NCPA - National Center for Policy Analysis

How Much Would Americans Pay in Online Sales Taxes?

November 25, 2014

The Marketplace Fairness Act (MFA) is proposed federal legislation that would allow states to collect sales taxes from out-of-state retailers who make sales to residents within their state. Because the Supreme Court has ruled that states cannot require a retailer to collect sales taxes unless that retailer has a physical presence in the taxing state, the MFA would allow states to capture tax revenue from online sales.

What would the MFA mean for consumers? According to a study from the National Taxpayers Union:

  • The average family that regularly shops online would spend $360 in additional sales taxes next year were the MFA in place.
  • The highest tax burden would be in the South and the Southwest, with Louisiana households seeing sales tax increases of up to $850 and Nevada households seeing an additional $620 in sales taxes. The MFA would effectively impose the second largest tax increase in Nevada history.
  • The overall sales tax burden on households would increase by $30 to $34 billion annually.

Many states are anxious for Congress to pass the MFA in order to capture more tax revenue, but, according to NCPA Senior Fellow Pam Villarreal, proponents may overstate the amount of revenue that the MFA will generate for states, as a large chunk of e-commerce sales are actually business-to-business transactions.

Source: "The Consumer Impact of the Marketplace Fairness Act," National Taxpayers Union, October 31, 2014. 


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