Tax Revenues and E-Commerce

Table of Contents:

i. Introduction ii. E-Commerce iii. Internet Tax Freedom Act (ITFA) iv. Amazon and “Amazon Tax”
v. State Budgetary Gaps vi. Conclusion vii. Appendix
a. Colorado House Bill 10-1193
b. State Budget Gaps and Uncollected Tax Revenues
c. Regression Analysis
i. Graph 1.1 ii. Graph 1.2 iii. Graph 1.3 viii. References

Introduction

It was May of 1984 in Gateshead, England when Tesco recorded the first ever-online shopping transaction from a home . Tesco is the second largest retailer in the world after Wal-Mart, based on profits . This single transaction would pave the way towards a society that relies on the virtual store as opposed to a traditional brick and mortar setting. The convenience and accessibility that the virtual market provides has consequently provided inconveniences in other areas.
State and federal governments have been steadily suffering from budget short falls. E-Commerce has diverted business from the mom and pop stores to companies such as Amazon.com and Overstock.com. Small businesses have closed and the land that they once occupied now sits vacant, with no one paying the respective land and sales taxes that the business once generated. The closing of smaller, local retailers has, in retrospect, paved the way for the expansion of e-commerce and the exponential growth that has been realized over the last decade. Current legislation and lack of regulation have limited the potential for federal and state governments to cash in on these lost revenues.
I chose Amazon.com as my subject for this paper. The reasoning behind it is that Amazon.com has for years, been the target of many local and state governments and tax authorities. This may be due to the overall success that Amazon has realized in its short history or their success at using tax codes and legislation to their