Supreme Court Rules States Can Levy Tax On Internet Sales; E-Commerce Stocks Sell Off

Supreme Court Rules States Can Levy Tax On Internet Sales; E-Commerce Stocks Sell Off

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by: Elizabeth Balboa, Benzinga Staff Writer

 

The markets sold off sharply Thursday after the U.S. Supreme Court ruled that states could impose sales taxes on out-of-state online retailers.

 

 

Why It’s Important

The decision on South Dakota v. Wayfair, a win for President Donald Trump, was not entirely expected. In April, the Supreme Court appeared to lean in favor of the precedent exempting internet retailers without physical in-state presence from collecting taxes in relevant territories.

Some read the shift as a negative for e-markets, which may need to raise prices or take margin hits if states opt to embrace taxes.

However, one recent analysis suggested Amazon and 19 of the nation’s other top 20 e-retailers will not be affected by the change, as they are already required to remit sales tax. Instead, smaller businesses will be “devastated.”

As shops continue shifting to embrace the e-commerce culture, the law could be widely felt.

 

 

What’s Next

Only online business in South Dakota will see immediate impact, but the case creates a channel for other states to enact their own taxation laws.

At time of publication, the aforementioned stocks were slightly rebounding from their initial drops.

 

© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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