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Sales Taxes and the Decision to Purchase Online

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Author Info

  • James Alm

    (Georgia State University)

  • Mikhail I. Melnik

    (Georgia State University)

Abstract

Current tax treatment of online business-to-consumer transactions may be one of the factors behind rapidly growing e-commerce. In this article, the authors examine the impact of state sales taxes on the consumer decision to conduct shopping online, using comprehensive data representative of the U.S. population. The estimation results demonstrate that there exists a direct relationship between the state sales tax rate and consumer participation in e-commerce. However, although statistically significant, this effect is relatively small. The estimates indicate that a 1 percent increase in the tax price leads to only a 0.5 percent decline in the probability of participation in online commerce.

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Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 33 (2005)
Issue (Month): 2 (March)
Pages: 184-212

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Handle: RePEc:sae:pubfin:v:33:y:2005:i:2:p:184-212

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Keywords: sales taxes; Internet taxation; e-commerce;

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Cited by:
  1. Leal, Andrés & López-Laborda, Julio & Rodrigo, Fernando, 2009. "Prices, taxes and automotive fuel cross-border shopping," Energy Economics, Elsevier, vol. 31(2), pages 225-234.
  2. Andrés Leal & Julio López-Laborda & Fernando Rodrigo, 2010. "Cross-Border Shopping: A Survey," International Advances in Economic Research, Springer, vol. 16(2), pages 135-148, May.
  3. Hu, Yu Jeffrey & Tang, Zhulei, 2014. "The impact of sales tax on internet and catalog sales: Evidence from a natural experiment," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 84-90.
  4. Liran Einav & Dan Knoepfle & Jonathan D. Levin & Neel Sundaresan, 2012. "Sales Taxes and Internet Commerce," NBER Working Papers 18018, National Bureau of Economic Research, Inc.
  5. Brian Baugh & Itzhak Ben-David & Hoonsuk Park, 2014. "The “Amazon Tax”: Empirical Evidence from Amazon and Main Street Retailers," NBER Working Papers 20052, National Bureau of Economic Research, Inc.

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