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Sales Taxes and the Decision to Purchase Online
Public Finance Review (2005)
  • Mikhail I. Melnik, Kennesaw State University
  • James Alm, Georgia State University
Current tax treatment of online business-to-consumer transactions may be one of the factors behind rapidly growing e-commerce. In this article, the authors examine the impact of state sales taxes on the consumer decision to conduct shopping online, using comprehensive data representative of the U.S. population. The estimation results demonstrate that there exists a direct relationship between the state sales tax rate and consumer participation in e-commerce. However, although statistically significant, this effect is relatively small. The estimates indicate that a 1 percent increase in the tax price leads to only a 0.5 percent decline in the probability of participation in online commerce.
  • sales taxes,
  • internet taxation,
  • e-commerce
Publication Date
March, 2005
Citation Information
Mikhail I. Melnik and James Alm. "Sales Taxes and the Decision to Purchase Online" Public Finance Review Vol. 33 Iss. 2 (2005)
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