On The Money — Sponsored by Prudential — Supreme Court allows states to collect sales taxes from online retailers | Judge finds consumer bureau structure unconstitutional | Banks clear Fed stress tests

Happy Wednesday and welcome back to On The Money, where we’ll be avoiding any clothing with slogans on it for the foreseeable future. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL — Justices uphold online sales taxes: The Supreme Court on Thursday upheld a South Dakota law requiring certain out-of-state retailers, including those that operate remotely online, to collect its sales tax.

In a 5-4 ruling, the court overturned a 1992 court precedent barring states from requiring businesses that have no physical presence in the state to collect their sales taxes.

Delivering the opinion of the court, Justice Anthony Kennedy said the physical presence rule in that former case, known as Quill Corp. v. North Dakota, is unsound and incorrect.

Kennedy said Quill created a tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a state’s consumers — something, he said, that has become easier and more prevalent as technology has advanced.

“Between targeted advertising and instant access to most consumers via any internet-enabled device, ‘a business may be present in a state in a meaningful way without’ that presence ‘being physical in the traditional sense of the term,” he said.

The Hill’s Lydia Wheeler and Naomi Jagoda explain the verdict here.

Reactions: 

• “Big Supreme Court win on internet sales tax – about time! Big victory for fairness and for our country. Great victory for consumers and retailers.” — President Trump
• “Quill puts both local businesses and many interstate business with physical presence at a competitive disadvantage relative to remote sellers.” — Supreme Court Justice Anthony Kennedy.
• “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.” — Supreme Court Chief Justice John Roberts.
• “It stops the federal government from forcing states to prefer out-of-state businesses over Main Street.” — Sen. Lamar Alexander (R-Tenn.).
• “The Supreme Court has given the green light for states to establish an underground, nationwide, privatized tax-collecting bureaucracy.” — Sen. Ron Wyden (D-Ore.).

LEADING THE DAY

Federal court rules consumer bureau structure unconstitutional: A federal district judge ruled Thursday that the structure of the Consumer Financial Protection Bureau (CFPB) violates the Constitution, countering a January ruling from a federal appeals court.

Judge Loretta Preska of the Southern District of New York ruled that the CFPB’s creation as an independent agency with a director that could only be dismissed for wrongdoing was unconstitutional.

In January, the Court of Appeals for the District of Columbia Circuit ruled that the CFPB’s structure was constitutional, reversing a 2016 verdict issued by a panel of the court’s judges. The appeals court’s initial opinion, written by Judge Brett Kavanaugh, sought to fix the issue by ruling that the CFPB director could be fired at will.

Preska, an appointee of former President George H.W. Bush, concurred with part of the D.C. appellate court’s initial ruling against the CFPB.

But she went even further when she ruled that the entire section of the 2010 Dodd-Frank Act that established the CFPB should be stricken. I’ve got more on that here.

Trump taps nominee to lead Export-Import Bank: Trump on Wednesday nominated Kimberly Reed to lead the Export-Import Bank, taking a step toward getting the agency running back at full lending strength.

The 84-year-old bank has been in financial limbo over the past three years, short of enough members on its board of directors to make loans above $10 million.

The pipeline for loans is backed up with more than $40 billion worth of export deals.
During her November confirmation hearing, Reed said that she looked “forward to bringing two decades of bipartisan experience to my work at the Bank, which has more than 400 dedicated career professionals.”

While the bank has become an “important source of funding for small businesses and an avenue for job creation,” reforms are still needed, she said.

The Hill’s Vicki Needham tells us more about the battle over the bank here.

All US banks clear Fed stress tests: The Federal Reserve said Thursday that close to three dozen of the largest U.S. banks passed annual stress tests designed to test their ability to survive an array of economic crises.

All 35 bank holding companies subject to annual Dodd-Frank Act Stress Tests proved that they held enough capital and developed sufficient plans to weather hypothetical financial shocks and recessions modeled by the Fed, the central bank announced Thursday.

The Fed began stress-testing banks in 2009, two years after the start of the financial crisis that triggered the 2008 recession.

I’ve got more on today’s results here.

MARKET CHECK–Dow extends losing streak: From CNBC: “Stocks fell on Thursday as fears of an impending trade war between the U.S. and China dragged investor sentiment lower.

“The Dow Jones industrial average dropped 196.1 points to 24,461.70, with Intel and Caterpillar as the worst-performing stock in the index. The Dow also posed an eight-day losing streak, its longest since March 2017. The S&P 500 declined 0.6 percent to 2,749.76 as energy shares fell 1.9 percent.

“The Nasdaq composite pulled back 0.9 percent to 7,712.95, erasing earlier gains, led by declines in Amazon and Alphabet. Amazon shares fell 1.1 percent after the Supreme Court ruled that states can force online shoppers to pay sales tax.”

GOOD TO KNOW

• Turkey on Thursday hit back at the United States with steep tariffs on $1.8 billion of goods for President Trump’s duties on steel and aluminum imports that went into effect in March.
• The Trump Organization and Kushner Companies are ending plans for a partnership to manage two hotels in New Jersey amid scrutiny from ethics watchdogs.
• A Senate government funding bill would require details of the Trump administration’s travel ban to be publicly released.
• The House Budget Committee on Thursday rejected an amendment to the House Budget Resolution for fiscal year 2019 that would bar the Department of Homeland Security from using funds to separate families detained after crossing the border illegally.
• The accelerating U.S. economy could give President Trump a stronger hand as he contemplates more tariffs and takes an increasingly confrontational approach with China, Canada, Mexico and other trading partners, writes the New York Times.
• Op-Ed: Mohamed El-Erian, chief economic adviser at Allianz, writes for The Hill on why developing nations are likely in the eye of an incoming financial storm
• Chinese officials warned Thursday that President Trump’s steep tariffs against the country will ultimately harm American workers.

ODDS AND ENDS

• The House Small Business Committee held a hearing Thursday to discuss the impact of federal regulations on farmers, who also complained about a cut to worker visas, reports The Hill’s Jasper Goodman. Two told lawmakers that the H-2A program, which allows foreign nationals to obtain a temporary visa to come to the United States and work in the agricultural sector, is essential to the success of farms across the country. Both representatives from agriculture groups testified that many plants struggle to find enough workers.

• U.S. mortgage applications increased the most last week in more than five months, as some 30-year home loan borrowing costs held steady or fell from the prior week, according to the Mortgage Bankers Association.
• The Committee for a Responsible Federal Budget has compiled a list of fiscal to-dos and deadlines Congress must meet before year’s end.

Join us Tuesday, June 26 for “Mergers and Innovation: Measuring Performance and Patient Care,” featuring HHS Deputy Secretary Eric Hargan, Sen. Bill Cassidy (R-La.) and Rep. Gene Green (D-Texas). Topics of discussion include how the landscape of health care delivery in the United States is undergoing a dramatic shift, its implications for health care industry stakeholders and patients and also the role of Congress in ensuring all Americans have access to quality care. RSVP Here.