Tangible products are being converted into intangible, information-based services at an accelerated rate. Current rules for taxing commerce are more easily applied to tangible products. In fact, many states that tax tangible products do not tax services. As the conversion continues, formerly taxable tangible products will be converted in non-taxible services. Many dotcom companies have very narrowly defined core competencies.
Companies use extensive outsourcing.
These companies have increased flexibility to relocate both property and payroll very quickly. The value of many of these businesses lies primarily in the intangible, unrecorded goodwill, so greater tax planning opportunities arise. Real-Time Commerce Paperless transactions. Efforts by states to broaden the tax base to include services not currently taxed.