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Ishuan Li, Robert Simonson, Guncha Babajanova and Matthew Tuomala
''Smartphone Diffusion and Consumer Price Comparison Shopping Behavior: Implications for the Marketplace Fairness Act''
( 2016, Vol. 36 No.3 )
Taxation of e-commerce sales is a contested issue with a potentially large impact on sales tax revenue collected by local and state governments. The stakes are high: the e-commerce share of total retail sales revenues has increased by about 16% each year since 2004, compared to 2.3% for total non-e-commerce sales revenues. Over this period, consumers not only enjoyed falling cellphone prices but also improved technology (smartphones) that allowed them to comparison shop almost instantaneously across state and national borders. We examine the impact of Nexus and effective online sales taxes on smartphone-assisted online purchases. We estimate that smartphone consumers are 6% more likely to comparison shop and 74% less likely to purchase from an online retailer if they live in a state with a Nexus sales tax. The implied tax elasticity of online purchases (6.8) is significantly higher than comparable recent estimates. These results suggest that local and state government forecasts of online sales tax revenue under the Marketplace Fairness Act legislation may be lower than previous estimates.
Keywords: Internet, e-commerce, taxation, smartphones, Nexus sales tax, Marketplace Fairness Act
JEL: L8 - Industry Studies: Services: General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Nov 04 2015 Manuscript Accepted : Jul 08 2016

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