Grover Norquist
© Gage Skidmore
Grover Norquist
The Supreme Court on Thursday standardized taxing rules for traditional retailers and online transactions, ruling that states and localities may collect sales taxes on all purchases over the internet.

By a 5-4 vote, the justices ruled that online sellers can be required to collect state and local taxes from customers even if the internet vendors have no physical presence, such as a store or factory, in that state.

Conservative groups decried the decision as a constitutional abomination, even though four of the five votes in the majority came from the right-leaning justices on the court.

"Today the Supreme Court said 'yes - you can be taxed by politicians you do not elect and who act knowing you are powerless to object,'" said Grover Norquist, President of Americans for Tax Reform.

"This power can now be used to export sales taxes, personal and corporate income taxes, and opens the door for the European Union to export its tax burden onto American businesses-as they have been demanding."

The ruling will mean higher prices for many online shoppers and billions of dollars in extra revenue for the states.

Free-market, limited government advocacy groups called for changes in the law following today's South Dakota v. Wayfair decision.

"The polls tell us that Americans are deeply opposed to an internet sales tax, which would hurt not only small businesses, but consumers as well," said Jason Pye, vice president of legislative affairs fro FreedomWorks. "The Supreme Court's decision today means that Congress must act in the American people's best interest and pass specific legislation that protects small business and consumers from unnecessary online taxes."

The decision may also pose a headache for small-scale web merchants who will have to keep track of and remit sales taxes for thousands of jurisdictions.

"Today's decision will likely allow for government at all levels to potentially burden small businesses and startups across the country with higher taxes," Pye said. "The rejection of the 1992 ruling on the Physical Presence Standard dangerously provides an opening for increased regulation that will hamper American business growth."

But tax experts say better software has made it easy to quickly calculate the exact rates for each locale, and many states have devised a "streamlined" filing system, in which a single state office collects and dispenses taxes for its counties and cities.

In 1992, during the era of mail-order catalogs, the Supreme Court ruled it was unconstitutional for states to demand that out-of-state sellers collect and remit sales taxes on all purchases.

The court said then, in Quill vs. North Dakota, that states could not extend their taxing authority to companies that had no stores, warehouses or "physical presence" within the state.

But with the explosion in online shopping, lawyers for South Dakota and 41 other states urged the high court to revisit the question and to overturn the Quill decision.

While Amazon and other large online retailers regularly collect sales taxes on purchases, many others have refused to do so.

They argued it is an unfair and heavy burden to require them to collect varying taxes charged by more than 10,000 jurisdictions across the country.

However, traditional stores and shop owners said it was unfair that they had to collect sales taxes on each purchase, while their customers had the option to buy the same product online and avoid paying the tax.

Last year, the Government Accounting Office estimated that state and local governments were collecting 75 percent to 80 percent of the taxes from "remote sellers," but they were nonetheless missing between $8 billion and $13.4 billion a year in uncollected taxes for online sales, if they were considered legally required to collect them.

State officials put their revenue "losses" even higher.

But Norquist said the emphasis should be on constitutional rights, not allegedly suffering governments and how much money they rake in.

"We fought the American Revolution in large part to oppose the very idea of taxation without representation," he said. "Today, the Supreme Court announced, 'oops;' Governments can now tax those outside their borders - those who have no political power, no vote, no voice."