Use Tax Administration and Revenue Production in the States

38 Pages Posted: 23 Sep 2022

See all articles by John L. Mikesell

John L. Mikesell

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

John Stavick

Indiana University - School of Public and Environmental Affairs

Justin M. Ross

Indiana University - School of Public & Environmental Affairs

Date Written: September 12, 2022

Abstract

Use taxes are utilized by states to discourage taxpayers from engaging in sales tax avoidance via shopping in lower tax states. Enforcement of this tax has long been difficult, as demonstrated in the case of South Dakota v. Wayfair, Inc. (2018). States have instead relied on different administration and tax structures to generate revenues. We contribute to the limited existing use tax literature by studying a panel of use tax revenues collected from 25 states, as well as use tax collection methods states implement for individual and business taxpayers. States are best at enforcing the use tax where they can rely on complementary administrative tax collection systems, such as in business-to-business transactions. They will likely struggle to realize improved use tax compliance for household consumption even in the wake of the Wayfair ruling.

Keywords: sales and use tax, e-commerce, nexus

JEL Classification: H27, H71

Suggested Citation

Mikesell, John L. and Stavick, John and Ross, Justin M., Use Tax Administration and Revenue Production in the States (September 12, 2022). Available at SSRN: https://ssrn.com/abstract=4216944 or http://dx.doi.org/10.2139/ssrn.4216944

John L. Mikesell

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

1315 East Tenth Street
Bloomington, IN 47405
United States
812-855-0732 (Phone)
812-877-7802 (Fax)

John Stavick (Contact Author)

Indiana University - School of Public and Environmental Affairs ( email )

1315 East 10th Street
Bloomington, IN 47405
United States

Justin M. Ross

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

1315 East Tenth Street
Bloomington, IN 47405
United States

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