Article ID: | iaor2005425 |
Country: | United States |
Volume: | 16 |
Issue: | 1 |
Start Page Number: | 63 |
End Page Number: | 79 |
Publication Date: | Jan 2004 |
Journal: | Journal of Public Budgeting, Accounting and Financial Management |
Authors: | Mikesell John L. |
Keywords: | management, government, politics |
The retail sales tax has provided a strong foundation for American state government finance since its beginnings in the Great Depression. However, its position as a productive, reliable, and administrable revenue source is now under challenge from three forces. First, it continues as a tax primarily on purchases of tangible personal property, despite the shift in consumption toward services. Second, the physical presence rule for taxation of sales by remote vendors creates an intolerable imbalance between local and remote sellers. And third, legislatures keep gnawing away at the base with politically attractive but fiscally unjustifiable exemptions. In total, the position of the sales tax as a viable and defensible revenue alternative is at risk.