Seattle City Council releases business tax proposal; hearing scheduled Monday. Senate minority leader favors preemption.

Today the Seattle City Council released its proposal to tax business to fund services to reduce homelessness. It’s not exactly a “long awaited” proposal; a lot of people, including business leaders, would prefer the idea remained shelved permanently. 

The plan, as described on the city’s website, is this:

The Progressive Tax on Business will:

  • Exempt Seattle’s small and medium-sized businesses, only applying to those with at least $20 million or more annually in taxable gross receipts as measured under the City’s existing Business & Occupation tax;
  • Applies only to the City’s approximately 500 largest businesses (or approximately 3% of Seattle’s business owners);
  • Large businesses included will pay just about a quarter ($0.26) per hour per employee working in Seattle;
  • All nonprofit businesses in Seattle are exempt;
  • The employee hours tax will be replaced by a business payroll tax on January 1, 2021;
  • For those same approximately 500 largest businesses, the replacement business payroll tax will be calculated as 0.7 percent of all payroll related to work done in Seattle.

The schedule for council consideration:

The Council is set to continue deliberation on the Council bill and resolution in the following manner:

  • Monday, April 23 Introduction of Legislation
  • Wednesday, April 25 Finance Committee Meeting 2:00 p.m.Discussion of Investments
  • Wednesday, May 2 Special Finance Committee Meeting 12:00 p.m.Issue Identification
  • Wednesday, May 9 Finance Committee Meeting 2:00 p.m.Discussion of Amendments, Possible VOTE

The Full Council vote is scheduled to occur on Monday, May 14 at 2:00 p.m.  The legislation will take effect in January 2019.

That last sentence reads like a tell: “legislation will take effect” next January.  The city’s site also describes how the money would be spent, contains endorsement quotes from council members who think the tax is a great idea, and links to a promotional infographic.

The Seattle Times reports,

The Seattle City Council has finally released draft legislation for a new tax on large employers that would raise $75 million next year to help address homelessness.

Four of the council’s nine members have put their names to the plan…

The tax initially would be based on employee hours rather than payroll because the city has collected an employee-hours tax before and has systems in place to collect one again.

Councilmembers M. Lorena González, Lisa Herbold, Teresa Mosqueda and Mike O’Brien are championing the plan. Councilmember Kshama Sawant also has been calling for a new tax.

According to a resolution accompanying the bill, the city would spend 75 percent of the tax revenue to help build low-income housing, 20 percent on homeless services and 5 percent on administrative costs.

State Sen. Mark Schoesler, R-Ritzville, thinks Seattle is overstepping its authority by levying the tax. In a Puget Sound Business Journal op-ed, Schoesler writes,

…the council doesn’t even have the explicit authority to impose all the taxes it wants.

That’s right — cities have no inherent authority to levy local taxes unless it’s expressly delegated by the Legislature or Washington’s Constitution. Also, the state’s authority over taxation includes the ability to restrict local taxing authority. An example is how state law prohibits local business taxes on the sale of motor vehicle fuel and insurance. 

Next year I will make sure legislation is introduced to explicitly prohibit local governments from taxing businesses on a per-employee basis. Clearly, local politicians need reminding that under the state constitution, taxing authority must be granted by the state to local government.

It appears that some cities currently levy some form of per-employee tax. For example, Redmond bases business license fees on employee hours worked in the city. 

The minimum fee for any license is $112.00, covering up to 1,920 hours worked in Redmond. In addition to the annual employee hours reported to Washington State Department of Labor and Industries (L&I), you must include employee hours for sole proprietors, owners, managers, partners, and any officers, agents, family members working at the business or personal representatives acting in a fiduciary capacity.

Regardless, the Legislature can act to preempt local ordinances, Schoesler told 770KTTH.

The state Legislature does have the ability to revoke local taxing authority, and they already prohibit city governments from taxing gasoline and insurance. Schoesler told Rantz he absolutely wants to put a stop to this tax, too, if he can.

“There’s a prohibition on local income tax,” Schoesler said. “I think it should be clarified that a regressive per-head tax on employers is prohibited unless authorized by the Legislature.”

There’s also the question of legality.

“We have concerns about whether it really is legal to have a head tax in the state of Washington,” Schoesler said. “Most local taxes are authorized in statute and added over the years. This one I think is a gray area.”

It should be an interesting couple of weeks ahead. 

Friday Roundup: Oregon’s top pension, dividing California, the minimum wage (again), and tariff fears

There are always a few items we’ve read during the week that deserve more attention but don’t make it into our regular posts. So we bundle them for the Friday roundup.

Here’s this week’s bundle:

New York Times: A $76,000 Monthly Pension: Why States and Cities are Short on Cash 

A public university president in Oregon gives new meaning to the idea of a pensioner.

Joseph Robertson, an eye surgeon who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension.

It is $76,111.

Per month.

That is considerably more than the average Oregon family earns in a year.

Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making.

San Francisco Chronicle: Splitting California in 3 would be different. That’s the only sure thing.

California is moving closer to a landmark November vote that could chop the state in three, splitting San Francisco from Los Angeles, dividing the Central Valley in half, and creating a mountain of questions about how the nation’s biggest state would divvy its resources…

Congress would also need to be convinced; lawmakers must approve any split.

Jeffrey Clemens and Michael R. Strain: The Short-Run Effects of Recent Minimum Wage Changes

This paper presents early evidence on the employment effects of state minimum wage increases enacted between January 2013 and January 2015. As of 2015, we estimate that relatively large minimum wage increases (defined as those exceeding $1) reduced employment among low‐skilled population groups by just over 1 percentage point. Smaller minimum wage increases, as well as increases linked to inflation indexation provisions, appear to have had much smaller (and possibly positive) effects on employment over our sample period. The estimates thus raise the potential importance of nonlinearities in the minimum wage’s effects, which are consistent with standard models of the labor market. 

Associated Press: Fed survey finds worries about higher tariffs

The Federal Reserve’s latest national survey has found that U.S. businesses are growing increasingly concerned about the impact higher tariffs could have on their companies and the overall economy.

The Fed reported Wednesday that the economic outlook remains positive with growth continuing at a moderate pace in the central bank’s 12 regions.

But its latest survey of economic conditions around the country also found that various industries — from manufacturing to farming and transportation — are worried about possible penalty tariffs on China and those already slapped on imports of steel and aluminum.


Seattle business leaders prepare for key city council hearing on jobs tax; Mayor Durkan lays out her thoughts on the tax

Seattle businesses leaders plan to make their case against the city’s proposed jobs tax at a critical city council hearing next Monday. (Some background here.) On the Metropolitan Seattle Chamber of Commerce website the priority is clear, as is the call to members:

The Chamber continues to stand with member companies and partners to voice strong opposition to the Seattle City Council’s pursuit of a misguided tax on jobs…

Here’s how you can get involved:

Join us at a hearing at City Hall on April 23 on the proposed legislation. The hearing starts at 5:30 p.m., but those wishing to testify will need to arrive early and add their name to a list. Even if you aren’t interested in testifying, it is critical that we show up and show support for our businesses.

The Chamber lays out its concerns:

  • There is no plan, beyond the very broad proposal that 80% of the money will go to affordable housing and 20% will go to homelessness services.
  • Past Council action on homelessness does not inspire confidence that they would use new revenue wisely and with accountability measures that track outcomes.
  • A tax on jobs is not the answer—instead, we urge the Council to take a regional approach to this regional challenge and coordinate its work with the One Table effort.

Seattle Mayor Jenny Durkan also has concerns. The Seattle Times reports,

Seattle Mayor Jenny Durkan is willing to work with City Council members on a new tax on businesses to help address homelessness, but she wants them to consider her views as they craft a measure that could raise tens of millions of dollars a year.

Small businesses should be wholly exempted, the tax money should be spent in line with a regional plan on homelessness and an independent board should provide oversight, she wrote in a letter to the council’s nine members Tuesday, making her most specific comments to date on the issue.

The letter should be read in its entirety. The Times writes,

Some business people were alarmed when the task force suggested the council might want to impose a flat “skin in the game” tax of a few hundred dollars on small companies, rather than completely exempting them.

The council should reject that option and should also exempt nonprofits, member organizations and health-care providers, Durkan wrote.

There should be tax breaks for companies that make private investments in homeless services and affordable housing, and a board appointed by the council and mayor should oversee how the money is spent, she added.

MyNorthwest reports small business owners remain on high alert.

If there was one cohesive message from Seattle businesses to the city council, it’s that they want to be part of homelessness solutions. They have little, if anything, left to give the city, however.

…The city is currently considering a head tax on employers, among other revenue options. All the businesses at a council committee meeting Wednesday argued a similar point: taxes and regulations in Seattle have become so steep, they are struggling to survive. Many conveyed that they believe the head tax is already a “done deal.”

The MyNorthwest story has several telling anecdotes and testimony. We thought Steve Hooper with Kigo Kitchens made an effective point.

He points to an infamous study out of the University of Washington. That study found Seattle’s rising minimum wage resulted in fewer hours and jobs for employees. It is sometimes referred to as the “Jacob Vigdor study” after one of the researchers.

“We’re living the Jacob Vigdor study in our restaurant chain,” Hooper said. “When we started four years ago, we had 13 people working lunch. Today we have nine. That is the Vigdor study. What was 60 hours of work to serve 250 people is now 45 hours of work … It’s because we’re business people and we solve problems. And one of the problems that you presented us with is ‘do more with less.’ So we’ve done that.”

“This is straws on the camel’s back,” he said. “Will this be the straw that knocks over my business? Probably not. Maybe for Destiny [owner of another small business testifying] and maybe for other small businesses like ours. The question is really one of threshold. You continue to layer things on and it gets harder and harder to make the whole thing make sense.”


U. S. Supreme Court hearing on online sales tax collections suggests divided court; analysts try to read tea leaves.

Those hoping for a swift signal from the U.S. Supreme Court on whether it would change the rules governing online sales tax collections were disappointed yesterday. The New York Times reports,

By the end of arguments on Tuesday, it was not clear whether there were five votes to overrule the 1992 decision, Quill Corporation v. North Dakota, which said the Constitution bars states from collecting sales taxes from companies that do not have a substantial connection to the state.

Several justices expressed concerns about imposing crushing burdens on small businesses that sell goods on the internet and about making them liable for back taxes. Justice Sonia Sotomayor said the case before the court, South Dakota v. Wayfair, No. 17-494, raised “a host of questions” and “a whole new set of difficulties.”

Sounding almost plaintive, she added that Congress, rather than the Supreme Court, was the right forum in which to settle the matter.

“Is there anything we can do to give Congress a signal that it should act more affirmatively in this area?” Justice Sotomayor asked.

To which the Chief Justice responded, possibly wryly,

…Chief Justice John G. Roberts Jr. said that “it would be very strange for us to tell Congress it ought to do something in any particular area.”

Read the story for a bit of the give-and-take, a good account of past court statements, and the current politics and law on remote sales. Also, see our earlier post for some Washington state implications.

At Route Fifty, Bill Lucia reports the musings of one member of the court.

Notably, Justice Stephen Breyer sounded conflicted over how to best tackle the case.

“When I read your briefs, I thought ‘absolutely right,’” he said as South Dakota Attorney General Marty Jackley presented his argument.

“And then I read through the other briefs, and I thought ‘absolutely right,’” Breyer added, according to a transcript of the court proceedings. “And you cannot both be absolutely right.”

A tea-leaf reading analyst says,

Lisa Soronen, executive director of the State and Local Legal Center, a group that assists state and local governments with Supreme Court litigation, said in an email that Breyer’s uncertain position would probably not work in favor of discarding the Quill standard.

Stateline also notes the lack of a clear signal.

The justices seemed split on the issue. Several of the justices questioned the online retailers’ central argument against the South Dakota law: that collecting and sending in the taxes from the more than 9,000 jurisdictions that impose them would be burdensome and too complicated, especially for small sellers.

But others supported the businesses, and Chief Justice John Roberts suggested that the “problem has peaked” since Amazon, the biggest online retailer, already collects sales taxes, and that the problem may correct itself further over time.

A decision – one with substantial long-term consequences – is expected in June.

Revenue collections come in below forecast last month; numbers affected by reporting changes. State economy still strong.

The Economic and Revenue Forecast Council has released its monthly update. It contains a line we haven’t seen for many months. 

Major General Fund-State (GF-S) revenue collections for the March 10 – April 10, 2018 collection period came in $40.4 million (3.1%) below the February forecast. 

The latest update follows the eye-popping forecast revision in February that added $1.3 billion through the next biennium and greatly eased legislative budget pressures.

As the ERFC points out, it’s hard to know what – if anything – to make of the underperformance last month. That’s because,

Collections for this period were affected by a mid-March change in the Department of Revenue’s tax reporting system. During the change there was a one-time extension of the due date for monthly returns, which moved some revenue out of March collections figures. In addition, collection patterns under the new system may also differ from that of the old system in ways not yet accounted for in the forecast. 

The drop leaves cumulative collections since the February forecast down just $15 million from forecast, a drop of 0.6 percent.

The state economy continues to thrive.

We have two months of new Washington employment data since the February forecast was released. Total nonfarm payroll employment rose 11,800 (seasonally adjusted) in February and March, which was 900 less than the 12,800 expected in the February forecast. Private, service-providing sectors accounted for most of the job growth by adding 8,500 net new jobs. The manufacturing sector added 1,100 jobs and construction added 1,000 jobs. Gov-ernment employment increased by 1,300 in February and March. 

Washington initial claims for unemployment insurance reached a new all-time low. 

We look even better when compared with the rest of the country.

In March, after the forecast was complete, the U.S. Department of Com-merce, Bureau of Economic Analysis (BEA) released preliminary annual personal income estimates for 2017. The 4.8% growth rate in Washington personal income was the highest among the states and District of Columbia and was significantly higher than the 3.1% growth rate for the U.S. as a whole (see figure). The difference between Washington personal income growth and U.S. personal income growth was mostly due to two sectors: retail trade (which includes electronic shopping) and information (which includes software publishing and other IT information services such as internet publishing and web search portals). Retail trade earnings increased 15.3 percent in Washington compared with 2.9 percent for the nation and information earnings rose 8.9 percent in Washington compared with 2.4 percent for the nation. 

While it’s always comforting to see numbers coming in above estimates, there’s nothing in this report to cause concern. As mentioned yesterday, though, a trade war could undo rosy projections.

As U.S. Supreme Court considers online retail sales taxes, Tax Foundation cites growing number of state sales tax jurisdictions

The U.S. Supreme Court is hearing arguments on the taxing of remote sales. Yesterday, we previewed what was at stake

The Tax Foundation identifies an issue that we hadn’t considered: the growing number of state sales tax jurisdictions. As the map above shows, Washington has 371, exceeding California’s 323 and ranking on the high end of the scale. Tax Foundation analyst Katheryn Loughead writes,

With the Supreme Court expected to act by June, states, retailers, and online shoppers alike are anxious to see just how the tax treatment of online transactions may change this summer. With the state sales tax landscape growing more complicated, the high court’s decision will inevitably be a timely one.

According to October 2017 data from tax software company Vertex, there are now at least 10,814 sales tax jurisdictions in the United States, up more than 800 since we explored this trend in 2014. Each jurisdiction has a distinct aggregate sales tax rate based on a unique combination of factors, including sales taxes levied by taxing authorities at the state, county, city, and district levels.


Loughead points out that the growing number of jurisdictions also means a significant number of annual changes in tax rates. She concludes,

While different parties will certainly continue vying for their preferred outcome from the Supreme Court, when it comes to establishing a consistent baseline standard for how and when sales taxes should be collected, we can only hope Wayfair will bring some level of method to the madness.

Method, maybe. RouteFifty, however, reports analysts expect the short-term revenue effect of the decision to be relatively slight, though the long-term consequences will be significant. 

“The incremental revenue that would actually be gained immediately by Wayfair is probably relatively small,” said David Hitchcock, a senior director at S&P Global Ratings. “It’s not significant in the short-run,” he explained. “But it could be significant in the long-run.”

…One reason gains from eliminating the physical presence rule could be limited in the near-term is that e-commerce is only a fraction of the nation’s overall retail sales—about 9 percent last year. Another is that states have found workarounds to the rule and are collecting taxes on many sales made by some of the nation’s largest online vendors, including Amazon.

Washington’s top budget officer is quoted.

David Schumacher, director of the Office of Financial Management in Washington state, described the possibility of capturing more taxes from out-of-state, online retailers as “closing a loophole rather than adding a new tax” and said it would “definitely be a good thing.”

“We could always use the extra money,” he said. “But it’s not like a budget buster, or it’s not a solution to all our problems.”

Sales tax collections are especially important in Washington, one of seven states that does not have an individual income tax. But Schumacher said that, with Amazon located there, the state has been collecting sizable online sales tax revenues for some time.

He says the estimated increase in short-term revenues for the state is about $100 million on a $50 billion biennial budget and adds,

“It’s not huge,” Schumacher said of potential new online sales tax revenue. But he added: “I would love to have it for my next budget.”

Nina Totenberg, NPR’s legal correspondent, reports,

On one side of the case argued Tuesday are the states, almost all of them with sales taxes. And on the other side are online companies, in this case, retailers Wayfair, Overstock and Newegg. They point out that they, like many other successful online companies, are already paying state sales taxes in an increasing number of states, often because they now have warehouses or stores in many places…

The two sides in Tuesday’s case agree on almost nothing — not the economic facts, not the amount lost in sales taxes, not even on who is hurt by the court’s prior decisions. Each side contends that the other’s solution will annihilate small businesses.

Main Street retailers “are getting crushed because their costs are higher than Internet retailers,” said lawyer Eric Citron, who represents South Dakota.

Small retailers even have a name for what happens. It’s called “show-rooming.” People come into a Main Street store, ask to look at particular products, and then buy the one they like online because the price is 5 to 10 percent cheaper without the sales tax.

Countering that argument is Andrew Pincus, who represents eBay and small business sellers that operate on eBay platforms. He calls the idea of leveling the sales tax playing field a “business killer.”

“The reality is that these [online] small businesses are just going to go out of business, because they can’t absorb the costs,” he maintained.

A decision is expected by the end of June.

Brookings Institution: West Coast states most at risk in trade war with China

Washington and other Pacific Coast states are most at risk in a trade war with China, according to a new study from the Brookings Institution. The map above shows the counties with employment concentrations most likely to be affected by Chinese tariffs. The darker the red, the more the exposure. Washington’s Puget Sound region, along with Southern California, are clearly identifiable as risk centers.

The News Tribune carries a Sacramento Bee story that points out,

Most of the concern over the president’s escalating trade conflict with China has centered on the fallout for farmers, particularly in the Midwest, a part of the country that disproportionately voted for Trump in 2016.

But an analysis by experts at the Brookings Institution, a non-partisan District of Columbia think tank, finds that the West Coast has far and away the most jobs on the line in the tariff tit-for-tat between the Trump administration and Beijing.

Agriculture here, too, is at risk, as the Yakima Herald-Republic reported last month.

About 13 percent of the state’s cherry crop went to China last year, while Hong Kong and China represent the state’s fifth largest export market for apples…

Washington growers sent 3 million boxes of cherries to China in 2017, and 5.7 million apple boxes to markets in mainland China and Hong Kong in 2016, the most recent year of complete data available from the Washington State Tree Fruit Association.

Citing the Brookings study, the Seattle Times editorial board says Washington has much to lose should a trade war become heated.

Nearly 154,000 of Washington’s employees work in industries that would be affected by China’s countermeasures, a higher number of workers than in any other state besides California or Texas, according to the Brookings study…

By one measure, Washington would be the worst off of any state in the nation. Jobs in directly affected industries here make up 4.8 percent of the total workforce, a larger share than in any other state, according to the Brookings study. Kansas has the second-largest percentage of potentially affected jobs, at 3.5 percent of its total employment.

Among all U.S. counties, King and Snohomish counties trail only California’s Los Angeles County as having the highest number of jobs that could be at risk.

The Brookings analysts write of the broader implications:

For one thing, as several of us have said before about trade reliance more generally, the map of U.S. tariff exposure makes clear that while any “trade war” may be entered as a matter of abstract geopolitics, its particular battles will ultimately involve local and regional economies and jobs—with potentially unexpected ramifications. As we wrote before, “trade involves millions of workers in hundreds of real and varied places, and often drives crucial local commerce.” The implication: any coming trade wars will not be remote from America’s local communities, which will likely not remain silent about their views of any potential dislocation.

In our 2015 foundation report, we wrote of the importance of trade to our state.

Washington’s economy is highly dependent on global trade. The state ranks second in the nation in exports per capita. According to the Washington Council on International Trade, 40 percent of the jobs in the state are related to trade in some way. Given its many trade advantages, the state is well-positioned to continue to be a leader in international trade for years to come.

That is, provided we maintain trade-friendly public policies.

Will the U.S. Supreme Court bring certainty to retailers and taxpayers? Tomorrow’s hearing on sales tax will be closely watched.

Tomorrow’s the big day for retailers and shoppers concerned with online sales tax collections. The Associated Press reports that retailers are looking for clarity and certainty.

Retailers are hoping for a resolution this year from the Supreme Court, which hears arguments Tuesday in a decades-old dispute: Whether companies must collect sales tax on items sold in a state where they don’t have a store or other building.

If the court backs government officials who say they’re losing billions of dollars in uncollected taxes, thousands of small companies could be forced to start charging their out-of-state customers for them. Some businesses fear that could alienate customers used to tax-free shopping. On the other side: Retailers who do collect sales tax and believe those who don’t have an unfair advantage.

When we wrote of the upcoming hearing last November, we noted that one national authority says Washington’s tax on remote sales is “the one to watch.” We said

The Washington Research Council’s brief on the state budget stated last year, lawmakers passed legislation in 2017 that

  • Requires remote sellers (sellers without a physical presence in Washington), referrers (people who list or advertise items for sale for a seller and receive a commission) and marketplace facilita- tors (people who contract with a seller to facilitate the sale of items through a marketplace) to either collect and re-mit sales taxes or comply with notice and reporting requirements to the cus- tomer and the Department of Reve- nue. This is not settled law at the federal level—see our report, “Washington’s Steady Move to an Economic Nexus Standard for Taxes

Geek Wire provides a good FAQ on the issues. For example,

What does this mean for consumers, small businesses and big online retailers like Amazon?

For shoppers, the potential outcomes are simple. If South Dakota wins, it basically marks the end of sales tax-free shopping online, according to Avalara’s [Scott] Peterson, [vice president of U.S. Tax Policy and Government Relations].

“Within just a very short time — three or four years — every state will have all these laws and every merchant will effectively be collecting everywhere,” Peterson said. “Consumers won’t be able to shop tax free anymore.”

Even if the Supreme Court rules in favor of the retailers, tax-free shopping is likely on the way out in the near future, Peterson argues, thanks to a variety of laws passed by legislatures to compel businesses to collect sales taxes and allow states to do it themselves if retailers don’t.

The AP writes a decision could come quickly.

The justices are likely to rule by June on whether to overturn a 1992 decision, Quill v. North Dakota, that said companies cannot be forced to collect sales tax from customers in a state where they don’t have a physical presence, such as a store or distribution center. Collecting tax from online sales hasn’t been a question for big online retailers like Walmart or Macy’s since they have physical stores in most or all states. They also have accounting systems and financial staffs to handle the work.

Small retailers have software options to help collect taxes and do the administrative work, but it’s an added cost. Whether it’s worth it may depend on how much revenue a seller gets from other states.

RouteFifty has this brief background on the precedents

Two previous Supreme Court decisions provide key legal underpinnings for the physical presence rule. The most recent was the 1992 decision in Quill Corp. v. North Dakota. It reinforced a ruling in the 1967 case National Bellas Hess v. Department of Revenue of Illinois.

Quill and Bellas Hess both focused on companies with mail order, catalog sales operations. One of the amicus briefs filed in the Wayfaircase points out that the Quill ruling was issued about two years before the world’s first secure retail transaction took place over the internet.

Online retail has evolved dramatically since then. U.S. e-commerce sales during 2017 checked in at an estimated $453 billion, according toU.S. Census Bureau figures. That total marked a 16 percent increase from the year prior. But e-commerce still only accounted for about 9 percent of the nation’s overall retail sales in 2017.

Keeping up with the times has been challenging for all parties involved. For state and local governments, the fiscal consequences are clear, as RouteFifty points out.

A report the Government Accountability Office issued last November estimates state and local governments could have gained $8 billion to $13 billion in 2017 if states had the authority to require sales tax collections from all out-of-state “remote sellers,” like online retailers.

GAO says those amounts are equal to between 2 percent and 4 percent of total state and local revenues in 2016 from general sales tax and gross receipts tax—a tax similar to sales tax.

And, to clarify:

The companies in the Wayfair case highlight GAO findings that indicate states already receive tax on between 87 percent and 96 percent of sales by the top 100 online retailers.

Amazon, for instance, now collects and pays sales tax in all states where the tax is imposed—though the company does not do this for sales by third-party vendors using its platform. Wal-Mart, another big player in online retail, is on the hook for the taxes from its internet sales in states where it has stores and other facilities.

As high-stakes tax debates go, this is as big as we’re likely to see for some time. Too bad they don’t televise U.S. Supreme Court hearings.