5 percent
The Legislature's compromise crafted a phased in increase in the minimum wage and family leave benefits while maintaining the sales tax should negate the financial mess the referendum questions would have caused, and the Wayfair decision has the potential to draw in revenue while forcing online retailers to be subject to the same sales tax that brick-and-mortar retailers must pay. With the playing field leveled, the regular calls for the sales tax to be reduced may disappear, and the traditional stores buffeted by online retailers will catch a deserved break.
Unlike far-off on-line retailers, local stores pay taxes to their communities, provide jobs and support local charitable organizations, youth leagues and other beneficial organizations. When they suffer here in the Berkshires, the towns and cities of the Berkshires suffer as well. The Court's Wayfair decision should put an end to an unfair situation that arose with the unanticipated rise of online retailers to the benefit of the small retailers that are critical to the Berkshire economy.
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