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Supremes' Decision Branded Online Taxation Without Representation

The Supreme Court's decision that states can require online retailers to collect and remit state sales taxes from sales to state residents, even when those retailers have no physical presence in the state, drew immediate response, including pushback from low-tax and high-tech groups.

The decision opened the door to potentially billions in new online taxes that retailers will have to pony up to states, which means either raising costs on those online goods or lowering their profit margins.

Related: Supremes Allow States to Tax Online Retailers

Americans for Prosperity Policy Manager Mary Kate Hopkins was not pleased with the court's ruling.

“Today’s Supreme Court decision opens the floodgates to states asserting the power to tax and regulate any business, anywhere across the country regardless of their physical location, simply because they use the internet," she said. "Allowing states to reach across borders and collect state taxes from online retailers is taxation without representation that will harm small businesses the most. Critical constitutional limitations on states’ power to regulate and tax exist to protect our liberties, and today the Supreme Court failed to uphold those liberties."

The Computer & Communications Industry Association, whose members include big edge-player retailers including Amazon and Google, was unsurprisingly unhappy as well, also invoking the "taxation without representation" theme.

"Today’s decision promises to subject small businesses reliant on e-commerce to new and burdensome tax obligations in states across the nation," said CCIA President Ed Black. "As we approach the celebration of our nation’s independence, we should recall that taxation by a remote government was an injustice that animated the founding of our nation. CCIA has serious concerns about the future implications for e-commerce if governments are empowered to tax those who reside beyond their borders.”

The Institute for Policy Innovation had filed a brief with the court asking it to strike down the South Dakota law.

“In today’s Wayfair decision, the Supreme Court overturned 25 years of its own precedent and decided that states will be able to assess sales taxes on internet transactions, siding with the state of South Dakota against Wayfair and other online sellers," said institute president Tom Giovanetti, who also sounded ready to throw some tea overboard. "The decision leaves e-commerce and especially small sellers extremely vulnerable to states gluttonous for tax revenue particularly from consumers and businesses with no representation in their state. If that sounds to you like taxation without representation, you’re right."

He called for tailored legislation that would help those small businesses.

“The Supreme Court’s decision today on internet sales taxes risks creating a complex web of state-by-state tax rules that startups will have difficulty navigating," said 'net startup advocate Engine. "This ruling will likely increase costs for small internet startups trying to sell products across the nation. Forcing early stage companies to devote scarce resources to understanding dozens of different tax jurisdiction rules will put them at a clear disadvantage to large incumbents. We urge Congress to step in to help prevent this ruling from hurting the very startups which are driving our nation’s economic growth and innovation.”