I asked Gemini to answer a few questions about why I had to pay a local tax for an online purchase of items not manufactured or sold locally or even made in the U.S.A. The following is what it wrote...
Taxing the Fiction: Why Alaskans Pay Local Use Tax on Out-of-State Purchases
Alaska is one of the few U.S. states with no statewide sales tax. However, many residents living in boroughs like Wrangell find that purchasing goods essential for daily life—such as a new computer—from an out-of-state retailer still incurs a local Use Tax.
This scenario presents a persistent legal and economic conflict: How can a local government legitimately impose a tax on an item that is neither manufactured, sold, nor readily available within its local market?
https://suno.com/s/Q2qgSTycbpjIgQME
This post examines the legal framework that permits this tax structure. We will analyze the constitutional justification (the Dormant Commerce Clause) used to uphold the tax, why it is defined as a "compensatory" measure despite the lack of local commerce, and the legal rationale for distinguishing between individual consumers and businesses (the resale exemption). Finally, we confirm where this revenue goes and explore the limited avenues available for challenging this specific tax policy.
The Legal Basis: Jurisdiction Over "Use"
The legal justification for the Use Tax rests entirely on one single fact: The item is being used (consumed) within the taxing jurisdiction.
Taxable Event: The local tax is NOT on the sale (which occurred outside the state). The tax is on the privilege of storing, using, or consuming the goods in Wrangell.
Legal Nexus: By establishing a home or a place of business in Wrangell, a resident establishes a "nexus" (a sufficient connection) with the local government. This allows the local government to tax activities that occur within its borders.
The Private Affair: While the purchase is a private affair, the courts view the use of property (and the benefit derived from that use) as something that requires municipal services. Even computer use benefits from a stable, maintained community:
Police/Fire protection for the residence where the computer is kept.
Roads and infrastructure that allow the shipping company to deliver the package.
The basic public safety that supports all commerce, including the ability of external companies (like phone providers) to operate.
The AT&T Analogy
This concept is clearest with services like cellular connections:
When a service is paid for, the Wrangell Use Tax is applied to the service being delivered and used in Wrangell.
The tax is a percentage of the service cost because the service is being consumed within the municipality that provides the infrastructure and governance for the community.
Why the Use Tax Must Exist (Legally)
If Wrangell did not have a use tax on out-of-state purchases, the entire local sales tax would be considered discriminatory and unconstitutional under the Dormant Commerce Clause.
Local businesses in Wrangell would have to charge the full sales tax rate (7.0%).
Out-of-state retailers would charge 0% tax.
This creates an illegal economic incentive to buy from out-of-state, and the tax would be ruled an illegal burden on interstate commerce because it favors out-of-state sellers over local sellers.
The Use Tax is what legally "compensates" for the missing local sales tax, neutralizing the effect and making the tax constitutional.
A Philosophical Divergence: The Court and Taxation
To illustrate how deeply rooted the power to tax is, consider a hypothetical scenario: How would U.S. tax laws change if the Supreme Court were packed with anarchists?
Anarchist Philosophy: Anarchism fundamentally rejects the state and all forms of involuntary, coercive authority, viewing taxation as a forced taking of property.
Judicial Impact: Currently, the Court uses the Commerce Clause and Dormant Commerce Clause to uphold taxes. A majority of justices holding an anarchist philosophy would likely dismantle these legal precedents, viewing any compelled tax payment as a violation of fundamental individual liberty and property rights.
Likely Outcome: An "anarchist" Court would likely rule that taxation, as a coercive act of the state, is unconstitutional because it violates due process and represents an unconstitutional taking of private property without the state having a legitimate moral or legal claim to the funds. This would trigger a constitutional crisis and effectively end the existing tax system in the United States.
The Bottom Line: Your Options
The perspective that the tax is on a "fiction" (the potential for a local sale) and is for a "private affair" (personal computer use) is economically and logically sound, but it does not align with the standard used in U.S. constitutional law for use taxes.
As long as the Use Tax Rate = Sales Tax Rate (7.0% in Wrangell), the courts will almost certainly uphold it as a valid, non-discriminatory tax on local consumption.
The most effective path to challenging this specific tax is local policy advocacy to persuade the Wrangell Borough Assembly to add a specific tax exemption to the municipal code for items proven to be unavailable within the community.
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