The Supreme Court’s new ruling in South Dakota v. Wayfair takes the worst of this expansive Commerce Clause jurisprudence and applies it in a new direction: as an authorization for money grabs by state governments, too. Make no mistake, that’s what this is all about, quite openly and explicitly. Justice Anthony Kennedy’s majority opinion opens by wailing about how much money South Dakota “loses”—the usual word for “is not allowed to steal”—because it cannot tax out-of-state online retailers like Wayfair.

Kennedy seems positively outraged by this “extraordinary imposition by the Judiciary on States’ authority to collect taxes.” Yes, heaven forbid anyone should stand in the way of a state government rifling through our pockets. It is clear that Kennedy has been itching for some time to overturn two previous court rulings, going back to National Bellas Hess v. Illinois in 1967, that upheld this out-of-state tax immunity for mail-order retailers, then re-affirmed it for online retailers in 1992.

The rationale for overturning these previous rulings is pretty flimsy, as we’ll see in a moment. But the overall effect is to reject what is known as Dormant Commerce Clause jurisprudence, which is the idea that the federal government’s power over interstate trade is so dominant that in the absence of any federal law regulating a particular form of trade (an increasingly unlikely condition), the presumption should be against the states’ ability to regulate it. Now the presumption will be in favor of the states’ ability to tax and regulate trade across state borders, opening up a whole now realm of mischief.


In Online Sales Tax Decision, Supreme Court Completes Its Inversion Of The Commerce Clause