Abstract

http://ssrn.com/abstract=2328479
 


 



The Internet as a Tax Haven? The Effect of the Internet on Tax Competition


David R. Agrawal


University of Kentucky - James W. Martin School of Public Policy and Administration; University of Kentucky - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

April 2016


Abstract:     
High Internet penetration puts downward pressure on tax rates as jurisdictions seek to reduce revenue leakage to tax-free sales; but, taxable online sales will put upward pressure on tax rates because the Internet facilitates tax collection. I find that an increase in Internet penetration induces large municipalities on the low-state-tax side of state borders to lower their local tax rates by more than municipalities on the high-state-tax side. I then use panel data on all local sales tax rates in the country and changes in Internet subscription rates to show that the effect of Internet penetration changes is negative.

Number of Pages in PDF File: 80

Keywords: Commodity Taxation, Fiscal Competition, e-Commerce, Tax Havens, Tax Evasion

JEL Classification: H25, H71, H73, L81, R50


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Date posted: September 21, 2013 ; Last revised: May 5, 2016

Suggested Citation

Agrawal, David R., The Internet as a Tax Haven? The Effect of the Internet on Tax Competition (April 2016). Available at SSRN: http://ssrn.com/abstract=2328479 or http://dx.doi.org/10.2139/ssrn.2328479

Contact Information

David Robert Agrawal (Contact Author)
University of Kentucky - James W. Martin School of Public Policy and Administration ( email )
433 Patterson Office Tower
Lexington, KY 40506-0027
United States
859-257-8608 (Phone)
HOME PAGE: http://www.uky.edu/~drag222/
University of Kentucky - Department of Economics ( email )
Lexington, KY 40506
United States
HOME PAGE: http://www.uky.edu/~drag222/
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.uky.edu/~drag222/

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