Is court the right place for tax fight?

(Fort Wayne) News-Sentinel

Indiana is taking on the U.S. Supreme Court. Talk about an uphill fight.

Attorney General Curtis Hill has filed a response to a lawsuit on behalf of the state that asks Marion Superior Court to find a new state law constitutional. The law, which went into effect July 1, requires out-of-state businesses to collect and remit the same sales taxes as Indiana-based businesses.

The goal is for the suit to end up before the Supreme Court. If Indiana is to prevail, the court would have to reverse its own relatively recent decision, something it has rarely agreed to do. In 1992, the justices ruled that out-of-state retailers do not have collect and remit sales and use taxes, unless they have a physical presence in the state.

“In light of the rapid evolution and capabilities of software and technology, the incredible growth of online sales in recent years and other factors, it’s time for the Supreme Court to revisit and overturn this ruling,” Gov. Eric Holcomb said in support of the suit. “Hoosier-based businesses need the ability to compete on a level playing field as soon as possible.”

Indiana has a point about the adverse effect that ruling, which was before the advent of the behemoth Amazon and the explosion of e-commerce as the dominant retail phenomenon in the country. Sales taxes provide the state with one of its largest sources of revenue.

In 2016, more than 40 percent of the state’s $18 billion in revenue came from sales taxes. A study by the Indiana Fiscal Policy Institute and Ball State University estimates the state lost around $77 million in 2012 because it could not collect all online sales taxes. A separate University of Tennessee study put that figure even higher at $195 million.

And brick-and-mortar establishments have legitimate complaints as well. Faced with infrastructure and staffing costs the online retailers do not have, physical points of sale are dropping left and right. That they must collect sales taxes the online retailers do not is to add insult to injury.

But perhaps Holcomb and Hill should look elsewhere for relief. As the court noted in its 1992 ruling, Congress has the ultimate power to resolve the remote sales tax issue.

Congress, unfortunately, has discussed the issue but can’t seem to agree on much of anything. The Constitution’s Commerce Clause gives it great authority to regulate commerce between the states.

That clause has been used to give Congress every power under the sun, including thousands of things it should never have been involved in. Is it too much to ask that the clause be invoked to actually do a little regulation of actual commerce?

This was distributed by Hoosier State Press Association. Send comments to awoods@tribtown.com.