New Buckeye Institute-NTUF Report Examines the Impact of E-Commerce Tax Policy »Research» The Buckeye Institute


New Buckeye Institute-NTUF Report Examines E-Commerce Tax Policy Impact

06/17/2021

Columbus, OH – A new report, Taxation Beyond Boundaries: Principles for Ohio’s South Dakota vs. Wayfair Tax Policy, published by the Economic Research Center of the Buckeye Institute and the National Taxpayers Union Foundation, examines the impact of the U.S. Supreme Court in 2018 decision in the South Dakota versus Wayfair on Ohio tax policy and how lawmakers can create a simple, easy-to-use e-commerce tax policy that will not harm the state’s economy.

“In his South Dakota versus Wayfair The US Supreme Court decision opened the door for states to revise how they collect sales taxes on overseas retailers. Unfortunately, Ohio is easy took over the model from South Dakota to comply with the court’s judgment, ”said Rea S. Hederman Jr., executive director of the Economic Research Center and vice president of policy at Buckeye Institute. “But South Dakota policies don’t offer a one-size-fits-all approach, and Ohio should rethink its e-commerce tax policies to ensure they don’t unfairly hamper small businesses or stifle economic growth.”

In the report, the authors use two guiding principles – harmless and simplicity – to outline the approach lawmakers should take to shape Ohio’s e-commerce tax policy that avoids “overloading businesses with complex tax systems that Business investment, economic growth, and job creation. “The authors recommend Ohio:

  • Raise the threshold a foreign retailer needs to collect sales tax from $ 100,000 to $ 500,000, freeing smaller businesses from expensive administrative burdens they cannot afford
  • Simplifying Ohio Taxes to Reduce Compliance Costs for Companies That Operate PostalWayfair Thresholds;
  • Reduce the number of tax authorities and simplify the tax transfer; and
  • Avoid the expansion of the economically destructive business tax in Ohio.

“Small businesses and entrepreneurs have unfortunately suffered from the low de minimis threshold in Ohio that requires companies outside of the state to pay distance taxes,” said Andrew Moylan National Taxpayers Union Foundation Senior Vice President. “Rather than adopting South Dakota’s low threshold for collecting and reporting taxes outside of the state, Ohio should raise those thresholds, simplify compliance requirements, and limit the linking of its business tax. The increase in online shopping during the pandemic has shown the importance of ensuring that tax policies are fair to small businesses that need the internet to be competitive. Our analysis with the Buckeye Institute clearly shows that Ohio needs to update its tax laws to make its system friendly to taxpayers and businesses everywhere. “

Taxation across borders was written by Rea S. Hederman Jr., Executive Director of the Economic Research Center and Vice President of Policy at Buckeye Institute; Andrew J. Kidd, Ph.D., former economist at the Economic Research Center at the Buckeye Institute; James B. Woodward, Ph.D., former economic research analyst at Buckeye Institute’s Economic Research Center; Andrew Moylan, executive vice president of the National Taxpayers Union Foundation; and Andrew Wilford, policy analyst at the National Taxpayers Union Foundation.

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