e on out-of-state companies, especially for small businesses or for sellers ofinformation goods that are delivered online and often do not even have a customer’s mailing2 Such theoretical discussions can be found in Gordon (1983), Mintz and Tulkens (1986), Braid (1987), Kanburand Keen (1993), Trandel (1992; 1994) and Gordon and Neilsen (1997).3 Empirical work on sales taxes and excise taxes in border areas can be found in Mikesell (1970), Fox (1986),Walsh and Jones (1988), or Rappaport (1994). Holmes (1998) gives similar evidence on the effects of right-to-worklaws in border regions.4 To actually impose such a tax, however, would likely require a specific federal law permitting states to requireout-of-state companies without nexus in a state, nevertheless, to collect use taxes for that state (see footnote 1). Foxand Murray (1997) give a good discussion of the issues. The role of digital content is not as clear (see McLure,forthcoming).5 The ITFA establishes a moratorium on new taxes but, applying a sales tax to physical goods sold over the Internetwould not be considered a new tax so long as it applies to retail and out-of-state mail-order sales.ഊ4address.Despite ongoing policy interest and despite the potential relevance to the broader field ofopen economy tax policy, there has been little empirical work on the impact of tax policy onInternet commerce. Most economic work on the Internet has focused on more basic issues suchas pricing and access.6Existing discussions of taxes and Internet commerce have either centeredon legal and practical issues (see, for example, Horner and Owens, 1996; Bourgeois andBlanchette, 1997) or else on the conceptual basis for Internet tax policy (Fox and Murray, 1997;McLure, 1997). Nor can we take lessons from previous research on mail-order sales which faceexactly the same issues. There is virtually no empirical work on that subject, either. Indeed pastwork that has advocated administering taxes...
