Return of the Web Tax

[Commentary] New York Governor David Paterson has resurrected one of Eliot Spitzer's least popular ideas, a tax on Internet sales that he hopes will raise more than $70 million a year. Despised by consumers and constitutional scholars alike, this new tax will hit e-shoppers within weeks. The measure will force out-of-state retailers such as Amazon.com to collect New York's sales taxes, which approach 9%, including local levies. A 1992 Supreme Court decision called Quill bars exactly this type of money grab. The Supremes ruled that forcing such obligations on companies with no employees or buildings in a state could cripple interstate commerce. Without Quill, small Web merchants would have to answer to 7,500 state and local tax collectors. The Governor apparently believes he can get to companies like Amazon through New Yorkers who run ads for Amazon on their Web sites. In fact, if nonemployees with some business relationship with a company were enough to establish physical presence, then Quill would essentially be meaningless. The courts may well ax the tax on these grounds.
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