Ever since the U.S. Supreme Court overturned the physical presence nexus requirement for state sales and use taxes in South Dakota v. Wayfair, 138 S. Ct. 2080 (2018), taxpayers and practitioners have questioned the extent to which the Court’s holding applies to locally administered sales and use taxes. This question is often rooted in the Court’s statement in Wayfair that “States may not impose undue burdens on interstate commerce” and its reference to Pike v.…
In City & County of San Francisco v. All Persons Interested in the Matter of Proposition C, Dkt. A158645 (Cal. App., June 30, 2020), the California Court of Appeal upheld Proposition C—a voter initiative that created a new local business tax in San Francisco. The court upheld the initiative that was enacted by a simple majority of electors. This ruling answers a question that was been heavily debated since the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland, 3 Cal. 5th 924 (Cal. 2017). That is, do special taxes proposed by voter initiative require a supermajority of voters to pass? This decision expressly narrows the supermajority requirement to only those tax measures proposed directly by local governments and will likely trigger more tax initiatives proposed and passed by citizen groups.