Statutory Incidence and Sales Tax Compliance: Evidence from Wayfair

This paper studies the compliance, pricing, and progressivity effects of changing statutory incidence. The recent Wayfair Supreme Court decision granted U.S. states new powers to shift the statutory incidence of taxation from consumers to online retailers, forcing supply side-administration of the sales tax. With state-level data, we find this increased sales tax revenues by 5.4 percent, more so in states with stringent compliance standards. With barcode-level scanner data, we find evidence of full pass-through of the tax to consumer prices. Effects are largely progressive however, with increased tax liabilities only for higher-income households