Abstract: This paper studies the compliance, pricing, and progressivity effects of changing statutory incidence. The Wayfair Supreme Court decision granted U.S. states new authority to shift the statutory incidence of taxation from consumers to online and out-of-state retailers, forcing supply-side remittance of the sales tax. With state-level data, we find this increased sales tax revenues by 7.9 percent, concentrated in states with stringent compliance standards. With barcode-level scanner data, we find evidence of full pass-through of the tax to consumers. Effects are progressive however, with the reforms increasing tax liabilities principally for higher-income households.
JEL classification: H21, H22, H25, H26, H71, H73
Key words: Sales tax, compliance, state and local public finance, statutory incidence
Cite this article: William F. Fox, Enda Patrick Hargaden, LeAnn Luna, ‘Statutory incidence and sales tax compliance: Evidence from Wayfair’, Journal of Public Economics, Volume 213, 2022, 104716, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2022.104716
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