This article describes Wayfair and provides some cautions about what it means for the U.S. states and the rest of the world, especially Europe. It concludes that the lesson is that we should be sure that we like our temporary solution to the digital tax problem, because temporary solutions have a way of sticking around long after everyone recognizes that they no longer work. The Bellas Hess Court thought it was deciding a case about mail-order-catalog sales, and it could not have predicted that its decision would turn out to have such profound implications for e-commerce. The European Commission carefully formulated its Digital Services Tax (DST) proposal to tax certain digital giants operating today. But the DST may prove unworkable for business models we cannot even imagine yet. And, as Congress learned after Quill (and the OECD members are experiencing with the PE threshold), powerful business interests have a way of keeping in place outmoded, but precise, tax thresholds long after they have stopped making sense as a practical matter. The details of the DST may mean that it hits the (mostly U.S.) companies the EU has within its sights, but it also may take some of the oomph out of the drive for more meaningful and general reform (like modifications to the PE definition) that would be robust against changes in how companies operate. Take it from this American: You don’t want the DST to be the next Quill, an anachronistic bar on taxation of new forms of business.

Citation
Ruth Mason, Implications of <em>Wayfair</em>, 46 Intertax 810–819 (2018).