Analysis of the Remote Transactions Parity and Simplification Act and the Remote Transactions Parity Act of 2017
Online sales and use transactions are the subject of ongoing policy discussion. To collect revenues from the transactions, states have taken to passing individual legislation regarding the taxation of online transitions. These laws fall into three categories: economic nexus, affiliate nexus, and economic and affiliate nexus. Several federal policy solutions have been introduced in form of federal legislation. In the most recent congressional legislative sessions, several pieces of legislation have been proposed including Remote Transactions Parity Act of 2017 (RTPA) and the Remote Transactions Parity and Simplification Act (RTPSA). RTPA determines the sales tax rate and base by the physical location of the buyer of the good. RTPSA determines the sales tax rate based on the physical location of the buyer and the base from the definition of base determined by state of the seller. Comparing revenue estimates under the two policy proposals, RTPSA allows for the collection of additional revenue by states at a lower estimated annual expenditure cost.
Contrasting the Remote Transactions Parity Act of 2017 (RTPA) and the Remote Transactions Parity and Simplification Act (RTPSA) with regards to revenue, the RTPSA produces $444,580,237.05 additional revenue for states within the first year of implementation. Expenditures for RTPA could be around $10 million annually, where estimates of RTPSA annual expenditures are approximately $5.8 million.