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Why the Supreme Court should overrule Quill

In ‘Quill Corporation v. North Dakota’, the US Supreme Court held that, under the dormant Commerce Clause of the US Constitution, the states cannot require out-of-state vendors to collect sales taxes because such vendors lack physical presence in the taxing state. As internet commerce has grown, Quill’s physical presence test has severely hampered the states’ ability to enforce their sales taxes since the states cannot obligate out-of-state internet firms to collect the taxes attributable to their respective sales.

Much of the Supreme Court’s case law suggests that, under the banner of stare decisis, the Court should not overturn Quill. This case law indicates that it is Congress’s job to modify or reject the physical presence test established in Quill. Quill was decided under the dormant Commerce Clause and thus can be overturned by Congress. The Court has repeatedly indicated and stated in Quill itself that Congress should correct the Court when Congress has the authority to do so.

However, a careful assessment of the federal political process suggests a contrary conclusion, namely, that the Supreme Court itself should overturn Quill in the Court’s role as guardian of the states against federal commandeering. A combination of factors supports this conclusion: the tactical advantage which Quill bestows in the political process upon the internet sales industry, the importance of the states in the structure of federalism, the centrality of sales taxes to the financing of state government, the severe impediment which Quill and its physical presence test impose upon the collection of these taxes, and the unique disadvantages of the states in the federal legislative process.

In our system of federalism as it exists today the states are structurally important, but politically disadvantaged. Federal legislators receive no political benefits from helping the states. This contrasts with the political support – votes and campaign contributions – private groups bestow for legislative backing.

Quill effectively commandeers the states to subsidize internet commerce by not taxing it. Quill also hands great political advantage to the defender of the status quo, the internet sales industry which effectively sells its goods sales tax-free because of Quill’s physical presence test. In the federal law making process, defenders of current law have the politically easier task of blocking change in a process which affords them many opportunities to do so. Quill gives that tactical advantage to the internet firms which need merely impede legislation to preserve the status quo – as they have done successfully for over two decades.

South Dakota’s Supreme Court has agreed to hear oral argument this month in ‘South Dakota v. Wayfair, Inc., a case challenging the continuing validity of Quill and its physical presence test. After the South Dakota court addresses this litigation, the US Supreme Court should take this case and, as protector of the states from federal commandeering, should itself overturn Quill.

Quill is an anachronism. The states should be permitted to impose sales tax collection responsibilities on out-of-state firms which sell on the internet.

Featured image credit: Quill Headquarters by Quill Corporation. CC-BY-SA-4.0 via Wikimedia Commons.

Recent Comments

  1. Bill Jense

    This is bull 1: The USSC job is to protect the constitutionality of laws. 2: State make zero effort to even attemp to collect uses taxes. 3: Stop acting like Sales Taxes are the only way to raise funds for States. 4: Federalism core value are State are micro governments. 5: As a out of State business What you are asking for of my company is to be your unpaid tax collector. What are my rights and who is my out of State Representatives? That has my interests. Did we the people not go to war with England over “No taxation with out representation”. This is what you really want?

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