Abstract

http://ssrn.com/abstract=2403952
 


 



Does Use Tax Evasion Provide a Competitive Advantage to E-tailers?


Jeffrey L. Hoopes


University of North Carolina (UNC) at Chapel Hill

Jacob R. Thornock


University of Washington - Michael G. Foster School of Business

Braden Williams


University of Texas at Austin - Department of Accounting

November 3, 2015

National Tax Journal, Forthcoming

Abstract:     
Many online retail firms (e-tailers) do not collect sales tax from the majority of their customers, providing these firms a potential competitive advantage over traditional retailers. We examine stock market returns and analysts’ sales forecast revisions surrounding federal legislative proposals, such as the Marketplace Fairness Act, that could erode this alleged competitive advantage for e-tailers. Following events that indicated an increased likelihood of federal sales tax legislation, we find negative abnormal stock returns for e-tail firms relative to traditional retail firms. We also find that analysts forecast a future reduction in sales revenue for e-tailers. These findings imply the existence of a competitive advantage for e-tailers, which advantage will potentially diminish with the enactment of federal sales tax legislation.

Number of Pages in PDF File: 44

Keywords: Sales tax, Marketplace Fairness Act

JEL Classification: H20, H25, H29, G14, G18


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Date posted: March 3, 2014 ; Last revised: November 11, 2015

Suggested Citation

Hoopes, Jeffrey L. and Thornock, Jacob R. and Williams, Braden, Does Use Tax Evasion Provide a Competitive Advantage to E-tailers? (November 3, 2015). National Tax Journal, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2403952 or http://dx.doi.org/10.2139/ssrn.2403952

Contact Information

Jeffrey L. Hoopes (Contact Author)
University of North Carolina (UNC) at Chapel Hill ( email )
CB #3265
Chapel Hill, NC NC 27599
United States
Jacob Thornock
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
HOME PAGE: http://faculty.washington.edu/thornocj/index.shtml
Braden Williams
University of Texas at Austin - Department of Accounting ( email )
Austin, TX 78712
United States

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