The Path Ahead for Sales Tax Reform

October 13, 2020 at 2:00 PM

Where do U.S. state sales tax systems go from here? Two years ago, the U.S. Supreme Court resolved the looming jurisdictional issue with its decision in South Dakota v. Wayfair. States quickly adopted the presumed constitutional economic nexus standard—approving minimum thresholds that, when met, require remote sellers to collect the states’ sales and use taxes from in-state customers. States also seized the opportunity to adopt marketplace laws that impose tax collection duties on marketplace facilitators like EBay, Amazon.com, and Etsy.com. The states are relatively aligned: all but two have an economic nexus standard and all but three have approved marketplace facilitator rules. Still, businesses remain concerned over the gaps and new gray areas, especially administration.

Experts from the Council On State Taxation will discuss how state sales tax systems are structurally flawed: under-taxing household purchases, overtaxing business inputs, and offering too little administrative simplification. Businesses are even more concerned in the wake of state budget shortfalls caused by the Covid-19 pandemic and the resulting economic downturn. Taxpayers question how state and local lawmakers will cover fiscal gaps and whether these efforts will stymie needed reforms in sales and use taxation.

Learning objectives:

  • Understanding the extent to which states rely on state sales tax revenue.
  • Explore how making structural changes in the states’ sales and use tax systems could improve overall fairness and efficacy of these taxes.
  • Learn the key administrative simplifications states and local taxing jurisdictions could make to ease sales tax compliance burdens.
  • Compare which sales tax modernization efforts will pay off and which may create more problems.
  • Learn what tax policy options states are likely to consider to overcome budget deficits.
  • Discover what we can learn from consumption taxes in other industrialized nations.
  • Understand whether businesses and purchasers should worry about state legislatures enacting digital taxes.