Sales Taxation: Critical Issues in Policy and Administration

Sales Taxation: Critical Issues in Policy and Administration

Sales Taxation: Critical Issues in Policy and Administration

Sales Taxation: Critical Issues in Policy and Administration


This book is a comprehensive analysis of the major issues in state sales taxation. Topics such as taxation of services, mergers and acquisitions, nonprofit organizations, media, religious organizations, and international companies are analyzed by a group of the nation's leading experts on state taxation, including representatives of industry, government, and academia. The book identifies long-term qualitative and quantitative trends in the sales tax base and rates. Likely policy changes during the next decade are pinpointed and their implications discussed. Emerging sales tax problems are identified and analyzed, and techniques for integrating equity in sales tax design are included.


The sales tax, together with the compensating use tax, is strictly an American invention and remains a uniquely American institution. From its inception during the 1930s, the sales tax in most states retains to this day its original basic structure--a levy applicable broadly and at a uniform rate to most retail purchases of tangible goods.

A half-century of profound economic changes has aggravated old problems with the sales tax and created many new ones. the uptrend in service expenditures has accentuated the anomaly that for the most part the tax is confined to goods and omits services. the growth of mail-order sales has focused attention on problems of jurisdiction to tax, effectiveness of use tax enforcement, and compliance costs. the increasingly interstate and international character of economic activity has aggravated problems of tax situs and of apportionment of receipts. Technological change has raised ever more complex issues in distinguishing taxable from nontaxable purchases, of both consumer goods and producer goods.

On January 10 and 11, 1991, the National Tax Association conducted a seminar in New Orleans, bringing together many of the nation's leading authorities on sales and use taxation to debate and throw light on these and related issues. in attendance were academic students of taxation, corporate tax executives, private tax attorneys, and government officials responsible for tax administration and for making state tax policy. This volume has resulted from that seminar.

These collected papers do not pretend to offer a program for sales tax reform. As is clear, the issues are complicated and controversial. Solutions involve difficult trade-offs, for example, between tax neutrality and administrative feasibility, between tax equity and simplicity of tax com-

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