Economics, Finance and Quantitative Analysis

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How does online cross-border shopping affect state use tax liabilities? We collect our own data on actual online cross-border shopping transactions from, focusing upon a “representative” commodity classification and a “typical” day. These data allow us to examine the extent of actual online crossborder shopping by buyers, and the subsequent potential impact on state use tax liabilities of buyers. Our results indicate that online cross-border shopping is highly prevalent on eBay, with out-of-state purchases accounting for on average 94 percent of the volume of a state’s online purchase transactions. Even so, given the limited volume of eBay-based transactions relative to total sales transactions, the likely impact of cross-border transactions on state use tax revenue streams is negligible, even if we assume full buyer compliance with state use taxes.

Journal Title

Tulane Economics Working Paper Series #1206