Does Online Cross-border Shopping Affect State Use Tax Liabilities?

James Alm () and Mikhail Melnik ()

No 1206, Working Papers from Tulane University, Department of Economics

Abstract: How does online cross-border shopping affect state use tax liabilities? We collect our own data on actual online cross-border shopping transactions from eBay.com, focusing upon a "representative" commodity classification and a "typical" day. These data allow us to examine the extent of actual online cross-border shopping by buyers, and the subsequent potential impact on state use tax liabilities of buyers. Our results indicate that online cross-border shopping is highly prevalent on eBay, with out-of-state purchases accounting for on average 94 percent of the volume of a state's online purchase transactions. Even so, given the limited volume of eBay- based transactions relative to total sales transactions, the likely impact of cross-border transactions on state use tax revenue streams is negligible, even if we assume full buyer compliance with state use taxes.

Keywords: online commerce; sales taxes; nexus; tax evasion (search for similar items in EconPapers)
JEL-codes: H71 H73 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2012-07
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:1206

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