Taxes and other revenues.

• Position: From the Library - Municipal Finance Journal, Fall 2001, pp. 1-23. - Brief Article

"e-Commerce and the Single-Rate Sales Tax Proposal"

Cornia, Gary; Edmiston, Kelly; Sheffrin, Steven; Sexton, Terri; Sjoquist, David; and Zorn, Kurt

Municipal Finance Journal, Fall 2001, pp. 1-23.

The sales tax landscape is dotted with a diverse array of local sales tax structures and rates that result in significant compliance costs for vendors, particularly those who do business in more than one state. As a result, the United States Supreme Court has ruled that states cannot compel out-of-state vendors to collect use taxes on remote sales, such as catalog and Internet sales. The potential revenue losses from these activities have prompted some to suggest that each state adopt a single local sales tax rate to reduce the burden of compliance. After examining the single-rate sales tax proposal in five stares, the authors concluded that the proposal is not feasible within the current fiscal environment for three main reasons. First, local governments would lose fiscal autonomy--the ability to respond to fluctuating demand for public services by adjusting aggregate tax levels. The loss of fiscal autonomy is particularly acute in states like California where tax limitation laws already have undermined the flexibility of local tax structures. Second...