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In the Digital Update - Taxing Web Purchases (textbook pg 363), the U.S. Supreme Court ruled in 1992 that an individual state cannot compel an out-of-state business that lacks a substantial physical presence within that state to collect and remit state taxes. Congress has the power to pass legislation requiring out-of-state corporations to collect and remit state sales taxes, but it has not yet been done so. Thus, only online retailers that also have a physical presence within a state must collect state taxes on Web sales made to residents of that state. (State residents are supposed to self-report their purchases and pay use taxes to the state, which they rarely do.) Read the remainder of this article for more information on this topic.
Some argue that if online retailers must pay sales taxes in jurisdictions in which they have no physical presence, they have no democratic way to fight high taxes in those places. Is this an instance of taxation with representation? Do you agree/disagree with the main points in this article?
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