Economic Development

State Legislator Letter: State and local officials across the country are resisting calls to allow aggressive taxation across state borders

As state legislators, we oppose the attempts to overturn constitutional precedent safeguarding Congress’s essential authority to protect interstate commerce from discriminatory regulation and taxation. As a result, commerce has grown, unfettered between the states. Such a populous and geographically expansive free trade zone is largely responsible for the abundance of wealth and opportunity—unrivaled in history—spread across our nation. Unfortunately, some state policymakers are attempting to resolve their overspending problems to look aggressively beyond their own state lines for tax revenue. This misguided bid to resolve their overspending problems utterly violates the constitutional principles that provide a proving ground for innovation, entrepreneurship and small businesses.

The U.S. Constitution was written to replace the Articles of Confederation in no small part due to the latter’s failure to prevent a spiraling interior “war” of states who could assert tax and regulatory authority outside their borders and thereby create fiefdoms for themselves. The Constitution’s Commerce Clause and subsequent jurisprudence make clear that taxing power must be limited by state borders. Businesses lacking a “substantial nexus” or link to a state through a “physical presence” such as offices, employees, or property, cannot be forced to act as tax collection agents for that state (Quill Corp v North Dakota (1992)). If the Supreme Court overturns Quill, state tax collectors would be empowered to reach across their boundaries to collect taxes from non-resident online retailers located outside of their jurisdiction. These retailers could face fines or legal challenges from taxing jurisdictions based on rules in which the online retailers have no voice.

Forcing online retailers to understand and comply with remote rates, exemptions, rules, tax holidays, or other peculiarities of 12,000 different tax jurisdictions (roughly twice as many as existed in 1992) is highly discriminatory. Contrast this with the treatment of sales in similar brick-and-mortar businesses, which only require collection of tax for the jurisdiction in which they are physically located. The compliance costs would fall particularly hard on specialty businesses and small sellers that are dependent on the internet to reach their customers. This would stunt economic dynamism, deter business activity, and unreasonable burden businesses engaging in interstate commerce.

As state legislators, we recognize the threat to growth, and to each of our states, posed by the potential unleashing of aggressive out-of-state tax collectors and auditors on businesses located elsewhere. For nearly 20 years, ALEC members have steadfastly supported the physical presence standard outlined in Quill through model policies such as the Sales and Use Tax Collection Protection Act as well as the 21st Century Commercial Nexus Act. Our constituents overwhelmingly agree (according to a Rasmussen Reports Poll) with our opposition to allowing tax enforcement agents from one state to collect taxes from hardworking individuals and businesses elsewhere. Healthy economic competition in a free market, between the 50 “laboratories of democracy,” is at the heart of the American experiment with federalism. Each year, the Rich States, Poor States publication reveals how tax policy affects state tax competition and economic outlook. Blurring—or eliminating—the limits of any individual state’s sovereignty—erodes the efficacy of this experiment.





Representative David Eastman

Representative Cathy Tilton


Senator Joel Anderson

Councilman John Masson


Representative Lori Saine


Senator Colin Bonini

Representative Richard Collins


Representative Brad Halbrook


Senator Jim Buck

Representative Sean Eberhart

Representative Mike Speedy

Representative David Wolkins

Elkhart Mayor Tim Neese


Representative Dawn Pettengill


Representative C. Wesley Morgan


Senator Andre Cushing

Representative Rich Cebra

Representative Matthew Harrington

Representative Trey Stewart

Representative Nathan Wadsworth

Representative Tom Winsor


Representative Daire Rendon


Representative Gary Chism

Representative Dan Eubanks

Representative Steve Hopkins


Representative Kurt Bahr

Representative Bruce DeGroot

Representative Justin Hill


Senator Dee Brown

Senator David Howard

Senator Doug Kary

Senator Fred Thomas

Senator Roger Webb

Representative Tom Burnett

Representative Barry Usher


Senator Don Gustavson

New Hampshire

Senator Gary Daniels

Representative Marc Abear

Representative Glenn Cordelli

Representative Jess Edwards

Representative Richard Gordon

Representative Peter Hansen

Representative Werner Horn

Representative Raymond Howard Jr.

Representative John Lewicke

Representative Norman Major

Representative Sean Morrison

Representative John O’Day

Representative Jordan Ulery

Representative Michael Vose

Representative Ken Weyler

New Jersey

Senator Michael Doherty

North Carolina

Senator Joyce Krawiec

Representative Mike Clampitt

Representative George Cleveland

Representative Dennis Riddell

North Dakota

Representative Daniel Johnston

Representative Matthew Ruby


Representative Wes Retherford

Representative Andrew Thompson


Representative Jason Murphey


Senator Dennis Linthicum

Representative Gene Whisnant


Representative Seth Grove

South Carolina

Representative Alan Clemmons

Representative Garry Smith

South Dakota

Representative Taffy Howard


Representative Jay Reedy


Representative Tom Craddick

Representative Phil King

Representative Rick Miller

Representative Ron Simmons

Judge Keith Self


Representative Kim Coleman


Councilman Jon Russell

West Virginia

Delegate Gary Howell


Representative Mike Kuglitsch

In Depth: Economic Development

The United States is among the most developed economies in the world. This has led to a standard of living that is simply unmatched throughout the world or throughout history. Even in such a developed and comparatively wealthy nation, policymakers still must allocate resources appropriately to encourage further economic development…

+ Economic Development In Depth