The US Supreme Court overturned Quill v. North Dakota. In its 5 to 4 South Dakota v. Wayfair decision yesterday, the high court ruled that a state may require online retailers to collect sales tax, even if the retailer does not have a physical presence in the state. TPC’s Howard Gleckman says the ruling largely resolves a decades-old controversy. And it flips the burden of Congress: Until yesterday states were limited in their ability to collect sales taxes while they awaited congressional or judicial action. Now, they’ll be free to require retailers to collect unless Congress blocks them. Chief Justice John Roberts wrote the dissenting opinion, arguing that it should be up to Congress to reverse the physical presence standard. TPC will host a conference on the ruling on Tuesday featuring US Senator Heidi Heitkamp (D-ND). To register, click here.
Coming next week: A post-card sized tax form. Treasury Secretary Steven Mnuchin promises the department “will be unveiling the new 1040, and it will be a postcard as we've promised, and hardworking taxpayers won't have to spend nearly as much time filling out their taxes.” TPC’s Howard Gleckman has noted that the Tax Cuts and Jobs Act likely results in cutting only five or six lines from the current two-page 1040. Yet to be determined: Whether anybody will care, since nearly all individual returns are now filed electronically.
In Oregon, a state senator takes the Department of Revenue to state tax court. Senator Brian Boquist says the state legislature needed a three-fifths supermajority to pass the bill that disconnects Oregon from federal tax changes. The state constitution sets that standard for any bill that raises revenue. While the measure didn’t increase state taxes, it removed the 20 percent deduction for pass-through businesses that the TCJA created.
Cupertino, California taps the brakes on a head tax. The city was planning to follow Seattle’s lead by levying a tax-per-employee on local firms. But the city council voted 3-1 to take another year to work with the business community, including big employer Apple, to develop a viable plan. Mountain View is the only Silicon Valley city that still plans to proceed with such a tax this year.
Are EU competition regulators guilty of overreach? Fiat Chrysler and Luxembourg accused the European Commission of acting as a supranational tax authority for the European Union when it blocked a 2015 tax deal between the automaker and the nation. Fiat ended up with a $35 million tax bill after the European Commission took issue with an earlier Luxembourg tax cut. Said Fiat’s attorney: “Let there be no doubt, the Commission is trying to make new law in this case. The Commission acted as a supranational tax authority, even as a supernatural tax authority.” The attorney, as yet, has not been accused of super hyperbole.
Australians may soon see $106 billion in personal income tax cuts over ten years. The Australian senate passed the tax cut this week, the centerpiece of Prime Minister Malcom Turnbull’s budget. He hopes parliament will pass corporate tax cuts next week. Turnbull will l seek another three-year term in 2018.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at [email protected]. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
