Slide 24 of 27
Notes:
If we are going to continue to rely on the taxation of consumption, however, failure to tax remote sales violates two basic principles of taxation: Equity and neutrality.
Equity requires that similar circumstances be treated similarly. If I buy a shirt from Land’s End and don’t pay a tax, but I buy the same shirt from Kmart and it is taxed, similar transactions are receiving different tax treatments. The public policy question here is why the method of initiating a transaction should result in a difference in tax liability.
Ideally, a tax system should not favor one method of doing business over another--it should be neutral. By not collecting taxes on remote sales, the State is implicitly favoring this means of commerce, raising the question of what interest the State has in favoring remote sales over face-to-face sales.