It’s been a year since the U.S. Supreme Court handed down its decision in the Wayfair case giving states the ability to collect taxes on remote sales. At the time, we called it a big deal. Last October, the state revenue department put into effect new rules to accommodate the ruling. At the time, state analysts anticipated modest but positive revenue gains. And in March, lawmakers passed and the governor signed HB 5581 to conform with the new rules. As the Washington Research Council reports, the fiscal note on the bill estimated a net gain of $116 million in the 2019-2021 biennium.
Given the state’s unprecedented revenue growth plus $1 billion+ in new taxes, $116 million probably fits the “modest but positive” revenue gain expectation. But, it’s not nothing.
Governing magazine takes a look at how states have responded to their enhanced authority. Liz Farmer reports,
One year after the U.S. Supreme Court overturned a decades-old ban on states collecting sales taxes from online sellers, nearly every state has instituted a tax.
The swift and relatively painless transition has been a strong rebuke to the argument that requiring online sellers to remit sales taxes to 40-some states would be too cumbersome for states and sellers…
As of this week, the District of Columbia and 42 of the 45 states with a sales tax have enacted laws or regulations requiring remote sellers to remit a sales tax.
She notes some of the difficulty in estimating the revenue effect, incljuding
…it’s nearly impossible to separate out the impact of the ruling from economic growth that would have occurred anyway over the last year.
sales tax growth over the past fiscal year, which for most states will end on June 30, has exceeded expectations. According to the latest data from the National Association of State Budget Officers (NASBO), 32 states are collecting more than they anticipated. The tax is outperforming budget forecasts by 1.4 percent, or $3.6 billion. That’s better than the income tax, which is exceeding forecasts by 0.6 percent.
In total, sales tax revenue is projected to grow by 3.5 percent in fiscal 2019, an increase NASBO attributes at least in part to the uptick in online sales tax collections.
In all, thing seem to be going better than expected.