Sales Taxes and Internet Commerce
- (pp. 1-26)
AbstractWe estimate the sensitivity of Internet retail purchasing to sales taxes using eBay data. Our first approach exploits the fact that a seller's location—and therefore the applicable tax rate—is revealed only after a buyer has expressed interest in an item. We document how adverse tax "surprises" reduce the likelihood of purchase and shift subsequent purchases toward out-of-state sellers. We then use more aggregated data to estimate that every one percentage point increase in a state's sales tax increases online purchases by state residents by almost 2 percent, while decreasing their online purchases from state retailers by 3–4 percent.
Citation2014. "Sales Taxes and Internet Commerce." American Economic Review, 104(1): 1-26. DOI: 10.1257/aer.104.1.1
- H71 State and Local Taxation, Subsidies, and Revenue
- L81 Retail and Wholesale Trade; e-Commerce
- L86 Information and Internet Services; Computer Software