Under the US Constitution, Article 1, Section 10:
No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it’s inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.
Sales taxes on items that come across state lines (assuming the sender does not have a physical location in the receiving state) are already unconstitutional.
A use tax is a sales tax with a different name. Especially since the “use tax” rate is the “sales tax” rate and you can take any sales tax you pay to the first state off of the use tax.
Therefore a use tax is unconstitutional under Article 1 Section 10 of the Constitution.
I know that use taxes are constitutional but what is wrong with my argument?
No, it isn’t. The use tax places the burden of compliance on the in-state buyer. The sales tax places the burden of compliance on the out-of-state seller, which places an undue burden on interstate commerce (see Bellas Hess v. Illinois Department of Revenue).
The “export-import clause” (“No state shall . . . lay any Imposts or Duties on Imports or Exports”) applies to international commerce, not interstate commerce. This interpretation was confirmed by SCOTUS as long ago as 1869 (Woodruff v. Parham). Put another way, the “imports” and “exports” referred to are imports and exports to or from the United States, not from one state to another. States can’t impose additional tariffs on top of those imposed by the federal government.
The only restriction against interstate tariffs is the more general commerce clause, which, as interpeted over the centuries, prevents states from placing an “undue burden” on interstate commerce. Non-discriminatory taxation of interstate sales doesn’t impose such a burden. Placing the burden of compliance with such a tax on an out-of-state seller with no physical presence within the state does impose such a burden. Placing the burden of compliance on an in-state buyer or “user” does not.
I see the question has already been answered, but here’s a bit more info.
As Freddy the Pig already said, this only applies to international commerce. In Quill Corporation v. North Dakota, the court used the Due Process Clause (14th Amendment) and the Commerce Clause (Art. I, § 8, cl. 3) to determine whether a use tax was unconstitutional.
The Due Process Clause “requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.”
A tax doesn’t violate the Commerce Clause if it passes the four prongs of the Complete Auto test.
In Quill and Bellas Hess, the court said that it’s unconstitutional to make mail-order businesses collect and pay the tax. It doesn’t mean that the buyer doesn’t have to pay sales/use tax, just that the company isn’t required to collect it. This makes it harder to enforce the tax, but the taxpayer is still liable for it.
In those cases, Supreme Court of the US required physical presence to pass the nexus part of the Complete Auto test. Supreme Court of North Dakota, though, thought that the physical presence requirement in Bellas Hess was obsolete. Nowadays, so much business is done over the Internet that I don’t think physical presence should be a determining factor anymore. Apparently, neither does New York, because it’s trying to make online retailers collect sales/use tax, even though they don’t have a physical presence in NY. Amazon.com is challenging this law.
It’s true that sales and use tax are functionally equivalent, but technically they’re taxing different things (sale itself vs. use, storage, consumption). Use tax is necessary to prevent sales tax avoidance, so they complement each other.