The following is cross-posted at www.StopETaxes.com.
As North Carolina’s budget remains stalled in the legislature, proposed tax hikes on internet transactions are taking on heat.
Most notably, the budget includes an "affiliate nexus" etax, which requires out-of-state retailers to collect taxes on North Carolina consumers. The tax flies in the face of the U.S. Supreme Court’s decision in Quill v. North Dakota, which determined that such a tax violates the interstate commerce clause of the U.S. Constitution. As a result, the proposed tax hike has caused online retailers to fire back against the legislature, noting the unconstitutionality of such a tax collection scheme.
The budget also would apply the sales tax to digital goods purchased online, such as music, movies, ringtones, and films. Together with the nexus tax, these provisions constitute a $31 million tax hike on North Carolinians.
Meanwhile, negotiations between the House and Senate budget writers have broken down and this week legislators are expected to pass "continuing resolutions" to keep state government operating. A conference committee is poised to work out the budget differences in the coming weeks. All told, the budget contains nearly $2 billion in tax and fee increases.
(photo by Mr. T in DC)