Use Tax Legitimacy

Question

I recently learned of Use Tax.

The use tax I learned about is a little different than that defined above in that it is a small town enforcing a tax on goods purchased elsewhere, even though a sales tax is applied in the other location. I am flabbergasted that this is legal/constitutional.

Has there ever been any legal challenges to this?

Edit: So I get the there can be a tax for each level of govt, i.e. if you buy something you may pay tax for the local municipality, the state, the fed. What seems wrong to me is that a local municipality charges a use tax if you buy stuff in another municipality. In this case, when getting a building permit in say, Springfield but buying concrete blocks in Shelbyville, Springfield levies a use tax in the permit. And what is worse, the use tax is levied even if concrete blocks are not available in Springfield.

Answer 1

The US Constitution does not address state and local taxation

ArtI.S8.C1.1.1 gives the Federal government the power to levy taxes, but it does not restrict or interfere with the power of states (including any sub-state governments they empower) to do so.

State law

The starting point for this analysis is that, unless a state has deliberately restricted itself, it has to power to levy any sort of tax that it wants. County and city governments are creations of state law, and they have the power to levy whatever taxes the state delegates to them.

So, assuming that the state has not banned use taxes, and assuming the municipality has legally enacted the relevant ordinance, there is no legal impediment to such a tax.

While I don’t know of any case challenging use taxes, SOUTH DAKOTA v. WAYFAIR, INC., ET AL. USSC No. 17–494 2018 takes them as a given without remarking on them.

However, not all taxes are practical due to being inefficient, inequitable, or difficult to enforce. Use taxes are difficult to enforce as they rely on the user paying the tax themselves and non-compliance is difficult if not impossible to detect. Income tax for non-wage earners suffers the same problem; particularly for taxpayers who operate predominantly in cash.