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Elena Kagan on Tax Reform
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Only Congress can allow out-of-state Internet sales tax
The Supreme Court ruled that states can require internet retailers to collect sales taxes, even if the merchant doesn't have a physical presence there. In a 5-4 ruling in favor of South Dakota and against online retailer Wayfair, the court decided that
states can require merchants to collect sales taxes for online purchases. Online shoppers who reside in one of the 45 states that have a sales tax should have been reporting and remitting those levies to their state of residence.The Supreme Court's
decision overturns a 1992 ruling in Quill Corp. v. North Dakota, which found that states could not require retailers to collect sales taxes unless they had a physical presence in the same place where the buyer is located.
Wikipedia summary of
court ruling:Majority opinion by˙Kennedy, joined by Thomas, Alito, Ginsburg, & Gorsuch, determined that the physical-presence rule of˙Quill˙was "unsound and incorrect." Roberts˙wrote the dissenting opinion, joined by Breyer,˙Sotomayor, & Kagan. ˙
Source: CNBC on 2018 SCOTUS case: "South Dakota v. Wayfair Inc"
, Jun 21, 2018
States can tax out-of-state earnings, even if taxed there
Maryland Residents who pay income tax to another jurisdiction for income earned in that other jurisdiction were not allowed a credit [in Maryland]. Held: Maryland's personal income tax scheme violates the dormant Commerce Clause, [the
doctrine barring state protectionism, and hence is disallowed]. Summary by Justia.comMaryland's income tax scheme discriminates against interstate commerce. If every State adopted Maryland's tax structure, interstate commerce would be
taxed at a higher rate than intrastate commerce. Alito delivered the opinion of the Court, in which Roberts, Kennedy, Breyer, and Sotomayor joined. Scalia, Thomas, Ginsburg, and Kagan dissented.
Excerpts from Dissent GINSBURG [joined by
Scalia and Kagan]: Today's decision veers from a principle of taxation repeatedly acknowledged by this Court: A nation or State "may tax all the income of its residents, even income earned outside the taxing jurisdiction."
Source: Justia.com on 2015 SCOTUS case: "Comptroller of MD v. Wynne"
, May 18, 2015
Railroads can sue for tax exemptions on other diesel users.
Justice Kagan wrote the Court's decision on CSX v. ALABAMA on Feb 22, 2011:
Alabama requires railroads that purchase diesel fuel to pay the 4% sales tax. Alabama exempts from the sales tax the main competitors of railroads--interstate motor and water carriers. The federal Railroad Revitalization and Regulatory Reform Act (4R) prohibits four forms of taxation that discriminate railroads. Three prohibitions concern property taxes. A fourth forbids a State to “impose another tax that discriminates against a rail carrier.” CSX seeks to prohibit Alabama from collecting the State sales tax from CSX.
HELD: Delivered by KAGAN, joined by ROBERTS, SCALIA, KENNEDY, BREYER, ALITO, and SOTOMAYOR
The State's collection at issue here is a tax. There is nothing in 4R that limits its definition to only an income tax. The plaintiff does not complain about the tax exemption given to others, it complains about the sales tax it must pay when other carriers do not. Discrimination means “the failure to treat all persons equally when no reasonable distinction
can be found between those favored and those not.” Competitors in interstate transportation get a tax exemption that railroads do not. These facts state a case worthy of considering by Alabama as to whether its tax exemptions discriminate against railroads in violation of 4R.DISSENT: Compared to broader tax base, no discrimination provable Filed by THOMAS; joined by GINSBURG
I would find that, in its context within 4R, the “another tax” clause harkens back to the three previous examples of discriminatory taxes given, all of which concern discriminatory tax policy in comparison with the class of other “commercial and industrial” taxpayers. CSX will not be able to show it was taxed differently than the general class of “commercial and industrial” taxpayers. The State's allowance of exemptions from a generally applicable tax to a few “commercial and industrial” taxpayers do not make the generally applicable tax discriminatory.
Source: Supreme Court case 11-CSX-AL argued on Nov 10, 2010
Page last updated: Mar 21, 2022