In a bet that the U.S. Supreme Court is ready to change its mind, Washington state lawmakers are considering trying to collect vastly more tax revenue from online shoppers.
A budget approved Thursday by the state House counts on that gamble paying off.
Democrats spearheading the move say they’ve waited long enough for Congress to let states collect sales tax from Internet businesses.
The high court has said for decades that unless Congress changes the law, state governments may collect sales tax only from sellers that have a physical presence in their states.
The plan “will run smack into the physical presence standard,” said Steve DelBianco, executive director of e-commerce trade group NetChoice.
Justice Anthony Kennedy has invited a challenge to that precedent. He did so in a recent opinion in which he said the current system is “inflicting extreme harm and unfairness on the States.”
But Rep. Drew Stokesbary, R-Auburn, said it would be irresponsible for the Legislature to “go out on a limb” by budgeting for millions of dollars in new revenue based on the words of a single justice, who might have no allies in his position.
And DelBianco contends that even if the court does make the change, websites might be able to take shelter under a separate constitutional provision related to due process.
At the request of House budget writers, the revenue department drew up a legal strategy for expanding sales tax obligations. But the department says the strategy comes with risk.
By targeting internet transactions, this tax would harm our state’s growing tech industry. In fact, the Illinois Supreme Court recently invalidated a similar law because it violated the federal Internet Tax Freedom Act, which prohibits discriminatory taxes on electronic commerce.
But most importantly, I oppose this proposal because it is unconstitutional under current Supreme Court case law. The proceeds of this new tax would go toward K-12 education, so the Legislature would literally be gambling education funding on reversing Supreme Court precedent. Our kids, teachers, and schools deserve better.