Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207205 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7814
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
As e-commerce has grown over the last few decades so has states' concern for its use for sales tax avoidance. Using a panel of Washington State tax jurisdictions from 2005 through 2015, I estimate the effect of a sales tax regime change on the elasticities of taxable sales. I find the regime change, targeted at reducing sales tax avoidance through remote purchases, had a differential impact that varied by tax jurisdiction. I find that in tax jurisdictions near the border of lower-sales-tax states (Oregon and Idaho) consumers became more responsive to the difference in sales tax rates across borders than their counterparts in the interior of the state. I interpret this as a substitution by consumers along the Oregon and Idaho border from e-commerce purchases to cross-border shopping in order to avoid sales taxes.
Subjects: 
sales tax avoidance
destination-based taxation
cross-border shopping
JEL: 
H26
H71
Document Type: 
Working Paper
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