University of Michigan Law School Scholarship Repository
Abstract
Current economic conditions in the United States have led to a dramatic decrease in state tax revenue. Without these funds, states will be unable to support important public services, and hundreds of thousands of jobs in the public and private sectors are at risk of being cut, as states work to close 103billioninbudgetgaps.Accomplishingthatwillinvolveovercomingmanyhurdles,suchastheunpopularityofraisingtaxesduringtimesofeconomictrouble,butonelargelyuntappedsourcecouldprovideasignificantamountofincometostates.Statescurrentlylosearound23 billion annually in uncollected use taxes, about half of which likely would have come from transactions with Web retailers. Use taxes act as an adjunct to sales taxes on purchased goods and services that are not subject to sales taxes. But because this tax is voluntarily collected from the consumer instead of the retailer, compliance is extremely low