Our view: Tax revenue good, but fair play was issue
Starting next month, Grand Forks is expecting a bump in sales-tax collections after a new rule puts traditional retailers on equal footing as those who do their business online.
It's been a long time coming, and the result of a Supreme Court decision made in June that declared online retailers must pay appropriate sales taxes to states for the goods they sell and deliver there.
The Herald is reporting the city of Grand Forks will see a corresponding increase in sales-tax collections, but also that it's too early to predict how big that bump will be. Finance Director Maureen Storstad suggests giving it a year to get a true feel for the new rule, although she said "it's safe to say it should show a positive impact."
State Tax Commissioner Ryan Rauschenberger told the Herald he is predicting the state could generate between $20 million to $50 million more in sales tax collections, and that, in his words, "Grand Forks does stand to be a significant beneficiary for its size."
It's good news, but this controversy never was — or at least shouldn't be — about governments
collecting more tax dollars.
Back in June, when the Supreme Court ruled 5-4 in Wayfair v. South Dakota, we called it a victory for the little guys. Specifically, we have worried that online sales have taken a great bite out of rural retail and especially the businesses that line the main streets of small towns. Companies like Amazon and FedEx have teamed up to make it awfully easy to buy a garden hose online, even though the local hardware store stocks a wide array of similar products.
We don't cry foul over traditional business competition. If online companies win over their customers in a fair battle, more power to them. But the battles haven't been fair, since not all online companies have been charging sales tax.
The recent Supreme Court ruling in Wayfair v. South Dakota clarifies only South Dakota internet tax rules, but it also sets precedent other states can follow. As Forbes Magazine recently wrote: "Online retail is no longer a lawless, anything-goes frontier."
That is well said, and it's why the Supreme Court decision was necessary as Congress wavered on the issue.
The coming month will be important, as a handful of states move forward with new sales-tax rules. North Dakota and Minnesota both start Oct. 1.
Both states have thresholds for the businesses that make sales here. In other words, the new taxing system affects only the businesses that have "significant presence" in the states. For example, Minnesota's threshold is $100,000 in sales and 10 transactions, or 100 transactions overall regardless of dollar amounts. In North Dakota, the threshold is sales exceeding $100,000 or 200 or more separate transactions.
That cities will see more dollars in their sales-tax coffers is a pleasant side effect, but that really isn't the triumph in this yearslong saga. The Supreme Court's decision earlier this summer was about fairness — nothing more.