I'm sure you're all aware of the ongoing civil war between e-commerce and brick-and-mortar retail, which has led to a currently ongoing U.S. Supreme Court case determining whether or not If there should be an online sales tax to dissuade people from shopping online in a last-ditch effort to save shopping malls, retail chains, and small businesses. The case in question is known as South Dakota v. Wayfair, Inc. which is related to a similar case in 1992 known as Quill Corp. v. North Dakota where North Dakota tried to force Quill Corp. (which was a mail-order shop based outside the state) to pay taxes for sales shipped into the state.
The U.S. Supreme Court eventually ruled in favor of Quill Corp. saying that states cannot charge sales taxes to a "vendor whose only contacts with the taxing state are by mail or common carrier." Although the ruling was made in a different era, it would seem to apply to online retailers. The real question is whether or not If the nature of business has changed enough to the point where the U.S. Supreme Court needs to reconsider the rule. The ruling that was made in favor of Quill Corp. by the U.S. Supreme Court is actually an interpretation of the U.S. Constitution's Commerce Clause, whose mainly concerned with the federal government's ability to regulate the national economy without interference from the states.
Because the Quill Corp. decision is merely an interpretation of the Commerce Clause, the U.S. Supreme Court could uphold the U.S. Constitution and still throw out Quill Corp.'s physical presence requirement. So what are the Constitutional boundaries? Well for one, the Commerce Clause limits states' taxing of sales between two or more states. So in other words, the Commerce Clause doesn't care about a regular sale that happens entirely within one state, but it's triggered when a sale involves two or more states ("interstate"). The Commerce Clause doesn't forbid taxes on any interstate sale as it only prohibits those taxes which would interfere with the federal government's plans to regulate the national economy.
The U.S. Supreme Court tried to narrow this down over time when in 1977 they came up with a four-factor analysis to determine whether or not If the Commerce Clause was being violated by a state tax (Complete Auto Transit, Inc. v. Brady). These are the four factors listed within our infographic. Now the fourth "substantial nexus" factor is where South Dakota v. Wayfair, Inc.'s controversy lies. The Quill Corp. decision which came 15 years after the U.S. Supreme Court established the four-factor analysis, decided to narrow the substantial nexus factor even further.
Now apparently the substantial nexus factor has something to do with a company's footprint in the state meaning that a state cannot tax a company that isn't substantially connected to the state in a certain way. Quill Corp. decided that having a substantial connection with a state must at least include a physical presence there where as the U.S. Supreme Court thought that the clarity of of the physical presence requirement outweighed its potential arbitrariness. They later admitted that the rule "appears artificial at its edges" but said the artificiality "is more than offset by the benefits of a clear rule".
This coming June the U.S. Supreme Court will decide whether to reformulate the substantial nexus requirement and ditch the physical presence requirement. Perhaps they'll find that a substantial economic connection with a state is more apt than a physical presence. They might choose to leave the physical presence requirement intact but choose to redefine it. For example, Massachusetts has declared that companies that place cookies on Massachusetts' residents computers are physically present in the state. In Illinois, Snickers are taxed at a higher rate than Twix because foods containing flour doesn't count as candy.
Bottom line is that If the U.S. Supreme Court overrules the Quill Corp. decision, or otherwise reformulates the substantial nexus requirement to include broader relationships between companies and states, then consumers will end up paying more for online purchases where states will gain a significant amount of money to spend on general budget items like public schools, departments, and programs. Online retailers like eBay would go out of business from having to overcharge their products because they would be required by law to collect sales taxes nationwide since tax rates and rules tend to vary by state, city, and county.
So you're probably wondering how this will all impact the Online Singles Market for Trading Card Games / Collectible Card Games. For one there would be less people buying online card singles to help complete their decks because they already know that the LGS has a hard time carrying them due to low supply and high demand. The LGS isn't going to go back to the way it was before e-commerce exploded when we still had to rely on pricing guides with Scrye Magazine and InQuest Gamer. E-commerce has made it to where people are no longer obligated to play the booster box lottery anymore where all the proceeds they end up saving for themselves could've went to help keep their LGS from closing it's doors for good.
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta
So the U.S. Supreme Court finally reached a verdict today on the South Dakota v. Wayfair case involving Online Sales Taxes which was ruled on a 5-4 decision that struck down the longstanding legal precedent that businesses don't have to collect internet sales taxes on behalf of states where they don't have a physical presence. The reason was that the physical presence rule decided from the Quill Corp. v. North Dakota 1992 case was "unsound and incorrect" in the current age of Internet services.
Only Congress can save online retailers from drowning in a paperwork flood that money-hungry state and local governments will be directing their way. If the decision is correct on the law, then it must be taken as a signal that the law must change. Otherwise it would mean that small online retailers on Amazon, eBay, and Etsy could no longer do business unless they're willing to keep records and make regular tax payments, even If the amounts are trifling, to as many as 9,998 different state and local sales tax jurisdictions that each have their own forms and tax rates.
To make matters worse, the various jurisdictions don't even agree on what gets taxed. Using its power to regulate interstate commerce, Congress can create a new standard, or restore the old one, in black-and-white, replacing a less-certain judicial creation, and prevent state and local governments from burying the national market under a landslide of tax paperwork. I guess the real question is whether or not If Congress can manage to pass some sort of legislation regarding this without President Trump threatening to veto.
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta
Calling sales tax "the death of e-commerce" is one of the click-baitiest thread titles I've seen in a while. It's a small percentage that doesn't even begin to bridge the gap between an online store vs. a brick and mortar store. Online stores have lower overhead due to smaller and less expensive physical locations - they can literally be anywhere and don't need expensive, high-visibility store fronts with lots of room for customers.
Calling sales tax "the death of e-commerce" is one of the click-baitiest thread titles I've seen in a while. It's a small percentage that doesn't even begin to bridge the gap between an online store vs. a brick and mortar store. Online stores have lower overhead due to smaller and less expensive physical locations - they can literally be anywhere and don't need expensive, high-visibility store fronts with lots of room for customers.
It isn't just sales tax which I assume you're referring to regular shipping when this ruling essentially adds a state tax to products where the prices vary from cities, districts, and counties within the United States. It doesn't stop consumers from purchasing products online when all it does is make it more expensive in order to help level the playing field with physical retail. The real question is just how expensive will it get under the tax paperwork and whether or not Congress will step in to help ease the burden for online retailers.
My biggest concern is how it will drive the cost of card singles for TCG's to a point where consumers will have no choice but to buy/trade from their LGS. Don't get the wrong idea, I'm all for supporting my LGS but I also like the convenience of being able to purchase specific cards, sleeves, and deck boxes online that my LGS doesn't carry If it's out of print or If my local distributor is unable to get any in stock. Either the situation isn't as bad as it seems or TCG communities aren't really aware of what's going on.
As for the thread title I apologize for blowing it out of proportion, it's just that I was deeply concerned about how it would affect the TCG Market.
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta
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The U.S. Supreme Court eventually ruled in favor of Quill Corp. saying that states cannot charge sales taxes to a "vendor whose only contacts with the taxing state are by mail or common carrier." Although the ruling was made in a different era, it would seem to apply to online retailers. The real question is whether or not If the nature of business has changed enough to the point where the U.S. Supreme Court needs to reconsider the rule. The ruling that was made in favor of Quill Corp. by the U.S. Supreme Court is actually an interpretation of the U.S. Constitution's Commerce Clause, whose mainly concerned with the federal government's ability to regulate the national economy without interference from the states.
Because the Quill Corp. decision is merely an interpretation of the Commerce Clause, the U.S. Supreme Court could uphold the U.S. Constitution and still throw out Quill Corp.'s physical presence requirement. So what are the Constitutional boundaries? Well for one, the Commerce Clause limits states' taxing of sales between two or more states. So in other words, the Commerce Clause doesn't care about a regular sale that happens entirely within one state, but it's triggered when a sale involves two or more states ("interstate"). The Commerce Clause doesn't forbid taxes on any interstate sale as it only prohibits those taxes which would interfere with the federal government's plans to regulate the national economy.
The U.S. Supreme Court tried to narrow this down over time when in 1977 they came up with a four-factor analysis to determine whether or not If the Commerce Clause was being violated by a state tax (Complete Auto Transit, Inc. v. Brady). These are the four factors listed within our infographic. Now the fourth "substantial nexus" factor is where South Dakota v. Wayfair, Inc.'s controversy lies. The Quill Corp. decision which came 15 years after the U.S. Supreme Court established the four-factor analysis, decided to narrow the substantial nexus factor even further.
Now apparently the substantial nexus factor has something to do with a company's footprint in the state meaning that a state cannot tax a company that isn't substantially connected to the state in a certain way. Quill Corp. decided that having a substantial connection with a state must at least include a physical presence there where as the U.S. Supreme Court thought that the clarity of of the physical presence requirement outweighed its potential arbitrariness. They later admitted that the rule "appears artificial at its edges" but said the artificiality "is more than offset by the benefits of a clear rule".
This coming June the U.S. Supreme Court will decide whether to reformulate the substantial nexus requirement and ditch the physical presence requirement. Perhaps they'll find that a substantial economic connection with a state is more apt than a physical presence. They might choose to leave the physical presence requirement intact but choose to redefine it. For example, Massachusetts has declared that companies that place cookies on Massachusetts' residents computers are physically present in the state. In Illinois, Snickers are taxed at a higher rate than Twix because foods containing flour doesn't count as candy.
Bottom line is that If the U.S. Supreme Court overrules the Quill Corp. decision, or otherwise reformulates the substantial nexus requirement to include broader relationships between companies and states, then consumers will end up paying more for online purchases where states will gain a significant amount of money to spend on general budget items like public schools, departments, and programs. Online retailers like eBay would go out of business from having to overcharge their products because they would be required by law to collect sales taxes nationwide since tax rates and rules tend to vary by state, city, and county.
So you're probably wondering how this will all impact the Online Singles Market for Trading Card Games / Collectible Card Games. For one there would be less people buying online card singles to help complete their decks because they already know that the LGS has a hard time carrying them due to low supply and high demand. The LGS isn't going to go back to the way it was before e-commerce exploded when we still had to rely on pricing guides with Scrye Magazine and InQuest Gamer. E-commerce has made it to where people are no longer obligated to play the booster box lottery anymore where all the proceeds they end up saving for themselves could've went to help keep their LGS from closing it's doors for good.
Articles related to topic:
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta
Only Congress can save online retailers from drowning in a paperwork flood that money-hungry state and local governments will be directing their way. If the decision is correct on the law, then it must be taken as a signal that the law must change. Otherwise it would mean that small online retailers on Amazon, eBay, and Etsy could no longer do business unless they're willing to keep records and make regular tax payments, even If the amounts are trifling, to as many as 9,998 different state and local sales tax jurisdictions that each have their own forms and tax rates.
To make matters worse, the various jurisdictions don't even agree on what gets taxed. Using its power to regulate interstate commerce, Congress can create a new standard, or restore the old one, in black-and-white, replacing a less-certain judicial creation, and prevent state and local governments from burying the national market under a landslide of tax paperwork. I guess the real question is whether or not If Congress can manage to pass some sort of legislation regarding this without President Trump threatening to veto.
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta
2023 Average Peasant Cube|and Discussion
Because I have more decks than fit in a signature
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My biggest concern is how it will drive the cost of card singles for TCG's to a point where consumers will have no choice but to buy/trade from their LGS. Don't get the wrong idea, I'm all for supporting my LGS but I also like the convenience of being able to purchase specific cards, sleeves, and deck boxes online that my LGS doesn't carry If it's out of print or If my local distributor is unable to get any in stock. Either the situation isn't as bad as it seems or TCG communities aren't really aware of what's going on.
As for the thread title I apologize for blowing it out of proportion, it's just that I was deeply concerned about how it would affect the TCG Market.
"Restriction breeds creativity." - Sheldon Menery on EDH / Commander in Magic: The Gathering
"Cancel Culture is the real reason why everyone's not allowed to have nice things anymore." - Anonymous
"For what will it profit a man if he gains the whole world, and loses his own soul?" - Mark 8:36
"Most men and women will grow up to love their servitude and will never dream of revolution." - Aldous Huxley, Brave New World
"Every life decision is always a risk / reward proposition." - Sanjay Gupta