A Tax System for an E-Commerce Economy

Many state governments and federal policymakers view a new, special tax on electronic commerce to be a fresh and attractive revenue source. But whether implemented at the state or national level, this new tax would be highly undesirable, because it simply expands the shortcomings of the current revenue structure. Because of the flexibility of e-commerce, the attempt to collect such a tax would result in enforcement policies that would further complicate an already complex tax system. The way out of this conundrum is to see the shortcoming in current efforts to tax internet transactions as part of a broader need to overhaul and modernize the nation's tax structure.