Sources on State Sales Tax and Reform of Internet Exemption
Sales taxes on retail purchases are widely charged in 45 U.S. states,* but not all businesses are treated equally. Businesses that sell via “brick and mortar” storefronts are forced by state governments to collect the tax on behalf of the states, but remote retailers lacking in-state facilities (online and catalog merchants) escape such responsibility (due to federal restrictions on states), effectively discounting their prices. This penalizes storefront businesses with a 4-11 percent handicap, creating a huge deterrent to patronizing local businesses (both independent and chain) and prevents genuine market competition.
The American Independent Business Alliance has long advocated for national reform to level the playing field and stop handicapping brick and mortar businesses, including commentary in Business Week, Wall St. Journal and other media.
- Information for the 2017 Marketplace Fairness Act
- This 2015 paper from Georgetown Policy Report is full of useful information and links
- The Institute for Local Self Reliance is a great starting point for an overview of the sales tax debate
- To Help Main Street, Close the Internet Sales Tax Loophole (2011 Business Week commentary by AMIBA co-founder Jeff Milchen
- National Conference on State Legislatures’ e-commerce page estimates foregone tax revenues by state
- University of Tennessee study (2009) estimates $11.4 billion in sales taxes owed by buyers on Internet sales in 2012 will go uncollected
- Stand With Main Street hosts many additional resources and provides legislative updates
- For Amazon-focused reporting on this topic, see the “Subsidies and Sales Tax Avoidance” section of our All About Amazon collection
- Streamlined Sales Tax Governing Board
- Online Retailer Sales Volume in the U.S. for 2007-2010 (by quarter)
- The American Booksellers Association provides fact sheets and often publishes updates in their weekly newsletter, Bookselling This Week
- The International Council of Shopping Centers hosts a huge library of resources for reform advocates
Legal Documents and Court Rulings
- Quill v. N. Dakota 1992 U.S. Supreme Court ruling
- Overview of Geoffrey v. S. Carolina 1993 S. Carolina Supreme Court ruling on nexus
- Current, Inc. v. California 1994 County Court ruling on nexus
How Did State Sales Tax Start?
1902 – According to the 1902 census, state governments generated 45 percent of revenues from property taxes while the figure for local governments raised 78 percent.1
1921 – West Virginia enacts the first statewide sales tax and begins collection taxes from the electric light and power, timber, oil, coal, and natural gas companies.
1929 – The stock market crashes.
1930 – Mississippi and Kentucky follow West Virginia and enact a sales tax.2
1934 – New York City imposed the first local sales tax.
1962 – Twelve states granted local governments the power to impose sales taxes. *Today, more than half of all municipalities receive some revenue from sales tax, though often only as a share of state taxes.
1969 – Vermont became the 45th state to enact a sales tax, leaving Alaska, Delaware, Montana, New Hampshire, and Oregon as the only states not imposing them. *Some local entities collect some sales taxes within those states.
1. Michael A. Pagano, dean of the College of Urban Planning and Public Affairs at the U. of Illinois at Chicago
2. Sales tax on specific items was common throughout U.S history (and may date back as far as 2000 BC in Egypt). Such item-specific taxes proliferated during the U.S. Civil War, though many were terminated after the war’s conclusion.
For more on issues surrounding of Amazon.com Corporation in this realm, see Amazon’s Physical Presence (Nexus) in U.S. States and the Sales Tax Battle.
- See also our endorsement of 2013 Marketplace Fairness Act.
Our All About Amazon library has much more on that corporation’s role in this issue
Tags: sales tax