Case history and background - Kenneth
The South Dakota v. Wayfair, Inc. (2018) case took place during the twilight years of the e-commerce era: Ebay, Amazon, and Alibaba were about 25 years old at this point, and Etsy and Shopify weren’t much younger.
The major regulatory arbitrage issue many e-commerce platforms capitalized on: delegating the collection of sales and use taxes to the customer, was resolved by the Wayfair case, but it may have been a little too late: the brick and mortar age of retailing was experiencing it’s late stage collapse and Montgomery Ward, the mail order catalog predecessor to online ordering, had collapsed about 20 years before.
Quill Corp. v. North Dakota (1992) is the primary case that South Dakota v. Wayfair, Inc. takes issue with, and from where the departure from Stare Decisis begins.
Circumstances
The Syllabus to the Wayfair case points out that “Forty-one States, two Territories, and the District of Columbia have asked the Court to reject Quill's test.” (p. 12); the issue was described as a state of emergency by the states. the Quill test being a set of criteria that determines when it’s appropriate for a state to enforce sales and use taxes upon a merchant. define dormant commerce clause
South Dakota v. Wayfair case demonstrates the delicate balancing act the Supreme Court has to manage when satisfying the interest of the various parties involved, the Legislature via the Commerce Clause, the authority of State Governments to enforce and collect sales and use taxes, and the legitimacy of the Judiciary by upholding Stare Decisis or departing from precedent when appropriate.
National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, 87 S. Ct. 1389, 18 L. Ed. 2d 505 (1967)
Circumstances
National Bellas Hess is the main case that the Quill case takes as precedent for its decision. Quill upholds the decision made in Bellas Hess on the basis of Stare Decisis, suggesting that if Congress disagrees with Bellas Hess it is more than welcome to legislate against it, the Supreme Court, however, is required to respect Stare Decisis and uphold National Bellas Hess.
Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 279, 97 S. Ct. 1076, 51 L. Ed. 2d 326 (1977)
Circumstances
Decision
Complete Auto Transit v. Brady established four requirements to determine if a state tax imposition is valid on an out of state business; the four requirements are: the business must have a Substantial Nexus within the taxing state, the taxes must be Fairly Apportioned, the taxes must not discriminate against Interstate Commerce, the taxes must be Fairly Related to the services the taxing state provides.
National Geographic Soc. v. California Bd. of Equalization, 430 U. S. 551, 555, 97 S. Ct. 1386, 51 L. Ed. 2d 631 (1977)
Circumstances
Decision
5. Business, economic and social significance of the Court’s decision - Kenneth
Business Significance of South Dakota v. Wayfair, Inc. (2018)
The business significance of the South Dakota v. Wayfair case is the elimination of the Physical Presence requirement established in prior case history.
Operating locations for remote businesses such as catalog companies and e-commerce companies would become less influenced by tax efficiencies, and more by logistical efficiencies.
Businesses can disperse operating locations throughout the United States rather than concentrating them in a particular location since the tax regime post Wayfair made the previous tax efficiencies irrelevant. If you are going to pay the same taxes either way, you might as well save money on gas.
Response to Collection Requirements
How they managed this
Development of sales tax software
modern technology would make this problem less of an issue.
even though the Court in Quill accepted that a physical presence in a state was not required to establish a substantial nexus in a state for due process purposes.
Businesses operating in a local tax jurisdiction would not be placed at a price disadvantage relative to businesses operating remotely as a result of sales and use tax collection policies.
South Dakota v. Wayfair leveled the playing field between businesses that operate locally and businesses that operate nationally, and also leveled the playing field between brick and mortar merchants and remote merchants.
operationally efficient because doing so would result in a physical presence in a greater number of tax jurisdictions.
less influenced by tax jurisdiction efficiencies in considering expansion
more by logistical efficiencies.
Economic Significance of South Dakota v. Wayfair, Inc. (2018)
Tax Collection Results in the aftermath of the South Dakota v. Wayfair decision.
Add details
Details about state budgets
Build out of distribution networks, rather than concentration of distribution networks in the aftermath of the South Dakota V. Wayfair decision.
Add details
Physical Presence requirement for the purposes of avoiding state sales tax collection.
Local businesses' benefit by avoiding price disadvantage relative to out-of-state businesses
Cultural Significance of South Dakota v. Wayfair, Inc. (2018)
Technological aspect of cultural impact
Online influencer culture selling merch on instagram tiktok
The composition of Justices in the Majority Opinion and the Dissenting Opinion in South Dakota v. Wayfair (2018) appears to be two sets of odd alliances to a casual observer of Supreme Court Cases.
The Majority Opinion includes: Kennedy, Thomas, Ginsburg, Alito, and Gorsuch. (p.13)
The Dissenting Opinion includes: Roberts, Breyer, Sotomayor, and Kagan (p.13)
A casual observer would more likely be exposed to civil rights and civil liberties cases, in which case it’s less likely that Ginsburg and Alito, or Roberts and Sotomayor would both be on the same side of an opinion.
The cultural significance is that the conservative and liberal divide of the Supreme Court doesn't seem to hold in commercial cases the way it does in civil rights and civil liberties cases.
The shift away from stare decisis being considered the primary reason for agreement for a prior decision in the Supreme Court
This is the cultural significance of the case, not the cultural impact of the case, commercial law doesn't really have a cultural impact, the cultural significance is that the conservative and liberal divide of the Supreme Court doesn't seem to hold in commercial cases the way it does in civil rights and civil liberties cases.
, however, the decision of a case comes after the petitioner and respondent make their arguments
Decision The Supreme Court in the Wayfair case breaks with Stare Decisis on the grounds that Stare Decisis is not an inexorable command and that the Legislature is not responsible for fixing a flawed precedent set by the Supreme Court, rather the Supreme Court is responsible for fixing flawed precedent even if it means breaking with Stare Decisis.
Decision The tests of the Quill case involve: a due process Minimum Contacts test, a interstate commerce clause Substantial Nexus test, a Physical Presence test established in National Bellas Hess, and a Fairly Apportioned test, meaning the taxes levied upon a business are commensurate with the services that the state provides to the business.
I'm considering removing the decision section of the part 1 presentation.
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