Perhaps the biggest controversy in state and local taxation today concerns the constitutional authority of the states to impose taxes on goods purchased over the Internet. Some argue that the current, bright-line rule of "physical presence" is the appropriate standard for determining a state's jurisdiction under the dormant Commerce Clause. Others contend that jurisdiction should instead be resolved on the more pragmatic basis of a firm's "economic presence" in the taxing state. Regardless, commentators seem to agree that the dormant Commerce Clause imposes jurisdictional limits on state taxation; the dispute concerns the content of those standards. This article contends that the debate thus far has ignored a more fundamental question: whether the Commerce Clause even speaks to the question of state tax jurisdiction. My thesis is that the attribution of a nexus requirement to the dormant Commerce Clause is, at least in part, analytically confused, and that it is premised on some questionable empirical assumptions.
24 Va. Tax Rev. 109