WASHINGTON (Gray DC) -- South Dakota is at the center of a blockbuster hearing about to take place at the U.S. Supreme Court. Tuesday the high court is set to consider a state law forcing online businesses to charge state sales tax.
Our Washington Bureau’s Alana Austin previews the big case.
“It’s a long time in coming," said Sen. Mike Rounds (R-SD).
Republican South Dakota Senator Mike Rounds is looking forward to a Supreme Court hearing this week taking up a state law dealing with online shopping. He says state budgets and local brick-and-mortar stores take a hit when Internet retailers do not charge sales tax.
“If we don’t level that playing field, then in order to collect the same amount of money, we have to increase that sales tax rate, that’s not good," said Rounds.
Rounds supports the South Dakota law before the nation’s top court. The law requires online businesses charge sales tax on products shipped to the state, even if the shop has no physical presence in South Dakota.
Supporters say online businesses can undercut prices by not charging the tax - driving customers to the Internet.
This legal challenge involves South Dakota as well as Wayfair, Overstock and other popular online retailers. A lawyer representing those companies - George Isaacson - says the state law in question hurts innovation.
“If you look at who it really impacts greatest, it’s going to be those smaller merchants, medium-sized," predicts Isaacson.
Isaacson argues there’s thousands of complex tax laws at the state and local levels and complying with so many regulations in different states could harm at-home businesses.
“The Internet has proven to be one of the most vital and dynamic sectors of our economy. I think it would be a shame to be throwing a wet blanket on it," said Isaacson.
The Supreme Court oral arguments are set to begin Tuesday morning.
A decision is expected by the end of June.