Sales tax, the Way-not-fair ruling, and the last day of duty-free online shopping in Arizona

Today marks the last day in Arizona one can buy and sell goods online without paying racketeering fees—also known as taxes—to the state government.

What at first was plunder assumed the softer name of revenue.

– Thomas Paine, The Rights of Man

Since the birth of mail order catalogs, people in the United States have been free to exchange value for value across cities and states without having to pay their local taxmen. In 1967, in National Bellas Hess v. Department of Revenue of Illinois, the U.S. Supreme Court affirmed this fact: Out-of-state resellers were not required to collect sales tax unless they had some physical contact with the state.

The Court revisited the issue in Quill Corp. v. North Dakota. In one of their earliest attempts to understand the internet, they upheld the Bellas ruling: Online purchases could only be taxed if bought from a vendor with a physical presence in the state.

This has been the understanding for decades. And this is why we all pay sales taxes on Amazon but not at New Egg or eBay: Amazon’s network of distribution centers and delivery trucks makes them one of the few online retailers with a physical presence in almost every state.

In 2018, using thinking that disregards 500 years of legal theory—look up stare decisis—the Supreme Court overturned 50 years of precedent: States not only can require resellers to collect taxes, they can also tax marketplace facilitators—like eBay, Etsy, and Reverb.

The Court majority opined in South Dakota v. Wayfair that “the Internet’s prevalence and power have changed the dynamics of the national economy.” Justice Anthony Kennedy then accused anyone who doesn’t pay taxes on their online purchases of tax evasion.

Predictably, within six months of the ruling, 31 states passed laws requiring online buyers to pay taxes and sellers to collect them. Arizona not-so-politely gave us an extra nine months of duty-free online shopping. That ends tomorrow.

State and local governments are pissed off and have been since the first day Amazon sold a book. According to the Court, in 2017 alone, they failed to confiscate another $13.7 billion in tax revenue—as though they have some natural right to yet another 8.6% of each person’s money, as though they add actual value to our purchases, as though human life itself would cease without them.

Every tax we pay is a slap in the face of our very existence.

Income taxes remind us we owe the government a portion of our labor. Little difference exists between the American toiling away until April 16—the day each year she finally starts working for herself—and the serf paying part of his crop to a feudal lord.

Little difference exists between the American toiling away and the serf paying part of his crop to a feudal lord.

Property taxes remind us we do not truly own our own homes. And worse, we cannot be trusted to decide where and how our—and other people’s—children should be schooled.

Sin taxes—those levied on gambling, tobacco, alcohol, marijuana, super-sized sodas, and fatty foods—remind us our bodies do not truly belong to us. We are too stupid and irresponsible to make own our choices.

Sales taxes remind us we cannot be trusted to do business with each other without the benevolent hand of government watching our every move. Like the mafia demanding payment for services we never asked them to provide, state governments actually believe we owe them something for exchanging values with other human beings on their turf.

Arizona is so bold they do not even try to hide this attitude: They call their sales taxes “transaction privilege taxes,” and describe them as “a tax on the vendor for the privilege of doing business in the state.”

When are we, as a species, going to realize that American states, like all governments, extort money from the very people they purport to protect, then convince those people its for their own good? Are they supposed to be grateful? Are they supposed to believe, to paraphrase former Supreme Court Justice Oliver Wendell Holmes, taxes are the price they pay for civilization? Are we?

Anything worth doing or owning in life can and should be done or bought by choice. Shoving a gun in one’s face and demanding their money in exchange for schools, prisons, zoos, buses, roads, and professional sports stadiums is not civilization; it’s theft.