Retail sales on the Internet are growing at a rapid pace. Some states have tapped into this potential revenue source with Internet sales taxes, while others have not. What are the factors that lead states to make these policy decisions? Using a 50–state comparative research design, we find that interest groups, as much as the partisan and economic factors emphasized in previous research on state tax policy, are correlated with adoptions of these state tax innovations. Furthermore, this interest group influence is not limited to a single industry, but comes from self-interested groups representing both sides of the issue, including newly emerging technology interests.
BerryFrances StokesBerryWilliam. 1992. “Tax Innovation in the States: Capitalizing on Political Opportunity.” American Journal of Political Science36:715–42.
3.
BerryWilliamRingquistEvanFordingRichardHansonRussell. 1998. “Measuring Citizen and Government Ideology in the American States, 1960–1993.” American Journal of Political Science42:327–48.
4.
BracePaul. 1993. State Government and Economic Performance. Baltimore, MD: Johns Hopkins Press.
5.
BruceDonaldFoxWilliam. 2000. “E-Commerce in the Context of Declining State Sales Tax Bases.” National Tax Journal53:572–9.
6.
Congressional Quarterly.1999. Digital Commerce: The Issues.CQ Outlook, February 20, p. 14.
7.
DueJohnMikesellJohn. 1994. Sales Taxation: State and Local Structure and Administration. Washington, DC: Urban Institute Press.
8.
DyeThomasFeiockRichard. 1995. “State Income Tax Adoption and Economic Growth.” Social Science Quarterly76:648–54.
9.
E-Freedom Coalition.1999. Proposal to the Advisory Commission on Electronic Commerce. November 10. Available at: http://www.e-freedom.org.
10.
GarandJames. 1988. “Explaining Government Growth in the U.S. States.” American Political Science Review82:837–49.
11.
GoolsbeeAustin. 2000. “In a World without Borders: The Impact of Taxes on Internet Commerce.” Quarterly Journal of Economics115:561–76.
12.
GoolsbeeAustinZittrainJonathan. 1999. “Evaluating the Costs and Benefits of Taxing Internet Commerce.” National Tax Journal52:413–28.
13.
GrayVirginiaLoweryDavid. 1996. The Population Ecology of Interest Representation: Lobbying Communities in the American States. Ann Arbor, MI: University of Michigan Press.
14.
GrimesAnn. 2000. Silicon Valley Moguls Pour Money into Ballot Battles over Education,Wall Street Journal, October 31, p. B1.
15.
HansenSusan. 1983. The Politics of Taxation: Revenue without Representation. New York: Praeger.
16.
HansenSusan. 1990. State Taxation and Budgets. In Politics in the American States, eds. GrayVirginiaJacobHerbertAlbritton.Robert5th ed.Boston, MA: Little Brown.
KoneSusanWintersRichard. 1993. “Taxes and Voting: Electoral Retribution in the American States.” Journal of Politics55:22–40.
19.
MaguireSteven. 2000. RL30431: Internet Transactions and the Sales Tax. Washington, DC: Congressional Research Service.
20.
MazerovMichaelLavIris. 1998. A Federal Moratorium on Internet Commerce Taxes Would Erode State and Local Revenues and Shift Burdens to Lower-Income Households. May 11. A report for the Center on Budget and Policy Priorities. Available at: http://www.cbpp.org/512webtax.htm.
21.
MelloanGeorge. 2001. Whatever Happened to the Labor Movement?Wall Street Journal, September 4, p. B1.
22.
MikesellJohn. 1999. The American Retail Sales Tax: Consideration of their Structure, Operations, and Potential as a Foundation for a Federal Sales Tax. In Tax Policy in the Real World, ed. SlemrodJoel. Cambridge: Cambridge University Press.
NesbaryDale. 2000. “The Taxation of Internet Commerce.” Social Science Computer Review18:17–39.
25.
NewmanNathan. 1995. Prop 13 Meets the Internet: How State and Local Government Finances Are Becoming Road Kill on the Information Superhighway. Berkeley, CA: Center for Community Economic Research.
26.
NiemiRichardStanleyHaroldVogelRonald. 1995. “State Economies and State Taxes: Do Voters Hold Governors Accountable?” American Journal of Political Science39:936–57.
27.
PowellDavid. 2000. “Internet Taxation and U.S. Intergovernmental Relations: FromQuill to the Present.” Publius: The Journal of Federalism30:39–51.
28.
RadcliffBenjaminSaizMartin. 1998. “Labor Organization and Public Policy in the American States.” Journal of Politics60:113–25.
29.
SchattschneiderE. E.1960. The Semisovereign People. New York: Holt, Rinehard and Winston.
30.
StiglerGeorge. 1971. “The Theory of Economic Regulation.” Bell Journal of Economics and Management Science2:3–21.
31.
TannenwaldRobert. 1998. “Come the Devolution, Will States Be Able to Respond?” New England Economic Review10:53–73.
32.
ThomasCliveHrebnerRonald J.. 1996. Interest Groups in the States. In Politics in the American States, eds. GrayVirginiaJacob.Herbert6th ed.Washington, DC: CQ Press.
United States Government Accounting Office.2000. Sales Taxes - Electronic Commerce Growth Presents Challenges; Revenue Losses Are Uncertain. June. GAO/GGD/OCE-00–165.
35.
WhinstonAndrewBaruaAniteshShutterJayWilsonBrantPinnellJon. 2001. Measuring the Internet Economy. A Report for the University of Texas' Center for Research in Electronic Commerce. January. Available at: http://www.internetindicators.com/jan_2001.pdf.
36.
WigginsCharlesHammKeithBellCharles. 1994. “Interest Group and Party Influence Agents in the Legislative Process: A Comparative State Analysis.” Journal of Politics54:82–100.
37.
ZookMathew. 2000. The Web of Production: The Economic Geography of Commercial Internet Content Production in the United States.Environment and Planning
