How Much Revenue Cities would Gain from Internet Sales Tax
- Jun 25, 2013 | Will Frei
If federal online sales tax proposals fail, major cities and counties stand to lose $1.7 billion dollars in sales tax revenue on Internet purchases this year, projects a recent study*. Estimated revenue losses by locality detailed below.
New York is projected to lose the most revenue in 2013, with $235 million in uncollected sales tax dollars. Here is the data for the next ten cities on the list:
The study also estimates losses for major counties. Here are the top ten:
Of course city and county revenue losses represent only a small part of total revenue uncollected from online sales:
- A 2009 study conducted by the University of Tennessee estimates that states missed a total of $11.4 billion in sales tax revenue in 2012.
- The National Conference of State Legislatures estimates that states missed a total of $23 billion in sales tax revenue in 2012.
Why this matters
This kind of data plays a prominent role in debates surrounding the Marketplace Fairness Act (MFA). The National Governors Association (NGA) argues in favor of MFA, citing the estimate that states lost $23 billion in revenue last year without online sales tax legislation. According to the NGA, ". . . states' sales tax bases are eroding and increasing states' reliance on other revenue streams."
MFA opponents, such as Montana Attorney General Tim Fox, maintain that an online sales tax bill would place an undue burden on ecommerce.
Whether states will get to collect this revenue under a law like MFA remains to be seen.
*The study was prepared for the National Association of Counties, the National League of Cities, and The United States Conference of Mayors, specifically