The U.S. Supreme Court ruled yesterday that states can, with limitations, force online retailers to collect sales taxes. Here is a round-up of writings by academics on the subject:
- Sarah Larson (University of Central Florida) has provided to the House of Representatives Judicial Committee an analysis of the two most recent congressional proposals (as of April 2018). These are the “Remote Transactions Parity and Simplification Act” and the “Remote Transactions Parity Act of 2017.” If congress moves next, then this might be how.
- See also, Sarah Larson on what we learn about political ideology from state “Amazon Laws” in Policy Studies Journal with “Simply a Case of Expressive Interests? Evidence from State E-Commerce Sales and Use Tax Reforms“.
- 2012 estimates of state sales tax revenue losses to e-commerce from the UTK trio of Donald Bruce, William Fox, and LeAnn Luna. Here is a March 2017 update of their work by Lorie Jo Brown.
- Bruce, Fox, and Luna also find (National Tax Journal) state tax policy efforts to reclaim the sales tax base from e-commerce has reduced the likelihood of firm nexus establishment within the state.
- Whitney Afonso (University of North Carolina) takes a look at the distribution of revenues across types of local governments (urban, rural, tourism-rich, etc.) in North Carolina after passing an “Amazon Law.”
- John Mikesell’s “Public Finance in the 21st Century” conference paper on “The American Retail Sales Tax: Depression’s Child in the New Economy of the 21st Century.” Mikesell (Indiana University) highlights a number of technological and new economy challenges to administering the sales tax and how their Depression-era legacy remains influential to these problems.
- See also Mikesell’s “Remote Vendors and American Sales and Use Taxation: The Balance between Fixing the Problem and Fixing the Tax” in the National Tax Journal (2000). Rather than being dated, parts of this look like it might be due for a resurgence of interest and relevance. In addition to being a good primer on the original problem of physical nexus, it also highlights structural features of the sales tax that exacerbated the problems. In particular, he makes the case that local, not state, use tax is a significant source of administrative cost that provides really no revenue, so suspending it might go a long way towards improved efficiency.
- A clever 2014 American Economic Review paper by Einav et al. shows that the e-Bay practice of revealing the tax after the consumer selects “buy” induces substitution to out-of-state sellers. This older paper by Austan Goolsbee had found similar effects in the Quarterly Journal of Economics.
- Presumably, the difference between sales and use taxes in their compliance rates have implications for the overall equilibrium patterns of private and public economies. David Agrawal and David Wildasin (UKY) have a theoretical model in “Sales Taxation, Spatial Agglomeration, and the Internet” raising the profile of this question. See also Agrawal’s “Internet as a Tax Haven? The Effect of the Internet on Tax Competition” which shows that internet penetration in large municipalities have lowered local sales taxes by comparing high-tax versus low-tax sides of state borders.