Eleanor Wilking (Cornell) presents Does It Matter Who Remits? Evidence from U.S. States’ Voluntary Collection Agreements (with Yeliz Kaçamak (Boglaziçi University; Google Scholar) & Tejaswi Velayudhan (UC-Irvine; Google Scholar)) virtually at Florida today as part of its Tax Policy Colloquium hosted by David Hasen.

In South Dakota v. Wayfair (2018), the Supreme Court empowered states to require remote sellers to remit sales taxes, thereby eliminating a persistent difference in the tax treatment of online and brick and mortar commerce. Despite the attention this decision received, we know little about how shifting the responsibility to remit will affect consumption or the tax system. To remedy this, we use states’ staggered adoption of Voluntary Collection Agreements (VCAs), which committed large online retailers to remit sales taxes prior to Wayfair. We find that while retailer remittance stemmed sales tax base erosion, the effective tax increase arising from greater compliance was almost fully passed through to consumers via higher tax-inclusive prices. Among consumers, we find that wealthier households bore more of the tax burden after the policy, suggesting that closing this evasion channel was distributionally neutral, or even modestly progressive.

Discussant: David Weisbach (Chicago; Google Scholar)