Previous articleNext article FreeSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmailPrint SectionsMoreRetailer Remittance Matters: Evidence from Voluntary Collection AgreementsYeliz Kaçamak, Tejaswi Velayudhan, and Eleanor WilkingWhat are the effects of requiring online retailers to remit sales taxes, just as brick-and-mortar retailers do? Although goods purchased online have always been subject to similar sales/use tax as their brick-and-mortar counterparts, the responsibility to remit this tax has been on the consumer until recently. This issue has received considerable attention at the state and federal levels in light of the growing importance of online commerce and consequent efforts to stem base erosion. Yet there is little empirical evidence on how shifting the remittance obligation affects online and brick-and-mortar retail, and who bears the additional tax burden, if any, of imposing parity between the two retail channels. In this paper, we study VCAs — bilateral agreements between states and large online retailers to remit sales tax — enacted between 2009 and 2017. We explore how shifting the sales-tax remittance obligation on online sales to retailers achieves intended goals of retailer collection and parity between online and brick-and-mortar stores, as well as its consequences for sales-tax incidence.This paper has two main contributions. First, we document the impact of changing remittance obligations on the relative attractiveness of online and brick-and-mortar markets through their impact on the effective tax rate on online sales. We show that online retailers add sales taxes at checkout immediately following policy adoption, indicating that the agreements were binding, complied with, and measurable in our data. Shopping trips, where sales taxes were likely added, increase by 36 percent immediately after VCA adoption among large online retailers and show no change among brick-and-mortar retailers. This represents a significant change in the ability of consumers to use online retail as a means of evasion, as expenditure at these large retailers represents about half of their total online expenditure.Further, we find that consumers shift consumption to brick-and-mortar stores from online channels, suggesting that the differential remittance rules had conferred some advantage to online retailers. Consumers immediately reduce their online taxable expenditure due to VCAs at large online retailers by about 20 percent. Over time, brick-and-mortar household expenditure rises, even above the decline in online expenditure.Our second contribution is to document the incidence of the effective tax increase from increased compliance on online retail. We find that any effective tax increase was passed through to consumers, as the tax-exclusive price does not change after the VCA, suggesting that they bear the economic burden of the increased enfo
{"title":"Summaries of Articles","authors":"","doi":"10.1086/726079","DOIUrl":"https://doi.org/10.1086/726079","url":null,"abstract":"Previous articleNext article FreeSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmailPrint SectionsMoreRetailer Remittance Matters: Evidence from Voluntary Collection AgreementsYeliz Kaçamak, Tejaswi Velayudhan, and Eleanor WilkingWhat are the effects of requiring online retailers to remit sales taxes, just as brick-and-mortar retailers do? Although goods purchased online have always been subject to similar sales/use tax as their brick-and-mortar counterparts, the responsibility to remit this tax has been on the consumer until recently. This issue has received considerable attention at the state and federal levels in light of the growing importance of online commerce and consequent efforts to stem base erosion. Yet there is little empirical evidence on how shifting the remittance obligation affects online and brick-and-mortar retail, and who bears the additional tax burden, if any, of imposing parity between the two retail channels. In this paper, we study VCAs — bilateral agreements between states and large online retailers to remit sales tax — enacted between 2009 and 2017. We explore how shifting the sales-tax remittance obligation on online sales to retailers achieves intended goals of retailer collection and parity between online and brick-and-mortar stores, as well as its consequences for sales-tax incidence.This paper has two main contributions. First, we document the impact of changing remittance obligations on the relative attractiveness of online and brick-and-mortar markets through their impact on the effective tax rate on online sales. We show that online retailers add sales taxes at checkout immediately following policy adoption, indicating that the agreements were binding, complied with, and measurable in our data. Shopping trips, where sales taxes were likely added, increase by 36 percent immediately after VCA adoption among large online retailers and show no change among brick-and-mortar retailers. This represents a significant change in the ability of consumers to use online retail as a means of evasion, as expenditure at these large retailers represents about half of their total online expenditure.Further, we find that consumers shift consumption to brick-and-mortar stores from online channels, suggesting that the differential remittance rules had conferred some advantage to online retailers. Consumers immediately reduce their online taxable expenditure due to VCAs at large online retailers by about 20 percent. Over time, brick-and-mortar household expenditure rises, even above the decline in online expenditure.Our second contribution is to document the incidence of the effective tax increase from increased compliance on online retail. We find that any effective tax increase was passed through to consumers, as the tax-exclusive price does not change after the VCA, suggesting that they bear the economic burden of the increased enfo","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136169883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A guaranteed income could greatly reduce poverty, yet the impact and feasibility depend on several key policy design choices. We empirically compare guarantee designs financed by income taxation and estimate potential labor supply responses to transfer benefits as well as financing or targeting mechanisms. The analysis features a fundamental tax reform converting personal deductions and credits into an income guarantee along with higher marginal tax rates. Additional results consider policies with a flat surtax, benefit phaseout, or welfare reform. We use microsimulation analysis based on the Current Population Survey, and we adjust for underreported income.
{"title":"Income Guarantee Policy Design: Implications for Poverty, Income Distribution, and Tax Rates","authors":"R. Hartley, I. Garfinkel","doi":"10.1086/724254","DOIUrl":"https://doi.org/10.1086/724254","url":null,"abstract":"A guaranteed income could greatly reduce poverty, yet the impact and feasibility depend on several key policy design choices. We empirically compare guarantee designs financed by income taxation and estimate potential labor supply responses to transfer benefits as well as financing or targeting mechanisms. The analysis features a fundamental tax reform converting personal deductions and credits into an income guarantee along with higher marginal tax rates. Additional results consider policies with a flat surtax, benefit phaseout, or welfare reform. We use microsimulation analysis based on the Current Population Survey, and we adjust for underreported income.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"317 - 346"},"PeriodicalIF":1.7,"publicationDate":"2023-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43381794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tax progressivity is central in public and political debates when questions of vertical equity are raised. Applied, structural research demands a simple way to capture it. A power function approximation delivers one parameter that captures the residual income elasticity — a summary measure of progressivity. This approximation is accurate, tractable, and interpretable, and hence immensely popular. The most common procedure to estimate this parameter, a log ordinary least squares specification, produces biased and inconsistent estimates. A nonlinear estimator solves this issue and, using different data sets, I find differences in estimates between 6 and 14 percent.
{"title":"Bias in Tax Progressivity Estimates","authors":"Johannes König","doi":"10.1086/724186","DOIUrl":"https://doi.org/10.1086/724186","url":null,"abstract":"Tax progressivity is central in public and political debates when questions of vertical equity are raised. Applied, structural research demands a simple way to capture it. A power function approximation delivers one parameter that captures the residual income elasticity — a summary measure of progressivity. This approximation is accurate, tractable, and interpretable, and hence immensely popular. The most common procedure to estimate this parameter, a log ordinary least squares specification, produces biased and inconsistent estimates. A nonlinear estimator solves this issue and, using different data sets, I find differences in estimates between 6 and 14 percent.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"267 - 289"},"PeriodicalIF":1.7,"publicationDate":"2023-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41373589","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Stimulus checks were sent in response to recent US recessions. These checks grew from about $40 billion in the 2001 recession to $800 billion in the COVID era. Prior studies, however, ignored additional stimulus received upon filing tax returns (true-ups) and safe harbors that prevent possible stimulus repayment. Using population-level tax data, I estimate true-up and safe-harbor costs and decompose them by reasons, such as changes in income or the number of children. True-ups and safe harbors are costly. For the three rounds of COVID-era stimulus, true-ups and safe harbors cost more than $130 billion.
{"title":"Stimulus Checks: True-Up and Safe-Harbor Costs","authors":"David Splinter","doi":"10.1086/724500","DOIUrl":"https://doi.org/10.1086/724500","url":null,"abstract":"Stimulus checks were sent in response to recent US recessions. These checks grew from about $40 billion in the 2001 recession to $800 billion in the COVID era. Prior studies, however, ignored additional stimulus received upon filing tax returns (true-ups) and safe harbors that prevent possible stimulus repayment. Using population-level tax data, I estimate true-up and safe-harbor costs and decompose them by reasons, such as changes in income or the number of children. True-ups and safe harbors are costly. For the three rounds of COVID-era stimulus, true-ups and safe harbors cost more than $130 billion.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"349 - 366"},"PeriodicalIF":1.7,"publicationDate":"2023-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46868048","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
After matching more than 3 million loans from the $669 billion Paycheck Protection Program (PPP) to administrative wage records, I estimate a dynamic difference-in-difference event study showing robust impacts of the loans on employment, wages, and opening status of establishments 15 months after PPP approval. Between $12,000 and $19,000 of PPP loans are spent per employee-month retained 15 months postapproval, with 43 percent of the PPP going toward wage retention in the baseline model. The smallest employers show the largest impact, explaining disparate results from prior papers focusing on larger employers. Properly accounting for closures is key to understanding the PPP’s long-term impact.
{"title":"Putting the Paycheck Protection Program into Perspective: An Analysis Using Administrative and Survey Data","authors":"Michaela Dalton","doi":"10.1086/724591","DOIUrl":"https://doi.org/10.1086/724591","url":null,"abstract":"After matching more than 3 million loans from the $669 billion Paycheck Protection Program (PPP) to administrative wage records, I estimate a dynamic difference-in-difference event study showing robust impacts of the loans on employment, wages, and opening status of establishments 15 months after PPP approval. Between $12,000 and $19,000 of PPP loans are spent per employee-month retained 15 months postapproval, with 43 percent of the PPP going toward wage retention in the baseline model. The smallest employers show the largest impact, explaining disparate results from prior papers focusing on larger employers. Properly accounting for closures is key to understanding the PPP’s long-term impact.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"393 - 437"},"PeriodicalIF":1.7,"publicationDate":"2023-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42115571","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
During the COVID-19 pandemic, Congress enacted the Employee Retention Credit (ERC), a payroll tax credit paid to firms experiencing pandemic-related hardship. This paper uses administrative tax data to study the claiming of this credit. While firms have claimed nearly $100 billion of the credit, we find take-up to be highly imperfect even in contexts where nearly universal eligibility is expected. We find that the credit was mostly paid as a lump sum after the end of the quarter. Finally, we find that the progressivity of the ERC depends on whether the incidence of the ERC fell on business owners or employees.
{"title":"Delivering Aid to Businesses through the Payroll Tax System: The Case of the Employee Retention Credit","authors":"Lucas W. Goodman","doi":"10.1086/724133","DOIUrl":"https://doi.org/10.1086/724133","url":null,"abstract":"During the COVID-19 pandemic, Congress enacted the Employee Retention Credit (ERC), a payroll tax credit paid to firms experiencing pandemic-related hardship. This paper uses administrative tax data to study the claiming of this credit. While firms have claimed nearly $100 billion of the credit, we find take-up to be highly imperfect even in contexts where nearly universal eligibility is expected. We find that the credit was mostly paid as a lump sum after the end of the quarter. Finally, we find that the progressivity of the ERC depends on whether the incidence of the ERC fell on business owners or employees.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"439 - 463"},"PeriodicalIF":1.7,"publicationDate":"2023-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49054332","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent reforms have shifted tax-remittance responsibility for online purchases from consumers to sellers, thereby eliminating an important disparity between tax treatments of online and brick-and-mortar commerce. Despite the attention these reforms received, we know little about how shifting the responsibility to remit affects consumption or the tax system. To remedy this, we study US states’ staggered adoption of voluntary collection agreements, which committed large online retailers to remit sales taxes. We find that this change stemmed sales-tax base erosion and shifted consumption toward brick-and-mortar retailers. The increased tax burden resulting from the effective tax increase fell mainly on consumers, but it did not significantly alter the distributional burden of US sales taxes.
{"title":"Retailer Remittance Matters: Evidence from Voluntary Collection Agreements","authors":"Yeliz Kaçamak, Tejaswi Velayudhan, Eleanor Wilking","doi":"10.1086/724590","DOIUrl":"https://doi.org/10.1086/724590","url":null,"abstract":"Recent reforms have shifted tax-remittance responsibility for online purchases from consumers to sellers, thereby eliminating an important disparity between tax treatments of online and brick-and-mortar commerce. Despite the attention these reforms received, we know little about how shifting the responsibility to remit affects consumption or the tax system. To remedy this, we study US states’ staggered adoption of voluntary collection agreements, which committed large online retailers to remit sales taxes. We find that this change stemmed sales-tax base erosion and shifted consumption toward brick-and-mortar retailers. The increased tax burden resulting from the effective tax increase fell mainly on consumers, but it did not significantly alter the distributional burden of US sales taxes.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"239 - 265"},"PeriodicalIF":1.7,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45726424","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Previous articleNext article FreeSummaries of ArticlesSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMorePrice Isn’t Everything: Behavioral Response Around Changes In Sin TaxesAlex Rees-Jones and Kyle RozemaTaxes change behavior. But how does this change arise? In traditional economic models, change is achieved through the price channel: assuming all else is held constant, taxes increase prices and thus decrease demand. However, the assumption that all else is held constant may be violated in the course of a change in tax law, in part because the process by which laws are changed often involves the provision of information, attempts at persuasion, and the deployment of alternative dissuasive tools. Although one may expect these alternative channels to be important, relatively little empirical work measures the relative importance of them compared to a tax’s direct financial influence.In this article, we study the importance of nonprice factors in a particular policy domain: discouraging smoking with cigarette taxes. Examining state-level cigarette tax changes occurring between 1989 and 2009, we document the time paths of tobacco-industry-related political donations, antismoking appropriations, cigarette-related news headlines, and legislation of place-based smoking restrictions. We find that these nonprice factors are changing during windows when tax changes occur. To explore how this evolution of nonprice factors matters for estimates of behavioral change, we make use of information on the cigarette consumption of new mothers reported in the Vital Statistics Detailed Natality Data. In this population, we conduct common analyses that measure the degree to which cigarette consumption responds to the increase in cigarette taxes in the window around a tax change. We find that controlling for nonprice factors substantially reduces the estimated responsivity of consumption to tax changes. In addition, because these nonprice factors evolve in advance of a tax change, they can generate a decrease in consumption in advance of the actual tax-induced price change. This anticipatory decline in consumption closely resembles that predicted by “rational-addiction” motives, but it is derived from a different underlying behavioral model.Taken together, our results suggest an important role of nonprice factors in understanding the evolution of cigarette consumption that occurs around a tax change. We conclude by discussing the implications of our results for forecasting the expected effects of tax policies and for assessing estimates of sin-tax elasticities.Revealing Values: Applying the Inverse-Optimum Method to Us State TaxesRobert EmbreeSystems of tax rates represent a major mechanism by which societies implement their social preferences about inequality and redistribution. Observing different income tax rates in two jurisdictions may be a
{"title":"Summaries of Articles","authors":"","doi":"10.1086/724863","DOIUrl":"https://doi.org/10.1086/724863","url":null,"abstract":"Previous articleNext article FreeSummaries of ArticlesSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMorePrice Isn’t Everything: Behavioral Response Around Changes In Sin TaxesAlex Rees-Jones and Kyle RozemaTaxes change behavior. But how does this change arise? In traditional economic models, change is achieved through the price channel: assuming all else is held constant, taxes increase prices and thus decrease demand. However, the assumption that all else is held constant may be violated in the course of a change in tax law, in part because the process by which laws are changed often involves the provision of information, attempts at persuasion, and the deployment of alternative dissuasive tools. Although one may expect these alternative channels to be important, relatively little empirical work measures the relative importance of them compared to a tax’s direct financial influence.In this article, we study the importance of nonprice factors in a particular policy domain: discouraging smoking with cigarette taxes. Examining state-level cigarette tax changes occurring between 1989 and 2009, we document the time paths of tobacco-industry-related political donations, antismoking appropriations, cigarette-related news headlines, and legislation of place-based smoking restrictions. We find that these nonprice factors are changing during windows when tax changes occur. To explore how this evolution of nonprice factors matters for estimates of behavioral change, we make use of information on the cigarette consumption of new mothers reported in the Vital Statistics Detailed Natality Data. In this population, we conduct common analyses that measure the degree to which cigarette consumption responds to the increase in cigarette taxes in the window around a tax change. We find that controlling for nonprice factors substantially reduces the estimated responsivity of consumption to tax changes. In addition, because these nonprice factors evolve in advance of a tax change, they can generate a decrease in consumption in advance of the actual tax-induced price change. This anticipatory decline in consumption closely resembles that predicted by “rational-addiction” motives, but it is derived from a different underlying behavioral model.Taken together, our results suggest an important role of nonprice factors in understanding the evolution of cigarette consumption that occurs around a tax change. We conclude by discussing the implications of our results for forecasting the expected effects of tax policies and for assessing estimates of sin-tax elasticities.Revealing Values: Applying the Inverse-Optimum Method to Us State TaxesRobert EmbreeSystems of tax rates represent a major mechanism by which societies implement their social preferences about inequality and redistribution. Observing different income tax rates in two jurisdictions may be a ","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134949110","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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