Political Determinants of State E-Commerce Sales Tax Policy

In the absence of congressional action, states have two nonexclusive e-commerce sales tax policy options: membership in the Streamlined Sales Tax Project or enactment of Amazon tax legislation. Previous research has suggested that economic factors are important predictors of adopting the former, and legislators frequently assert that lost revenue is a motivation for adopting either. There is also some evidence that a state's political environment determines policy selection. This article tests these claims. Using two unique datasets, one for each policy, economic factors and foregone revenue are found to not be statistically significant predictors of e-commerce tax policy adoption. Instead, the political environment matters. The analysis concludes that governors drive state e-commerce sales tax policy, and that the naive perception that Republicans are less willing to tax than Democrats is misleading. Furthermore, the analysis finds indirect evidence that retail lobby influence is an important factor in a state's enactment of Amazon tax legislation. Related Articles Bauroth, Nicholas. 2007. “Buyer's Remorse: The Relationship between Local Economic Circumstances and Special District Policies.” Politics & Policy 35 (2): 366-394. http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1346.2007.00064.x/abstract Smith, Robert W. 2004. “The Courage to Tax: Rational Choice versus State Budgetary Politics in the South.” Politics & Policy 32 (4): 636-659. http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1346.2004.tb00199.x/abstract Farnsworth, Stephen J. 2002. “Campaigning Against Government in the Old Dominion: State Taxation, State Power, and the Virginia 1997 Gubernatorial Election.” Politics & Policy 30 (3): 460-480. http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1346.2002.tb00130.x/abstract Related Media Film Clip: Bloomberg. 2011. “Wal-Mart's Web-Sales Struggle, Amazon's Tax Policy.” http://www.bloomberg.com/video/74930810/ Ante la falta de accion del Congreso, los estados tienen dos opciones no exclusivas para su politica fiscal de comercio electronico: una afiliacion al Streamlined Sales Tax Project o el establecimiento de la ley fiscal Amazon. Investigaciones anteriores sugieren que los factores economicos son importantes predictores para adoptar este ultimo, mientras que los legisladores afirman frecuentemente que la perdida de ingresos es un incentivo para adoptar cualquiera de las dos opciones. Tambien existe evidencia de que el contexto politico de un estado determina la eleccion de politica fiscal. Este estudio pone a prueba estas afirmaciones. Usando dos conjuntos separados de datos, uno para cada politica, se encontro que los factores economicos y el ingreso perdido no son predictores estadisticamente significativos de la adopcion de politicas fiscales para el comercio electronico. De hecho, el contexto politico si importa. El analisis concluye que los gobernadores son quienes estatales impulsan la politica fiscal para el comercio electronico y que la imagen ingenua de que los republicanos estan menos dispuestos a gravar que los democratas es enganosa. Ademas, nuestro analisis muestra evidencia directa de que la influencia el cabildeo de los vendedores al por menor es un factor importante en la promulgacion estatal de la ley fiscal Amazon.