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As the Quill Turns...Tobacco

Today's Wall Street Journal carries an editorial on New York Governor David Paterson's intention of taxing internet sales. From "Return of the Web Tax":

By signing the state's budget, Mr. Paterson is now attempting to do what Mr. Spitzer only threatened: Force out-of-state retailers such as Amazon.com to collect New York's sales taxes, which approach 9%, including local levies. A 1992 Supreme Court decision called Quill bars exactly this type of money grab. The Supremes ruled that forcing such obligations on companies with no employees or buildings in a state could cripple interstate commerce. Without Quill, small Web merchants would have to answer to 7,500 state and local tax collectors.

Funny, that's not how North Dakota's Attorney General Nick Spaeth and Tax Commissioner Heidi Heitkamp described the Supreme Court ruling in "North Dakota v. Quill" in their Bismarck news conference back in 1992. (The case started in state court, State v. Quill.) If I recall correctly -- being there as a reporter -- their argument was that the Supreme Court decision was a victory for North Dakota because it said Congress could address the issue of taxation of interstate sales conducted via the Internet.

We mention this in context of the tobacco lawsuit -- really. Heitkamp went to serve as a popular attorney general, one of the many AGs who pursued the tobacco companies through litigation. She recently returned to the news, proposing a state initiated measure to allocate additional moneys from the settlement to health and anti-tobacco programs. From the AP: "It would establish a new fund managed by a nine-member advisory board appointed by the governor. The board would be in charge of developing a comprehensive plan to discourage tobacco use."

So the tobacco settlement continues to drive policy and politics a decade later. Consequences, we think more intended than un.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.