Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota

  • Blumenthal M
  • Christian C
  • Slemrod J
 et al. 
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Abstract

This paper takes a pragmatic look at the appropriate sales tax policy for the Information Highway, composed of Internet/on-line service providers ; content, hardware/software, and tele- communications transmission. Our general conclusion is that the sales tax should be designed to be largely con- sistent with the current structure. At the same time, we argue for a more inclusive approach to taxing final sales and a more liberal treatment of business input pur- chases. Specifically, we argue for destina- tion-based taxes; an economic concept of nexus preferably enabled through Con- gressional action; a direct use rule for ex- emption of business purchases; and the enumeration of nontaxable as opposed to taxable transactions. Neutrality should be enhanced by taxing similarly all functionally equivalent activities

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Authors

  • Marsha Blumenthal

  • Charles Christian

  • Joel Slemrod

  • Matthew G. Smith

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