Marty Jackley lost the primary to the less-qualified Kristi Noem, but he can celebrate winning his big Supreme Court case. Despite Jackley’s shaky performance in April, the highest court in the land today decided in South Dakota v. Wayfair to accede to the wishes of the conservative Republican South Dakota Legislature and allow us to enforce our state laws beyond our state borders and collect more tax dollars from people who’ve never set foot in our state.
I’m not the only one who finds this ruling ideologically confusing. The 5–4 ruling found usually conservative but today judicial activist Justices Thomas, Alito, and Gorsuch joining centrist Kennedy and liberal Bader Ginsburg overturning the Quill 1992 decision and greenlighting extraterritorial government authority and higher taxes, while liberals Breyer, Sotomayor, and Kagan joined conservative Chief Justice Roberts in defending stare decisis, limited state government, and lower taxes.
Jackley cheers today’s decision as “a win for South Dakota and for Main Street businesses across America that will now have a level playing field and tax fairness.”
Bread for the World South Dakota celebrates, too, because this victory means that if all those out-of-staters we now get to draft as tax collectors do their jobs well, the extra revenue they collect for us may lead to a lower sales tax rate.
Background: A little-known section of a 2016 law says that if the Supreme Court approves, as just happened, the collection of tax on online sales, and then if that tax revenue goes up at least $20 million, then one-tenth of a percent must come off the state’s general sales tax rate. It’s the law [Bread for the World SD, press release, 2018.06.21].
Of course, Bread for the World thinks that we should use this opportunity, brought to us by judicial activism, to focus relief on the poor by cutting the food tax:
A sales tax cut is coming. In fact the law requires one. Which do you prefer: Tenths of a percent off the general sales tax rate? or whole percents off groceries?
…The next legislature could switch the cut to make it a whole percent off groceries instead.
…Tell candidates for SD state legislature: I’d prefer 1% off food to 1/10% off the general rate. When there’s going to be a sales tax cut, we should start phasing down the food tax [Bread for the World SD, 2018.06.21].
Recall that Senator Reynold Nesiba proposed exactly this idea during Session:
Senator Reynold Nesiba (D-15/Sioux Falls) puts his economics degree to use in writing Senate Bill 159. which modifies one little sales tax statute. Recall that in 2016, the big sales tax bill we passed to fund the Blue Ribbon teacher pay increases contained Section 19—now SDCL 10-64-9—which obligates the state to use any proceeds from new sales tax revenue collected by remote sellers to reduce other sales taxes. If the Supreme Court votes our way on South Dakota v. Wayfair, current law would lower the sales tax rate on certain items by 0.1% for each $20 million in new revenue from remote sellers. SB 159 amends that reduction to 1% for each $10 million in new revenue and applies the reduction strictly to sales tax on food [CA Heidelberger, “SB 159: Nesiba Redirects Possible Online Sales Tax to Cut Food Tax,” Dakota Free Press, 2018.01.28].
The Republicans on Senate Taxation killed Senator Nesiba’s bill, because the poor are to be blamed and bludgeoned, not favored, by our laws. But now the Wayfair online sales tax windfall is real. It seems more than fair that the first fruits of that windfall should go to the least among us, those hit hardest by the tax on food. Let’s take Jackley’s win and run with it, straight to a revisitation of Nesiba’s excellent idea of food tax relief.