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Statutory incidence and sales tax compliance: Evidence from Wayfair

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  • Fox, William F.
  • Hargaden, Enda Patrick
  • Luna, LeAnn

Abstract

This paper studies the compliance, pricing, and progressivity effects of changing statutory incidence. The Wayfair Supreme Court decision granted U.S. states new authority to shift the statutory incidence of taxation from consumers to online and out-of-state retailers, forcing supply-side remittance of the sales tax. With state-level data, we find this increased sales tax revenues by 7.9 percent, concentrated in states with stringent compliance standards. With barcode-level scanner data, we find evidence of full pass-through of the tax to consumers. Effects are progressive however, with the reforms increasing tax liabilities principally for higher-income households.

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  • Fox, William F. & Hargaden, Enda Patrick & Luna, LeAnn, 2022. "Statutory incidence and sales tax compliance: Evidence from Wayfair," Journal of Public Economics, Elsevier, vol. 213(C).
    • Handle: RePEc:eee:pubeco:v:213:y:2022:i:c:s0047272722001189
    DOI: 10.1016/j.jpubeco.2022.104716
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    Cited by:

    1. David R. Agrawal & Aline Bütikofer, 2022. "Public finance in the era of the COVID-19 crisis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(6), pages 1349-1372, December.
    2. Agrawal, David R. & Shybalkina, Iuliia, 2023. "Online shopping can redistribute local tax revenue from urban to rural America," Journal of Public Economics, Elsevier, vol. 219(C).
    3. Belnap, Andrew & Welsch, Anthony & Williams, Braden, 2023. "Remote tax authority," Journal of Accounting and Economics, Elsevier, vol. 75(2).
    4. Hikaru Ogawa & Ryota Tsuchiya, 2024. "Taxing Cross-Border Online Sales for Pareto Improvement in Tax Revenue," CIRJE F-Series CIRJE-F-1235, CIRJE, Faculty of Economics, University of Tokyo.
    5. Hiroshi Aiura & Hikaru Ogawa, 2024. "Does e-commerce ease or intensify tax competition? Destination principle versus origin principle," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 702-735, June.

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    More about this item

    Keywords

    Sales tax; Compliance; State and local public finance; Statutory incidence;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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