Economics 286W
Honors Seminar
Spring
2003
Tuesdays 3:30-5
HRM 303
R. N. Langlois
322
Monteith X63472
Office
hours MT 1:30-3 or by appointment
Assignment 3
Our next speaker will be Dennis Heffley, who will talk about a model of Internet taxation he is working on. Your assignment is the following:
Online sales are subject to sales (or "use") taxes, but compliance is low. This means that the effective tax rate on online sales is typically below the tax rate levied on conventional retail sales. This "revenue loss" concerns state governments, who rely heavily on sales taxes to finance public services. Many of these governments, along with conventional retailers in their jurisdictions, want to find an effective way to tax online sales. Opponents argue that taxing online sales will discourage growth of the internet. This debate highlights the need to better understand both the effects of the internet on sales tax revenue and the effects of tax policies on online and conventional retailers. Based on some of the suggested readings and other information you might be able to track down, identify a couple of the critical questions in this debate and try to bring some evidence to bear on these questions. From research that's been done, what do we "know" about these questions or issues? Can you use this information to suggest a sensible approach to the taxation of online sales?
Since this is an assignment about the Internet, that will be your primary resource. See what you can find. To get started, you might want to look at these papers by Austan Goolsbee at the University of Chicago.
"In a World Without Borders: The Impact of Taxes on Internet Commerce," Quarterly Journal of Economics, May 2000, vol 115(2), pp. 561-576.
"Evaluating the Costs and Benefits of Taxing Internet Commerce" (with Jonathan Zittrain, Harvard Law School), National Tax Journal, 52(3), September 1999, pp. 413-428.
Due: March 11.
