An Analysis of the Feasibility of Implementing a Single Rate Sales Tax

Posted: 22 Jun 2001

See all articles by Gary C. Cornia

Gary C. Cornia

Brigham Young University - J. Willard and Alice S. Marriott School of Management

Kelly D. Edmiston

AEPR; University of Kansas - School of Medicine; Baker University

Terri A. Sexton

California State University, Sacramento - Department of Economics; University of California, Davis - Institute of Governmental Affairs (IGA)

Steven M. Sheffrin

Tulane University

David L. Sjoquist

Georgia State University

C. Kurt Zorn

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Abstract

The National Tax Association's project on the taxation of telecommunications and electronic commerce recommended that each state employing a sales and use tax consider adopting a single statewide rate rather than continue with the number of rates currently in use. This recommendation was made in response to the criticism that current state sales and use tax schemes are too complex to expect multi-state vendors to collect and remit the sales tax in thousands of state and local jurisdictions. This article reviews the history of single rate suggestions and the problems for state and local governments that are expected to develop under such a proposal. The feasibility of adopting such a policy in five states, California, Georgia, New York, Tennessee, and Utah, is analyzed. The results of the examination reveal that the proposal is administratively feasible and simplification could be achieved. In some states the adoption of a single rate would result in modest tax revenue shifts, but in others the revenue readjustments would be significant. All states would face sizable political obstacles to a single rate proposal. We conclude that states should consider using a single rate for use tax collections and continue the use of multiple rates for in-state sales tax collections. Regardless, states must actively pursue policies to simplify their current tax processes at every opportunity.

Suggested Citation

Cornia, Gary Carlos and Edmiston, Kelly D. and Sexton, Terri A. and Sheffrin, Steven M. and Sjoquist, David L. and Zorn, Charles Kurt, An Analysis of the Feasibility of Implementing a Single Rate Sales Tax. Available at SSRN: https://ssrn.com/abstract=251112

Gary Carlos Cornia (Contact Author)

Brigham Young University - J. Willard and Alice S. Marriott School of Management ( email )

P.O. Box 23113
730 N. Eldon Tanner Building
Provo, UT 84602
United States
(801) 378-4618 (Phone)

Kelly D. Edmiston

AEPR ( email )

12713 West 138th Street
Overland Park, KS KS 66221
United States
(816) 206-5147 (Phone)

HOME PAGE: http://aepresearch.com

University of Kansas - School of Medicine ( email )

3901 Rainbow Boulevard
Kansas City, KS 66160
United States

Baker University ( email )

United States

HOME PAGE: http://https://www.bakeru.edu

Terri A. Sexton

California State University, Sacramento - Department of Economics ( email )

6000 J Street
Sacramento, CA 95819
United States
916-278-6223 (Phone)

University of California, Davis - Institute of Governmental Affairs (IGA) ( email )

One Shields Avenue
Center for State and Local Taxation
Davis, CA 95616-8617
United States
530-752-2042 (Phone)

Steven M. Sheffrin

Tulane University ( email )

New Orleans, LA 70118
United States

David L. Sjoquist

Georgia State University ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-413-0246 (Phone)

HOME PAGE: http://frp.aysps.gsu.edu/sjoquist/index.html

Charles Kurt Zorn

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States
(812) 855-0563 (Phone)

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