What is the State's Right to Tax?

States have a need, a right and a duty to collect taxes from their citizens to pay for services demanded by those citizens.  A sales tax on goods and services where applicable, is accepted and that the state may pass laws to enforce their payment is not in dispute including requiring, as a condition of doing business in that state, a merchant must collect and remit sales taxes for certain goods and service.

The state may require a license to operate in their state. They may demand code inspections, fire inspections and provide police and fire protection. All of those services and regulatory functions which do not apply to any business located in another state.

The New York Legislature recently enacted a law dubbed "the Amazon Tax" which attempts to make Amazon.com liable for the collection and payment of sales taxes on goods shipped to New York residents.

A 1992 Supreme Court decision, Quill vs. North Dakota, the Supreme Court ruled that out-of-state retailers cannot be required to collect sales tax on purchases sent to states where they did not have a physical presence. One valid rational for that decision is the almost incomprehensible complexity and burden trying to track thousands of taxing jurisdictions individual rates, match those rates to customers and file the necessary monthly paperwork and mail checks to each of 50 different state.  None but a very few very wealthy corporations could muster the software and bookkeeping infrastructure necessary to manage such a complex task. Full time staff would likely be required just to keep pace with local tax rates and filing out paperwork for each state. A small mom & pop operation simply could not comply.

With no physical presence in the state, Amazon is not subject to New York's jurisdiction says their suit.

Most states have instituted an honor system that requires their own citizens to report these purchases and pay the sales tax. Obviously many people don't know about these laws and likely, few would ever report and pay the tax anyway.  But that is an internal problem for each state that does not justify an intrusion into private business in other states. They can't be permitted to demand that someone outside their own borders be responsible for the collection of their own taxes.

No state should have the right to impose a duty upon the citizen or business of another state to collect taxes on it's behalf.