Will destination-based taxes be fully exploited when available? An application to the US commodity tax system

• 成果类型: Article
• 署名作者: Agrawal, David R.; Mardan, Mohammed
• 署名单位: University of Kentucky; University of Kentucky; Norwegian School of Economics (NHH); Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2018.11.003
• 发表日期: 2019
• 页码: 128-143
• 关键词: tax evasion; Tax avoidance; Destination taxation; Origin taxation; Tax competition; Use tax; sales tax

摘要

We develop a tax competition model that allows for the setting of both an origin-based and a destination-based commodity tax rate in the presence of avoidance and evasion. In the presence of evasion, jurisdictions will give cross-border shoppers tax preferential treatment, thus not fully exploiting the potential of destination-based taxation. Moreover, the divergence between origin-based and destination-based taxes is stronger when the incentives for consumers' tax-arbitrage opportunities increase. The United States is one example of many such systems. While sales taxes are due at the point of sale, use taxes are due on goods purchased out-of-state. We document that when able to set both rates, a majority of jurisdictions levy destination-based use taxes at a lower rate than origin-based sales taxes. In response to changes in state-level policies that increase tax avoidance opportunities, the results of the empirical model broadly confirm our theory. (C) 2018 Elsevier B.V. All rights reserved.