Hawaii Web Tax Plan Makes It Into A Federal Case

While Hawaii pushes its Internet sales tax through its state legislature, it has become the latest in a long string of states trying to set rules for conducting commerce within its borders, with other states tackling everything from data privacy, payment security and RFID notifications. Of course, when it comes to global E-Commerce operations and national (and sometimes multinational) retail brick-and-mortar chains, a state's border doesn't have much meaning.

Some of the state legislation doesn't even limit itself to dictating what retailers must do while operating in their states but are setting new rules protecting the residents of that state when they happen to be shopping out-of-state or online. Do they expect cashiers at Wal-Mart to ask what state a customer lives in and then, based on the answer, change the way they handle a credit card payment?

If ever there was a time for a federal judge to say to the states, "Don't even try it. With an e-tailer or a retailer that operates in many states, only federal legislators can make the rules."

Hawaii is actually trying to do a little more than act as a single state, mostly by trying to participate in the Streamlined Sales Tax Project, an effort with 22 participating states. That effort, though, makes the point. Even that kind of coordinated operation still represents fewer than half the states.

Regrettably, the feds are needed. Of course, the idea of encouraging members of the U.S. House and Senate to meddle with retail commerce issues is unsettling, but the image of 50 conflicting sets of state rules is far more frightening.