The internet is still cutting into Texas sales taxes

July 17, 2017


We’ve heard a lot about how online shopping is taking a bite out of brick and mortar stores, leading to a collapse in retail employment. But it continues to pose problems for state and local governments, which lose billions of dollars in sales taxes each year to online purchases.

Sales taxes made up 31 percent of total state revenue in 2016. But the Supreme Court found in 1992 that it’s only legal to impose sales taxes if the vendor has a physical presence in the state where the buyer is located. 

Over the years, that has taken a toll on state sales tax collections — 22 states saw their revenues either decline or fail to keep pace with inflation last year, according to an NPR analysis of Census data. Over the last four decades, the aggregate tax base for all states has shrunk rather than grown, a 2015 study found.