Cyndi Lauper tells us that Girls just wanna have fun.
That can’t be said of Chief Justice John Roberts and his colleagues on the US Supreme Court! They passed over a real chance to have judicial fun earlier this month.
Here’s what happened.
Internet retail giant Amazon and its smaller competitor Overstock.com challenged a 2008 New York State law. The law requires on-line companies to collect New York state sales taxes on purchases by New York State residents. (By the way Overstock is a Delaware corporation with its principal place of business in Utah (what?)).
The New York Court of Appeals said: “No way, Jose!” (Or rather more accurately it gave judgement against Amazon and Overstock by 4 to 1). In giving judgement Chief Judge Jonathan Lippman commented: “The bottom line is that if a vendor is paying New York residents to actively solicit business in this state, there is no reason why that vendor should not shoulder the appropriate tax burden”.
Amazon and Overstock applied for leave to appeal to the US Supreme Court. This was declined. As is its custom, the Supreme Court gave no reason for that decision. They were dodging the ball on a big ticket item. New York State estimates that it lost US$1.8 billion in uncollected sales taxes. The best estimate for the US as a whole is $23 billion.
The buck has now passed to the US Congress – but the last time the US Supreme Court addressed this point of law it ended up deciding Congress should act. That was in Quill Corp vs North Dakota – in 1992!
Maybe one day the Justices will have some fun and address this $23 billion question. One would have to say that Judge Jonathan Lippman summed up what most people would see as common sense – if you’re operating there, pay your taxes there.
Put him in the Supreme Court – then maybe the Justices will have fun!
For more on Corporate Citizenship’s views on tax see our paper Tax as a Corporate Responsibility Issue