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E-Commerce in the Context of Declining State Sales Tax Bases

Bruce, Donald and Fox, William F.

Abstract:

This paper extends the quantitative estimates of sales tax revenue losses from electronic commerce in a variety of ways. First, we place the effects of e-commerce in the context of general sales tax base trends, arguing that e-commerce is only one of the factors reducing sales tax bases. Second, we take a forward looking view, estimating both the current losses and the expected losses several years hence. Third, we estimate the revenue-neutral increases in state sales tax rates that will become necessary to offset the base declines. Revenue loss estimates are prepared for every state with a sales tax. Our baseline estimates suggest that e-commerce will cause about $10.8 billion in additional tax revenue losses nationwide in 2003.

Citation

Bruce, Donald and Fox, William F. (2000), E-Commerce in the Context of Declining State Sales Tax Bases, National Tax Journal, 53:4, pp. 1373-90

DOI: dx.doi.org/10.17310/ntj.2000.4S2.06