Online Shopping Can Redistribute Local Tax Revenue from Urban to Rural America

David Agrawal and Iuliia Shybalkina

No 10204, CESifo Working Paper Series from CESifo

Abstract: What is the effect of e-commerce on the geographic distribution of local sales tax revenues? Using COVID-19 as a shock to online shopping and hand-collected high-frequency data on local sales tax revenue, we document an important shift in the state and local public finance landscape. As e-commerce increases, a destination basis for remote sales taxes results in higher growth in local sales tax collections in smaller, generally more rural jurisdictions. This increase comes at the expense of larger urban retail centers, which previously enjoyed an origin basis for sales tax collections. As households replace in-person commerce with online shopping, sales taxes no longer accrue to urban centers with large concentrations of retail establishments and instead expand the tax base of smaller jurisdictions. State-level reforms that enforce sales compliance generally mitigate the revenue falls in larger jurisdictions and amplify the increases in smaller jurisdictions.

Keywords: sales tax; online shopping; e-commerce; COVID-19; tax revenue (search for similar items in EconPapers)
JEL-codes: H25 H71 L81 R51 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-pay, nep-pbe, nep-pub and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp10204.pdf (application/pdf)

Related works:
Journal Article: Online shopping can redistribute local tax revenue from urban to rural America (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10204

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().