Michael O. Leavitt Center for Politics & Public Service

Project Prologue

Introduction

Governor Leavitt assumed office in January, 1993, a pivotal time in history when the forces of globalization and the opportunities presented by the electronic highway were just being recognized. In his inaugural address, Governor Leavitt noted the challenges and opportunities presented by the changing economy and invited Utah citizens to join him in meeting those challenges. Just a few months before, the United States Supreme Court, in Quill v. North Dakota, had decided a case that would have tremendous impact on the retail industry, as it grew and changed under the forces of electronic commerce and globalization. The Quill Company was actually a fairly traditional mail order retailer. It sold office supplies through its catalogue. And it sold a lot of office supplies. Quill did not have a store or warehouse in North Dakota and, according to prior Supreme Court precedent, National Bellas Hess, it did not believe it should be required to collect sales tax for North Dakota on goods that it sold in the state. North Dakota, on the other hand, believed that both the mail order industry and federal case law on interstate commerce had changed in the twenty-five years since National Bellas Hess had been decided (more…)

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Sounding the Warning

About the time of Governor Leavitt’s inauguration, internet was becoming a unbiquitous presence in the lives of Americans. The growth of electronic commerce was anticipated to eclipse the growth of normal “bricks and mortar” retail activity. Noted economists and like Lester Thurow and Austin Goolsbe were predicting that half the store-fronts on main street would be vacant by 2010. Many people thought the convenience, selection, and economies of scale available to electronic retailers would drive traditional retailers out of business. That eventuality would have profound impact on state and local tax revenues. Utah has a fairly balanced tax system in many ways. It has a property tax, which is a tax on wealth. That tax is imposed on wealth. It is assessed by County Assessors and collected by County Treasurers. The taxpayer receives a bill each year for his or her tax, without any effort on the taxpayer’s part. The state has an income tax, which is a tax on income. Although much of the tax is collected by employers through wage withholding, the income tax is essentially “self-assessed.” Each taxpayer files his or her own tax return every year, declaring income and computing the tax due. The state also (more…)

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Northwest Regional Sale Tax Project

It was in this environment, and with this realization, that Governor Leavitt addressed the annual meeting of the Multistate Tax Commission in Dana Point, California. He outlined the challenges facing the sales tax and the competitive disadvantage that burdened Main Street businesses. He noted that the issue was very simply whether or not the sales tax would remain a viable source of revenue for state governments in the 21st Century. He challenged the states to work together to simplify their sales tax systems, in the hope that the burden on interstate commerce presented by the current morass of thousands of jurisdictions with their own tax bases, rates, exemptions, and procedural requirements could be dramatically reduced. With dramatic simplification, in would not be unreasonable for Congress to determine that a collection requirement could legitimately and appropriately be imposed on an internet retailer exploiting the market of a state. The states of Idaho, Utah and Washington took up the challenge. Val Oveson, Chair of the Utah State Tax Commission, Mike Southcombe, Chair of the Idaho State Tax Commission, and Fred Kiga, Director of the Washington State Department of Revenue agreed to commence the Northwest Regional Sales Tax Project.5 Structure of the Project (more…)

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Advisory Commission on Electronic Commerce

Background. The Advisory Commission on Electronic Commerce was established pursuant to P.L. 105-277, Div C, Title XI Stat. 2681-719, and codified as 47 U.S.C.S. § 151 -5ec. 1102 (H.R. 4328) (referred to herein as the “Internet Tax Freedom Act” or the “Act”). As set forth in the Act, the Commission’s statutory mandate is to study “federal, state and local, and international taxation and tariff treatment of transactions using the Internet and Internet access and other comparable intrastate, interstate or international sales activities.” The Act required the Commission to complete its study within 18 months and transmit its findings, including any legislative recommendations, to Congress. The Advisory Commission on Electronic Commerce met in four in- person meetings: Williamsburg, Virginia; New York City, New York; San Francisco, California; and Dallas, Texas. At its final meeting in Dallas on March 20 and 21, 2000, the Commission voted on a number of proposals bearing on the subject of the Commission’s charter. Certain of those proposals received a 2/3rds vote and, pursuant to the statute, represent findings and recommendations of the Commission. Other proposals, including those pertaining to state sales and use taxes, received a majority vote of the Commissioners and are identified as such (more…)

References

Michael O. Leavitt Center for Politics and Public Service

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