December 23, 2006

Sales Taxes & Online Shopping

Opinion Journal:
But even Christmas stories, from Dickens to Seuss, need a villain. We'd like to nominate your friendly neighborhood state governments, which for years now have been predicting dire declines in state finances because untaxed online shopping would erode the revenue-raising ability of sales taxes.

As usual, the political gloom proved to be overwrought. State tax revenues took a header in 2002 along with the rest of the economy, but they've been growing smartly ever since. The third quarter of this year saw state tax revenues up 4.6% over last year, and that was a deceleration from growth that has bumped along at close to 10% at times in recent years. State sales-tax receipts grew at 4% in the third quarter--and that was the slowest growth in three years. The biggest news about the sales-tax apocalypse is that it isn't happening.

But the strong trend lines for overall tax receipts and sales-tax revenue in particular haven't slowed the move among states to grab a piece of the online-sales pie. In the 14 years since the Supreme Court ruled that the myriad state and local taxes were too complex for mail-order retailers to be expected to master, there's been a movement to obviate that argument by "streamlining" the country's many sales-tax regimes.
Posted by James Zellmer at December 23, 2006 8:16 AM | Subscribe to this site via RSS:
Posted to Politics | Taxes