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States' Internet Tax Grab Going Well--for Them

States have a lot to be thankful for as we approach the busiest shopping season of the year, because the Supreme Court’s South Dakota v. Wayfair decision is flooding state tax coffers.
On June 21, 2018, the Court ruled 5-4 that states could require businesses with no physical presence in the state to remit sales taxes based on transactions originating in the state.
The decision overturned the 1992 Quill v. North Dakota decision that took the opposite position—that states could only force retailers with a physical presence in the state to collect and remit sales taxes.
States had long pursued this goal affirmed in Wayfair because it opened up a new and largely untapped revenue stream. And now they are beginning to reap the tax benefits.
In its spring 2019 report, the National Association of State Budget Officers noted that general fund collections from sales taxes are forecasted to grow 4.8 percent, stating:
General fund collections from sales taxes in 2019 are considerably overperforming budget forecasts by 1.4 percent, with 32 states coming in higher than budgeted, four lower and nine on target, based on current estimates at the time of data collection. The solid growth in sales taxes may be attributed in part to both improved consumption and a partial year expectation of an additional uptick in online and remote sales tax collections resulting from the Wayfair decision and ensuing state actions.
Governing magazine pointed out last June, on the first anniversary of the Wayfair decision:
As of this week, the District of Columbia and 42 of the 45 states with a sales tax have enacted laws or regulations requiring remote sellers to remit a sales tax. The remaining three states—Florida, Kansas and Missouri—have already proposed bills, "and it is only a matter of time before they are enacted," says the Urban Institute’s Lucy Dadayan.
No doubt! Governing adds:
And with more states implementing a tax over the coming year, states collectively are projecting even stronger growth—4.8 percent in 2020. Among those, California is projecting $616 million in additional sales tax revenue, and New York is projecting $346 million more.
Well, California and New York will need it because both states are vastly expanding government-provided health care coverage and other benefits.
Given the state revenue windfall, taxpayers might have hoped that states would cut other taxes. But 47 states see this new tax grab as an excuse to spend even more money. As the State Budget Officers observe: “Recent growth in state revenues enabled governors to propose 2020 budgets providing for a moderate general fund spending increase of 3.8 percent.”

Yes, states have a lot to be thankful for this season; taxpayers not so much.