If such exemptions work, then low-income households won't be affected by the growth of online shopping since most of their purchases are already tax free. If the exemptions are ineffective, then the Internet at least offers a chance for the poor to escape punishingly high sales tax rates. The Internet is especially valuable to inner-city residents. Lower-income urban shoppers can go online to find goods and services not available in their own neighborhoods, which often aren't served by traditional stores. The Internet opens doors for these people that they never saw before.
Affluent households shop more online only because they are more likely to have access to a computer.
The ICIC study found that 30 percent of inner-city shoppers have computers at home compared to 50 percent of the general population. But that too is changing. And this year the Commerce Department reported that from 1994 to 1998, computer ownership by whites increased 72 percent, while ownership by blacks increased 125 percent. Families that don't have computers now are going to have them soon, and they're going to use them for shopping. For that to happen, states would have to experience significant revenue losses due to untaxed online shopping.