• DOI:10.1257/AER.104.1.1
• Corpus ID: 6760482

Sales Taxes and Internet Commerce

@article{Einav2012SalesTA,
  title={Sales Taxes and Internet Commerce},
  author={Liran Einav and Daniel T. Knoepfle and Jonathan Levin and Neel Sundaresan},
  journal={NBER Working Paper Series},
  year={2012}
}

• L. Einav, Daniel T. Knoepfle, +1 author Neel Sundaresan
• Published 1 April 2012
• Economics
• NBER Working Paper Series

We estimate the sensitivity of Internet retail purchasing to sales taxes using eBay data. Our first approach exploits the fact that a seller’s location—and therefore the applicable tax rate—is revealed only after a buyer has expressed interest in an item. We document how adverse tax “surprises” reduce the likelihood of purchase and shift subsequent purchases toward out-of-state sellers. We then use more aggregated data to estimate that every one percentage point increase in a state’s sales tax increases online purchases by state residents by almost 2 percent, while decreasing their online purchases from state retailers by 3– 4 percent. (JEL H71, L81, L86)