Introduction
Tax policy is one strategy that states have to increase their competitiveness. From the 50 states nationwide, only five states do not impose sales tax or have a 0% sales tax rate; they are Alaska, Delaware, Montana, New Hampshire and Oregon. Without sales tax, people can buy in these five states without spending extra money on tax and they can have extra ‘money’ for saving or spending on other goods. Compared to some other states, they mostly charge ‘double’ sales taxes, which is state sales tax and local sales tax.
This non-sales tax policy, for sure, brings some changes or impact to these states as well as their neighboring states. Oregon and Washington are the states …show more content…
For that reason, the neighboring states of Oregon could lose some of their potential income from sales tax. In order to find out the state’s loss or potential gain from sales tax due to cross-border shopping of residents in border counties, in 2014, the Washington Department of Revenue conducted research. They collected and examined data from 14 counties located in eastern and western border counties.
Based on the study’s result, it has been proven that, only in the fiscal year of 2014, the state government of Washington lost approximately $ 193 million and the local government of Washington lost approximately $ 54 million from sales and use tax due to tax evasion by cross-border shopping. Those tax values are the result of $ 3 billion taxable retail sales. Significantly, 84.54 % of that total loss was from western border counties, which directly border with Oregon, and again, Clark County had the highest number of revenue loss from sales tax. The following table provides detailed information regarding the loss or potential gain estimate of taxable retail sales, state sales tax and local sales tax per …show more content…
In contrast to business in Washington State border counties, retail businesses in Oregon are probably one of the many parties in the state, which get positive impact of cross-border shopping trends from Washington State. The more people come to shop in their stores, the more profit will the business get. Moreover, if the businesses have more income, more profit, it means the more business income for the state.
Cross-border shopping to Oregon State of residents from Washington State can bring multiple benefits for Oregon economics condition. Just like the domino effect, the more costumers come, the more workers that shop needs to service the customers. Thus, the more job opportunity will open and it will reduce the number of unemployment. From the Oregon State standpoint, if people work and get salary, the state can gain income from people’s income tax because personal income tax contributed around 70 % of the overall tax