February 2, 2016

Dear South Dakota State legislator:

On behalf of our organizations and the millions of citizens we represent, we write in strong opposition to the online sales tax proposal currently being considered in the South Dakota state legislature. This misguided plan (SB 106) would empower South Dakota to collect taxes from businesses with no presence in the state, and would create host of economic, logistic, and Constitutional problems.

Allowing states to assert tax authority on businesses outside their borders is also constitutionally suspect and practically unwise. It’s constitutionally suspect because the interstate commerce clause exists precisely to empower Congress to prevent such activities and because Supreme Court precedent underscores the importance of physical presence. It’s practically unwise because it could subject South Dakota businesses to the tax collectors of states that don’t share your generally conservative governance, like California, New York, and Illinois.

Despite proponents’ claim to the contrary, online sales tax legislation would impose high costs of compliance on businesses, especially small businesses and individual sellers. Keeping constantly-changing rates, bases, and collection methodologies, would be very challenging for remote sellers, and may even prevent some from selling to South Dakota consumers. This is a much higher collection standard than bricks-and-mortar sellers, which are only required to collect at the rate of their physical location.

We oppose efforts to impose tax collection and reporting requirements on businesses without a physical presence in the state, including measures like SB 106 and others like it.


Ben Lee, South Dakota State Director
Americans for Prosperity

Grover Norquist, President
Americans for Tax Reform

Wayne Brough, PhD, Chief Economist and VP for Research

Lisa B. Nelson, CEO
The Jeffersonian Project, an affiliate of the American Legislative Exchange Council

Brandon Arnold, Executive Vice President
National Taxpayers Union

Andrew Moylan, Executive Director and Senior Fellow
R Street Institute

George David Banks, Executive Vice President
American Council for Capital Formation

Sean Noble, President
American Encore

Coley Jackson, President
Americans for Competitive Enterprise

Peter J. Thomas, Chairman
Americans for Constitutional Liberty

Norm Singleton, President
Campaign For Liberty

Timothy H. Lee, Senior Vice President of Legal and Public Affairs
Center for Individual Freedom

Tom Brinkman Jr., Chairman
Coalition Opposed to Additional Spending and Taxes (COAST)

Jessica Melugin, Adjunct Fellow
Competitive Enterprise Institute

Katie McAuliffe, Executive Director
Digital Liberty

Jonathan Haines, Director
Federalism In Action

George Landrith, President
Frontiers of Freedom

Andrew Clark, President
Generation Opportunity

Mario H. Lopez, President
Hispanic Leadership Fund

Seton Motley, President
Less Government

Daniel Garza, Executive Director
The LIBRE Initiative

David Williams, President
Taxpayers Protection Alliance

Judson Phillips, Founder
Tea Party Nation

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