March23,2017
AnOpenLettertotheNorthCarolinaLegislature:
RejectS.B.81’sUnconstitutionalTaxGrab
DearNorthCarolinaLegislator,
Onbehalfofthemillionsofmembersoftheundersignedorganizations,including
thousandsofNorthCarolinaresidentsandtaxpayers,wewriteinstrongoppositionto
S.B.81regardingsalesfromremotesellers.Thislegislationisbothunconstitutional
andunwise,andyouwouldbewisetorejectit.
Thisbillandsimilarapproachestointerstatesalestaxesholdanignominious
distinction:theyaretheonlysucheffortsinrecentmemorytobeintentionallydrafted
soastobeunconstitutionalanddrawalawsuit.ByempoweringNorthCarolinato
collecttaxesfrombusinesseswithnophysicalpresencewithinyourborders,therule
wouldimmediatelydrawyourstateintoapotentiallyexpensiveandbittercycleof
litigationthatisduplicativeofsimilarcasesinotherstates.It’sacycleunlikelytoyield
apositiveresult,sincedecades-oldSupremeCourtprecedentmakesclearthatstate
taxpowersstopattheborder’sedge.
Settingasidethebill’sobviousunconstitutionality,itisdecidedlyunwiseforNorth
Carolina.Bycontributingtotheerosionofbordersaseffectivelimitsonstatetax
power,itwillencouragepoorly-governed,tax-heavystateslikeCalifornia,NewYork,
andIllinoistounleashtheiraggressivetaxcollectorsonNorthCarolinabusinesses.
Yourownconstituentscouldbesubjecttoauditandenforcementactionsinstatesall
acrossthecountryinwhichtheyhavenophysicalpresence.
TheU.S.ConstitutionwaswrittentoreplacetheArticlesofConfederationinnosmall
partduetothelatter’sfailuretopreventaspiralinginterior“war”ofstateswhocould
asserttaxandregulatoryauthorityoutsidetheirborders.WhiletheConstitution’s
CommerceClauseandsubsequentjurisprudencemakeclearthattaxingpowermust
belimitedbystateborders,S.B.81seekstowipethoselimitsaway.Thatwouldbe
dangerousandweurgethatyouandyourfellowlegislatorsacttostopit.
Sincerely,
AndrewMoylan,RStreetInstitute
NormSingleton,CampaignforLiberty JeffreyL.Mazzella,CenterforIndividualFreedom
JessicaMelugin,CompetitiveEnterpriseInstitute
WayneBrough,FreedomWorks
LisaB.Nelson,TheJeffersonianProject
PeteSepp,NationalTaxpayersUnion
DavidWilliams,TaxpayersProtectionAlliance
JudsonPhillips,TeaPartyNation
Furthermore,asystemofsalestaxenforcementunboundedbyanytangible
connectionlikeaphysicalpresencewouldimposesignificantcompliancecostsonwebenabledbusinesses.Thisburdenwouldfallparticularlyhardonspecialtybusinesses
andsmallsellersthataredependentontheinternettoreachtheircustomers.They
wouldbeforcedtokeeptrackofall10,000taxingjurisdictionsacrossthecountry,each
withitsownrates,rulesandregulations,whilesalesinsimilarbrick-and-mortar
businessesonlyrequirecollectionoftaxforthesinglejurisdictioninwhichthey’re
located.