Supreme Court rules that Colorado’s “Amazon Tax” can be challenged in federal court
The Supreme Court of the United States (SCOTUS) unanimously overturned a 10th Circuit ruling, allowing a lawsuit against Colorado’s “Amazon Tax” to resume proceedings in federal court.
The Supreme Court ruling (Direct Marketing Association v. Brohl, 13-1032) overturns a 10th Circuit Court decision that reversed a ruling by a federal trial court that had declared Colorado’s “Amazon Tax” illegal. The 10th Circuit ruling had held that federal courts had no jurisdiction over state tax issues, a position rejected by the recent Supreme Court ruling due to the tax being applied to interstate commerce.
The 2010 internet sales tax (or “Amazon Tax” – House Bill 10-1193: Sales Tax Out of State Retailers (Pommer/Heath) was among the worst of the “Dirty Dozen” tax increases from both a constitutional and policy perspective, since previous legal precedent had already held that a state’s attempts to regulate commerce in other states (as this tax attempted to do) ran afoul of the U.S. Constitution.
Clear The Bench Colorado was at the forefront of the opposition to the unconstitutional “Dirty Dozen” tax increases passed by the Colorado Legislature in 2010 – testifying before the House and Senate Finance Committees that the tax increases were violations of the rights of Colorado citizens under the Colorado Constitution (Article X, Section 20: Taxpayers Bill of Rights) to be consulted (by vote) before being subjected to more or higher taxes, despite an interpretation of the Colorado Supreme Court ruling in the “Mill Levy Tax Freeze” case that the requirement to ask first could be ignored.
Clear The Bench Colorado warned the state legislature that the tax was guaranteed to be challenged in court, and would likely lose – a prediction that was affirmed two years later when a federal court ruled to strike down Colorado’s “Amazon Tax” in 2012. The 10th Circuit, on appeal, held that federal courts had no jurisdiction over state tax matters – which the Supreme Court of the United States rejected and reversed.
The unconstitutional tax increase has never collected a dime in revenue, as it was swiftly suspended by the courts – but it has cost the state (and Colorado taxpayers) tens, if not hundreds, of thousands of dollars in litigation costs and attorneys fees. Naturally, the legislators who have imposed these costs on Colorado have incurred no liability for their unconstitutional legislation.
Passing on such exorbitant legal costs to the taxpayers or consumers seems to be a common predilection of pandering politicians – who should be held accountable, at the ballot box if not otherwise.