revenue

States are increasingly pursuing new streams of revenue to effectively operate and minimize debt. Some states have established or are pursuing a “millionaire’s tax” to minimize budget shortfalls and increase state revenue. The tax is primarily an income tax. California, Connecticut, New Jersey and New York have all established a such a tax. Massachusetts chose to not enact their version of the millionaire’s tax. In Arizona, a ballot measure is up for approval. Every state’s tax structure is different, but it boils down to taxing an individual which makes upward of $250,000 or more.

In March 2015 Justice Kennedy wrote a concurring opinion stating that the “legal system should find an appropriate case for this Court to reexamine Quill.” A new challenge coming out of South Dakota might be just the case Justice Kennedy had in mind. 

In Quill Corp. v. North Dakota, decided in 1992, the Supreme Court held that states cannot require retailers with no in-state physical presence to collect sales tax. Justice Kennedy criticized Quill in Direct Marketing Association v. Brohl for many of the same reasons the State and Local Legal Center stated in its amicus brief. Specifically, internet sales have risen astronomically since 1992 and states are unable to collect most taxes due on sales from out-of-state vendors.

The State and Local Legal Center (SLLC) has filed an amicus brief in the Ohio Supreme Court urging it to rule that Ohio’s commercial activity tax (CAT) applies to online vendors who sell in the state. The SLLC argues the holding of Quill Corp. v. North Dakota (1992), that states cannot require retailers with no in-state physical presence to collect use tax, should not be extended to a privilege-of-doing-business tax.