Sample questions for discussion

The purpose of the meeting is try to pull together a research agenda and
pointers to the relevant academic literature and data sources.  To
help get the process going, we have drawn up a list of sample
questions to illustrate the sorts of issues that we would hope to
address.  We are not necessarily seeking answers to these questions as
much as we are seeking methodology, data, and/or existing work that
sheds some light on these issues.


Simplification for compliance

1. One proposed deal is trading tax compliance simplification for the
right to compel tax collection from out-of-state vendors.  What is the
cost of compliance with state taxes, and who gains and who loses from
such a deal? To what extent is the difficulty of compliance confined
to small vendors with a relatively small share of interstate
transactions volume?

2. Most local tax rates are very small, on the order of a fraction of a
percent. Would there really be significant distortionary effects from
one-tax-rate-per-state for mail-order purchases?

Tax base

1.  Should states have the right to determine which goods and services
are subject to tax in their state?  What principles are relevant for
determining what is taxed and what is exempt?

2.  What rules could govern downloadable digital goods such as books,
music, software, and images?

3.  What is the history of catalog and TV mailorder business?  How
much of Web purchases are simply crowding out these other channels and
thus represent no net tax loss?


4.  Should business-to-business transactions be tax exempt? If they
are not to be taxed, how important is the potential revenue from the
taxation of interstate electronic commerce?

5.  How will the growth of electronic commerce and the tax rules
applied to it affect the viability of the distinctions drawn by
existing sales taxes, e.g. between goods and services?


Sourcing transactions

1.  Should tax be levied where goods are delivered or where they are used?

2.  Should tax be sourced at the state level or local level?

3.  What are implications of sourcing based on the seller's state
rather than the buyer's state?  (E.g., tax competition to affect
location decisions.)

4.  The "throwback rule" states that a transaction will be sourced in
the seller's state if the buyer's location is unknown.  The
"throwaround rule" states that a uniform rate will be applied if the
buyer's location is not known, the proceeds of which will be
distributed to states according to a particular rule.  What are the
economic implications of these rules?

5.  If sales taxes are not to be applied effectively on a destination
basis, why not just integrate them with existing income taxes and
eliminate the separate record keeping and compliance system?