Keywords

sales taxes, taxes and business strategy, Marketplace Fairness Act, e-commerce

Abstract

Many online retail firms (e-tailers) do not collect sales tax from the majority of their customers. This practice provides these firms with 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 that will potentially diminish with the enactment of federal sales tax legislation.

Original Publication Citation

“Does Use Tax Evasion Provide a Competitive Advantage to E-tailers?” (with Jeff Hoopes and Brady Williams). National Tax Journal (2016) 69:133-168.

Document Type

Peer-Reviewed Article

Publication Date

2016

Publisher

National Tax Journal

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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