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.
- Amazon.com, Inc. AMZN 0.69% fell 1.4 percent;
- Overstock.com Inc OSTK 4.75% 2.9 percent;
- Wayfair Inc W 1.95% 4.5 percent;
- Etsy Inc ETSY 3.19% fell 4.8 percent;
- eBay Inc EBAY 1.9% fell 1.8 percent; and
- Paypal Holdings PYPL 0.47% fell about 1 percent.
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.
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.