Supreme Court Justice Kennedy Weighs In on Online Sales Tax Legislation
On March 3, 2015, Supreme Court Justice Anthony Kennedy invited a legal challenge over whether states can require out-of-state and online retailers to collect sales taxes. Justice Kennedy’s opinion was issued as part of the Supreme Court’s unanimous ruling in Direct Marketing Association v. Brohl. Kennedy’s comments reveal the court’s awareness of the need for federal intervention that would enable states to collect e-commerce taxes. In his opinion, Kennedy added that he believes that the Quill and National Bellas Hess decisions, which establish the physical presence rule for sales tax, are “now inflicting extreme harm and unfairness on the states.” The justice cited the growth of Internet commerce; the reality of business presence, even in the absence of physical presence; and his view that “it is unwise to delay any longer a reconsideration of the court’s holding in Quill…. The legal system should find an appropriate case for this court to reexamine Quill and Bellas Hess.” Background on the Quill and Bellas Hess cases is available here.
Kennedy’s opinion comes as federal lawmakers face a stalemate on legislation that would allow states to enforce sales taxes on remote online vendors. Though a bipartisan group of senators reintroduced legislation this week that would enable state collection of e-commerce taxes, and the House is also discussing a legislative path forward on this issue, significant disagreement over the contents of these bills still remains. In the face of these obstacles, the GFOA and its state and local association partners continue their work to meet with congressional offices to build support for enacting online sales tax legislation this year. As this campaign continues, the GFOA will continue to keep its members informed about the status of these discussions and, where appropriate, engage our members to weigh in directly with their federal elected leaders in this campaign.
State, Local Government Employment Outlook Cloudy
GFOA Newsletter January 15, 2015
The latest jobs report showed relatively strong growth in private-sector employment, but state and local government employment remains lower than the levels reported in December 2007, according to a January 12 Rockefeller Institute of Government data alert. Total U.S. non-farm employment grew by 252,000 jobs in December 2014, compared to November, the Bureau of Labor Statistics reported, but state government employment gained only 7,000 jobs, and local government, just 4,000. According to the institute’s analysis, total non-farm employment rose by 1.4%, or 2 million jobs, since the start of the Great Recession in December 2007, with private-sector employment growing by 2.1% (2.4 million jobs). While private-sector employment has improved substantially, state and local government employment remains below prerecession levels: Employment is down by 1.1% (-54,000 jobs) for state government and by 2.3% (-340,000 jobs) for local government. “State and local government employment is far weaker seven years after the start of the Great Recession than it was seven years after the start of any of the previous four recessions. On average, state and local government employment was up 8.1% seven years after the start of the previous four recessions.” In other words, despite the good news for private sector jobs, the employment outlook remains cloudy for the state and local government sector. As the data alert says, “The Great Recession led to deep cuts in state and local government jobs – much deeper than any other recession in the last five decades.”
County Employment Picture also Gray. According to the National Association of Counties, unemployment has yet to return to pre-recession lows in most county economies. According to the NACO study, economic recovery is starting to spread, but only 65 county economies have fully recovered. Net job creation was greater in 2014 than the previous year, however, with 40% of the new jobs in industries earning more than the average county pay. But at the same time, average county pay in half of county economies declined between 2012 and 2013.
In Nationwide Economy, Jobs Improve but Wages Drop. Although the overall U.S. economy appears to be at its best since 2008, including the job market, wages are not increasing. Total employment rose by 2.95 million for the year, the largest advance since 1999, and the unemployment rate also improved, edging down in December to 5.6% from 5.8% in November. The rate fell by approximately one percentage point between 2013 and 2014, the largest decline since 1984. But average hourly earnings also fell last month. “This is still a buyer’s market in terms of labor,” according to the New York Times