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Sales tax effects on mail order customer purchasing decisions
~~
MICHAEL L. KLASSEN KAREN GLYNN KATHLEEN PORTER
Sales Tax Effects on Mail Order Customer Purchasing Decisions MICHAEL L. KLASSEN is an associate professor of marketing at the University of Northern Iowa. He has published in scholarly Journals and in the proceedings of national and international conferences. KAREN GLYNN i s currently an associate professor of marketing in the Graduate School of Business at Rosary College in River Forest, Illinois. Dr. Glynn’s research and teaching interests are in the areas of consumer behavior. small business management, and marketing education. Her articles have been published in schotarlyJournals and proceedings of national and regional conferences. KATHLEEN K. PORTER is an adjunct instructor of marketing at the University of Northern Iowa and is planning to pursue a PhD in marketing.
MICHAEL L. KLASSEN
KAREN GLYNN
KATHLEEN PORTER
ABSTRACT The results of a national survey of mail order customers are shared. The findings suggest that consumers are aware of the tax benefit associated w i t h mail order and that this benefit plays a more significant role in purchase decisions than popularly believed. The results are a “red flag” for the mail order industry about the potential deleterious impact o n sales if sales tax is mandated.
D 1994 John Wiley & Sons, Inc. and Direct Marketing EdllcdtiOndl Foundation, Inc CCC 0892-0591/94/03021-09
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INTRODUCTION
The mail order industry has experienced rapid growth in sales over the past two decades, making it one of the fastest-growing retail segments. The United States Bureau of the Census reports that between 1982 and 1987 mail order sales increased 80.8 percent, compared to 43.8 percent for all retail sales (9). However, this trend may be slowing, according to the Direct Marketing Association. It reports that the number of catalogs mailed declined from 13.6 billion in 1990 to 13.4 billion in 1991. The percentage of adult population shopping by phone o r mail declined from a high of 54.5 percent in 1990 to 52.6 percent in 1991 (5). Despite this decline, industry sources say that as much as one-fourth of all U S . merchandise purchases are done by some sort of mail order transaction ( 13). Generally, sales taxes on out-of-state purchases are not collected by a mail order retailer who does not have a substantial physical presence or nexus in the order-originatingstate. Sales taxes technically apply only to transactions within a state, and the taxing jurisdiction of a state does not g o past its borders. Goods bought out of state are subject to a “use tax,” which is exactly the same rate as the order-originatingstate’s sales tax. For example, if you are an Iowa resident and purchase a sweater in Iowa in the amount of $75, you pay $3.75 in state sales tax, plus 1.75 in local option tax. If you purchase the same sweater by mail order from a company in Maine, technically you owe the state of Iowa $3.75 in use tax. However, the mail order company in Maine doesn’t have to collect the use tax for Iowa if it doesn’t have a substantial physical presence in the state. In fact, use tax revenues from most mail order sales are rarely collected. Consequently, over $3 billion in use taxes are foregone by states every year (8).
collected by mail order organizations. Mail order retailers, on the other hand, contend that mandated sales/use tax would impose an onerous administrative burden on their companies and negatively affect potential sales. Many states have sought to collect sales tax from mail order retailers by enacting their own laws applying to out-of-stateretailers who have mail order customers in their states. Some 35 states have their own tax laws which require out-of-statemail order retailers to collect and remit their respective use taxes. Since the 1992 session of the U.S. Supreme Court, states are no longer able to enforce their own laws pertaining to the sales/use tax collection issue. The Court upheld its 1967 ruling in the precedentsetting National Bellas Hess u. Department of Reuenue, which prohibits states from collecting use taxes on entities with no physical presence within their borders. The Court implied that Congress is the only place to enact the empowering legislation, since the Bellas Hess decision was grounded in constitutional law. In the current state of affairs, Congress could draft legislation based o n the Commerce Clause of the Constitution, empowering it to regulate interstate commerce. Because the decision to authorize states to impose use tax obligations on out-of-state mail order firms has been left to Congress, both sides, states and mail order marketers, will need to renew their positions o n the state sales tax (use tax) collection issue. In order to be well represented before Con. gress, both parties will have to support their positions more adequately than in t h e past. The research presented in this article lends support to mail order marketers’ desire not to change current tax laws, by identifying the deleterious effects such changes could have on mail order consumer purchasing decisions.
SALES TAX COLLECTION DEBATE
REVIEW O F LITERATURE
There are two sides to the debate over granting states the right to extend their taxing jurisdictions across state borders. States contend that mail order firms enjoy an unfair competitive advantage over their own state retailers. Additionally, as mentioned above, states experience billions of dollars in lost revenue every year which, they believe, should be
There is a paucity of research on the subject of state sales tax effects on consumer behavior in mail order purchasing decisions. Prior studies (e.g., refs. 2, 3, 4,6,11, and 12), investigating mail order consumer buying behavior, have provided information about the motivation and attitudes of mail order shoppers. But none of this literature mentions factors pertain-
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ing to sales tax issues or price differentials brought about by sales tax. This lack of research is not surprising as sales tax in itself is not considered a controversial topic, and the perception of sales tax has generally been more favorable relative to other types of taxes. For example, in an Advisory Council on Intergovernmental Relations (ACIR) study ( l ) , a public opinion poll found that sales tax was one of the most acceptable ways to increase government collections. At the local level, sales tax was strongly preferred to either a local income tax or higher property tax. In a 1989 poll by the ACIR, respondents were asked which among four taxes-federal income tax, state income tax, state sales tax, and local property tax-was the least fair. State sales tax was third, while local property taxes were perceived as the least fair. In an earlier ACIR poll (l), it was observed that the growing preference for sales taxes might be attributable in large part to the growing burden of payroll taxes, the perceived inequalities in the income tax, and the long-standing public resistance to increased use of property taxes. Support for sales taxes can also be attributed to the fact that they are paid frequently and in small amounts. Moreover, many taxpayers like the idea that they can control to some extent the size of their payments by saving rather than consuming, and they like the fact that all citizens are taxed. These findings may account for part of the opinion held by many mail order marketers that sales tax is not a significant factor to consider when consumers shop by mail. There has been little previous research on the topic of sales tax and the possible competitive advantages among in-state retailers and mail order companies. Additionally, little research has measured the sales tax impact o n the mail order consumer. This lack of empirical data was alluded to during the 1987 hearings before the U.S. Senate Subcommittee o n Taxation and Debt Management of the Committee on Finance. Senator Mitchell (D, Maine) while hearing arguments from opponents and proponents of bills S.639 and S.1099-which would effectively require that out-of-state retailers collect use taxes-repeatedly asked for empirical evidence substantiating the states’ position of an unfair competitive advantage over their own retailers. He also requested evidence from mail order retailers to substantiate that there is no such unfair
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competitive advantage and that mail order patrons purchase by mail for reasons other than as a tax evasionary practice. Senator Mitchell stated: “I have heard this case made for several years now. I have asked every time of people who have come here: Where is the evidence? N o one ever has any evidence on the assumption that the unfair competitive advantage is that purchasers make their decisions based exclusively or even primarily o n the differential created by the sales tax” (14). In direct response to the legislative hearings before the House and Senate, Mowen, Weiner, and Young (lo), conducted two separate studies to assess the relative impact of the presence or absence of a sales tax o n store choice decisions in relation to six other factors that may influence store choice. The issue addressed was whether o r not the presence of a sales tax would influence store choice in the presence of other important store choice variables. In addition, a choice simulation was run to explore the effect of sales tax on store choice in a market share interpretation. The researchers found that, in low price conditions, subjects strongly preferred purchasing from the in-state store regardless of whether a sales tax was charged by the out-of-state store. In contrast, under the high price conditions, a strong effect occurred based upon whether the out-of-state store did not have to charge a sales tax. When the product was high priced, subjects preferred purchasing from the out-of-statestore. The choice simulation revealed that in “tax/low price,” “tax/high price,” and “no tax/low price” conditions, subjects tended to choose the in-state store. In a “no tax/high price” condition, only 20 percent of the subjects chose the in-state store. The results revealed that the absence of a sales tax caused consumers to shift their buying patterns. The findings suggest that if a store can avoid charging a sales tax to its customers, it is likely to have an advantage in the marketplace over stores that must charge a sales tax. The authors contend that if legislation allowed states to collect sales tax from mail order firms, those firms would likely lose sales to local retailers because consumers would tend to purchase from in-state stores. Along with the possibility of lost sales due to sales tax collection, the economic impact could be negative for some mail order firms. Specifically, those companies that are unable to absorb the
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higher operating costs that accompany sales tax collection may cease to function profitably. A study investigating the macromarketing effects of the taxation of interstate mail order sales (9) found that the effect on aggregate consumption patterns due to interstate mail order sales taxation depends o n the degree of demand elasticity with respect to price. In other words, the authors contend that the use tax when applied to mail order, does not fall equally on sales and therefore on all sellers, unless all mail order sellers make the same proportion of their sales in each taxing jurisdiction. Thus the effective rates on mail order sellers would be different. There appears to be strong reason to believe that the use tax, as applied to mail order sales, is less than completely shifted to the consumer, and that the portion carried by the sellers affects their location decisions and personnel policies. The effects of taxation on aggregate consumption patterns were also examined by Mittlestaedt and Stassen (9) by distinguishing among goods with different degrees of price elasticity. For those that are highly elastic with respect to price, such as luxury items, goods can be sold at a lower price and thus in greater volume than if the tax were more evenly applied. Accordingly, extending the use tax to cover more of the sales of these products would reduce the quantity sold, at least by mail. In turn, mail order retailers would feel pressure to find cheaper sources of supply and locate where the other factors of production are more economical. To the extent these efforts were successful, the tax would then b e shifted back to the factors of production in the form of lower wages and rent, and therefore, would have less net effect on consumption. Compared to price-sensitive goods, lowering the prices of lower elasticity goods, such as necessity items, does not provide as large an incentive to consumers. By extending the use tax to those goods not previously taxed, prices will be raised in the short run, especially for those most likely to be purchased by consumers with fewer alternatives. Over the long run, the effect would be to reduce the variety available by mail to consumers in all areas. In conclusion, mail order sales are distinguished by the disproportionate weight toward nonnecessities and, therefore, the imposition of a use tax on such sales partially reduces the regressive effects of a general sales tax. But, due to the present legal
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position, many nonnecessities sold by mail escape taxation which could be seen as a disguised subsidy to the buyers of such goods. OBJECTIVES OF THE STUDY
This study seeks to obtain empirical evidence about the significance of sales taxes on purchasing decisions of mail order customers and the impact on future mail order purchasing behavior due to sales tax collection. To address these issues, four objectives have been defined. The first objective is to determine if the absence of sales tax on mail orders is a significant purchasing variable and to discern what customers perceive as important reasons to shop by mail order. The second objective is to determine the effect of sales tax collection on future purchasing habits of its customers. The study seeks to determine whether or not mail order customers would alter their purchasing habits if mandatory tax collections existed. A third objective is to ascertain respondent's knowledge of their own state sales tax. If future laws dictate that mail order firms assume the task of collecting sales tax, part of this burden rests on consumers, who must have knowledge of their state's tax and be willing to correctly calculate and submit money to cover the tax. To the extent that customers are not willing or not able to comply, administrative costs of the mail order firm are increased, as companies will need to educate consumers and determine that they remit the correct tax due. The fourth objective is to determine at what point of purchase price and sales tax rate customers begin to object to a tax burden and indicate that they would alter their ordering activities. The study will look at various purchase price levels and sales tax rates to investigate consumer perceptions intent to buy.
METHOD Sample
The respondents for this study were randomly chosen from the mailing list of a national photographic equipment supply catalog company. The mail order
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retailer has been distributing catalogs nationwide for 22 years and currently sends out 600,000 photographic supply and equipment catalogs and about 140,000 video supply catalogs annually throughout the U S . and Canada. Questionnaires were distributed to a sample of 2,000 subjects who were randomly chosen from a database of approximately 145,000 photographic supply customers. In order to not include respondents who have never ordered merchandise through the mail, the selection criteria of having ordered from the photographic supply company catalog at least once in a 24-month period was implemented. There were 64,177 potential subjects that met this criterion and, from this group, every 32nd name was chosen to yield a sample of 2,000. Of the 2,000 questionnaires mailed, 1,276 were completed, resuiting in a response rate of 63.8 percent.
TABLE 2 Mail Order ShoDDina Variable-Absence Very Important 1
%Respondents 31.3%
2 13.4%
of Sales Tax’ Not Very Important
3 104%
4 18.3%
5 7 2%
6 6.6%
7 12.6%
Percent of Respondents Consider absence of sales tax important
55.1%
Undecided
18.3%
Consider absence of sales tax unimportant
26.4%
’ Over half the respondentsindicated that the absence of sales tax on mail orders was considered to be an important mail order shopping variable merchandise by mail is $2,165.15. O n average, respondents order from catalog anywhere from six to ten times in a 12-month period. The majority of respondents (803 or 62.9%) indicated that their orders are paid for by major credit cards.
Respondent Profile
The respondents were primarily male (71.7% or 91 5 respondents) with an average age of 48. The average age of female respondents was 29. Overall, 25.3% (or 323) reported their geographic location as having a population greater than 100,000, and 19.2% (or 245) indicated they were from rural locations. The largest proportion of respondents (31% or 387) have incomes between $30,000 and $49,999. Respondents’ average amount of expenditures on
TABLE 1 Reasons to Shop by Mail Order’ Mean Score I can find more speciality items
2.14
I can order at times convenient t o me
2.29
Convenience of shopping by leafing through a catalog
2.44
Greater selection of items available
2.48
Convenience of shopping from home
2.50
To the door delivery
2.65
Takes less time t o shop
3.12
Absence of sales tax
3.27
Twenty-four hours a day shopping
3.40
No parking hassles
3.47
Easier return policies
4.13
’ Reasons to Shop by mail order, ranked in order of importance. A scale of 1-7 was used. with one being most important. and seven least important.
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Results BY MAIL ORDER. The first objective of the study is to determine why customers shop by mail order, and to identify the relative importance of sales tax as a reason for shopping. Respondents were asked to express their feelings about the importance of 11 reasons to shop by mail order. Subjects recorded their responses on sevenpoint scales, with a “1” indicating that t h e reason is very important when shopping by mail and a “7” indicating that the reason is of little importance. Table 1 contains subjects’ mean responses and lists the reasons in ranked order of importance, according to subjects’ responses. Average scores for the reasons listed all fell within the perceived importance range (1-3) except for the reason, “easier return policies.” This indicates that for the majority of the respondents, each of the items had some influence on their willingness to shop by mail. The data summarized in Table 2 reveal that the absence of sales tax is considered important by a majority (55.1% or 703) of the respondents, who responded by circling 1,2, or 3 on the scales. These results, which conflict with the mail order industry’s perception of the relative unimportance of sales tax o n buying behavior, indicate that customers, in fact, do consider tax to be an important factor in their shopping decisions. This is not to say that mail order customers make their purchasing decisions excluREASONS FOR SHOPPING
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sively o n the basis of absence of sales tax, but that even in the presence of other perceived important mail order shopping variables, the absence of sales tax plays an important role. IMPACT O F SALES TAX ON FUTURE PURCHASING. The second objective of this study is to determine the impact of sales tax collection o n future mail orders. Subjects were asked to express their feelings about having to pay sales tax on out-of-state mail orders in the future. This question deals directly with the sales tax issue and the results were evenly divided (see Table 3). The average score on the seven-point scale was 3.98. Four hundred eighty~sixrespondents (38.1%) circled 1, 2 , or 3, indicating they would continue to order by mail. Two hundred ninety-two respondents (22.9%) circled 4 , indicating either indecision or neutrality. Four hundred ninety-seven (39%) of the respondents gave scores of 5 , 6 , or 7 , indicating that they might discontinue purchasing by mail order if a sales tax were imposed. Although no clear majority attitude on sales tax and future behavior was observed, the results indicate a potentially large impact o n the mail order business. If one-third of a single company’s customer base declined to continue ordering because of sales tax collection, it would create a real financial dilemma for many companies.
A
RESPONDENT’S KNOWLEDGE O F STATE SALES TAX.
third objective of the study is to ascertain respondents’ knowledge of their own states’ sales taxes. The respondents for this study indicated that they use checks or money orders 32.8 percent of the time
TABLE 3 The Impact of Sales Tax Collection on Respondent’s Future Purchasing Behavior‘ Discontinue to Purchase by Mail Order
Continue to Purchase by Mail Order i
2
3
4
5
6
7
15 2%
11.9%
11%
22.9%
11.5%
15%
12.5%
% Of all
respondents
’
In response to the question. “lo most cases, when you buy from an outof-state mail order company, that company does not have to collect sales tax on your purchase. If they did collect it from you. how might it affect your decision to purchase merchandise?” Thirty-nine percent of all respondents indicated that they would probably discontinue purchasing by mail order.
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and major credit cards 62.9 percent of the time. Of the respondents who pay by check or money order, which included 405 or 33 percent of the total sample, 53.1 percent (or 2 1 5 ) inaccurately stated their state sales tax rate, and 46.9 percent (or 190) correctly stated their tax. For all the respondents, 54.3 percent (or 693) were inaccurate and 45.7 percent (or 583) were accurate. The results suggest that if mail order customers are required to calculate their own sales tax o n a purchase, mail order firms will have to contend with a significant number of people who incorrectly compute and submit their state sales tax. For example, customers who pay by check or money order, which includes almost 33% of the respondents in this study, represent a type of customer that catalog sellers would have to include in the use tax compliance process. Specifically, mail order retailers will have to provide information to its customers of the tax rates and exemptions for each of the 46 taxing jurisdictions, and then hope that each customer will compute and remit the required sales tax. One result would be an increased cost to catalog sellers in order to devote more copy space to reciting state tax laws. Arthur P. Hall 11, an economist with the Washington, D.C. Tax Foundation, has referred to this situation as a “compliance nightmare.” PURCHASE PRICE AND SALES TAX RATES. A fourth objective of this study is to determine what price/ tax combinations respondents would object to enough that they alter their ordering activities. Five different purchase amounts at four different tax rates were established (see Exhibit 1).For each purchase amount, the respondent was asked to determine if they would place an order if sales tax in the amounts corresponding to the four different percentages was added to the purchase amount. The purchase amounts were $50, $100, $200, $300, and $500 and the tax rates were 2 , 4 , 6 , and 8 percent. Respondents made their judgments based on the intention to purchase photographic equipment and supplies. A seven-point scale was employed, with “1” indicating that the respondent would definitely place the order and “7” indicating that he or she would definitely not place the order. At a 2-percent tax rate for all purchase amounts of $50, $100, $200, $300, and $500, the majority of respondents indicated that they would place their orders. The mean responses across all purchase
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EXHIBIT 1
amounts at the 2-percent tax rate ranged from 2.14 to 3.21. At a tax rate of 4 percent, respondents' mean ratings suggested that they either didn't know how they would respond or that they would place the order. Mean responses ranged from 2.47 at $50 to 4.04 at $500. The 6-percent tax rate appears to be the pivotal point at which respondents indicated less willingness to purchase. The mean responses ranged from 4.05 to 5.11. At the 8-percent tax rate, mean responses indicated clear unwillingness to order as they ranged from 5.08 at $50 to 5.66 at the $500 level. The data suggest that the higher percent sales tax made respondents less willing to place a mail order. Using just the dollar amount of tax, we see in Table 4 that 80.7 percent would probably order $50 worth of merchandise at a 2-percent tax for a $1.00 total tax. However, at the 2-percent tax on $500, with a
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tax bill of $10.00, the percentage of probable orders drops steeply to 60.6 percent. t-Tests for paired samples were conducted between each tax rate for each price level. The differences were significant at p < .0001 for each pair. Focusing on the percentage of sales tax collected, the results are noteworthy. Using a $100 purchase amount as an example, at the 2-percent sales tax, 79% of the respondents would probably order. At the 8-percent tax on the $100 purchase amount, only 20.5-percent would probably order. Comparing the two extremes, we find that the percentage of those that would probably place an order for $50 of merchandise at 2 percent was 80.7 percent as opposed to only 9.1 percent who probably would not. But at 8 percent on $500, only 13.7percent said they would probably order and a substantial 77.8 percent indicated they probably would not. To summarize, in
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every case of a tax increase at all price levels, the number of people who would not place an order increases and those who would place orders decreases at all price and tax points. The results also suggest that the higher the percentage of sales tax, the less likely customers would be to order. In Table 5, a tax burden of $4.00 is calculated for the purchase amounts of $50, $100, and $200, at the corresponding tax rates of 2 , 4 , and 8 percent. What is significant to observe is that when the tax was only 2 percent, 73.2 percent indicated they would probably place the order. At the 4-percent tax rate 64.7 percent indicated a yes and, at the 8-percent rate, only 24.1 percent said they would probably place the order. The progression of dissent regardless of the tax burden, which was the same for each case, indicates a clear objection to the higher tax percentage. The perception of the tax rate overshadows the dollar tax amount. Respondents are not considering the dollar amount of tax in addition to the purchase price as objectionablerather they are objecting to the tax percentage alone. This perception conflicts with the respondents’ earlier lack of concern about the sales tax variable in their reasons to shop by mail and on their impact on future purchasing behavior. When exposed to
TABLE 4
Respondents Who Would Place an Order or Not Place an Order at All Purchase Prices and Sales Tax Rates of 2 Percent and 8 Percent’ Tax
Place
% Would Not Place
Burden
Order
Order
2% X 550
= $1
80.7%
8% X 550
= 54
24 1 %
%Would
Price
Tax
2%
x
5100
8 % X $100 2%
x
5200
9. 1 % 64.4%
= 52
79.0%
11.3%
= 58
20.5%
68.1%
= 54
73.2%
16.1%
= 516
18.5%
7 1 9%
= $6
66.1%
22.5%
524
16.0%
75.1%
5500
= 510
60.6%
28.2%
8% X 5500
= 540
13.7%
77.8%
8 % X $200
2%
x
5300
8 % X 5300 2%
x
=
’
Respondents indicated that they would b e more likely to place a n order at t h e 2.percent tax rate at price levels. The percent of respondents who would place orders decreased as t h e purchasers price increased. The percent of respondents who w o u l d n o t place orders increased at each price level.
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TABLE 5
Respondents Appear to Object to the Tax Rate More than the Purchase Price and Resultinq Tax Burden’ ~~
~~~
% Would
Tax
Price
Tax
Burden
Place Order
% Would N o t Place
Order
2%
x
$200
= 54
73.2%
16.1%
4%
x Sl00
= 54
64.7%
20.3%
= 54
24.1 %
64.4%
8% X 550
‘
For a tax bill of 5 4 00 under each price level, as the tax rate increased. the percent who would place an order decreases sharply and the percent who would not Dlace a n order increases.
the realities of possible sales taxes on their purchases, respondents indicated that tax is a significant issue and provides a sufficient motivation to not place orders at the higher tax levels of 6 and 8 percent.
CONCLUSION
This study provides evidence that the absence of sales tax is a motivating factor in mail order shopping. The findings suggest that consumers are aware of the tax benefit currently associated with mail order, and that this benefit may playa more significant role in purchase decisions than previously believed. The results also indicate, however, that consumers do not seek out mail order primarily for the sales tax benefit, as their responses indicate that there are other factors considered more important in the decision to purchase from a mail order company, such as convenience and selection. This study also provides evidence that the imposition of sales tax by mail order firms would cause a number of respondents to shift their buying behavior. Specifically, the findings suggest that, under both high and low purchase amounts, the propensity to place an order was related to the sales tax applied. When contemplating the extra cost of sales tax, respondents objected to the tax at higher rates, regardless of the total purchase amount. In conclusion, mail order companies should realize that a substantial proportion of their customers patronize their firms because of the sales tax benefit. T h e results of this study serve as a “red flag” to the mail order industry about the potential nega-
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tive impact on sales if sales tax collection is mandated. REFERENCES 1. Advisory Council o n Intergovernmental Relations (1986, Aprit), State and Local Taxation of Out-OfStateMail Order Sales, Robert B. Hawkins. Chair, Report No. A105, Washington, DC: ACIR. 2. Berkowitz, E., Walton, J., a n d Walter, 0. (1979, Summer), “ J n - H o m e Shoppers: The Market for Innovative Distribution Systems,” Journal of Retailing, 15-33. 3. Cunningham, I . and Cunningham, W. (1973, Fall), “The Urban In.Home Shopper: Socioeconomic and Attitudinal Characteris. tics,” Journal of Retailing, 42-50. 4. Darian, J . (1987, Summer), “In-Home Shopping: Are There Consumer Segments?,” Journal of Retailing, 163-186. 5. Dybdahl, C. (1992, August), “Catalog Retailing Cools Down After Growth of t h e 1980s,” Chain Store Age Executioe, 38A39A.
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6. Edwards, P. (1985, J u n e 17), “Study Probes Consumers’ Attitudes o n Direct Buying,” Advertising Age, 68. 7. Gillett, P. (1970, July), “A Profile of Urban In-Home Shoppers,” Journal of Marketing, 40-45. 8. Gupta, U. (1990, March 22), “Mail-Order Concerns Fight State Sales Taxes,” The Wall Street Journal, Bl-R2. 9. Mittelstaedt, R . and Stassen, R. (1991, Spring), “The Macromarketing Effects of t h e Tazation of Jnterstate Mail-Order Sales,” Journal ofMacromarketing, 46-56. 10. Mowen, J., Wiener, J., and Young, C. (1990, Summer), “Consumer Store Choice and Sales Taxes,” Journal ofRetailing, 222240. 11. Peters, W., Ford, N. (1972, January), “A Profile of Urban InHome Shoppers: T h e Other Half,” Journal ofMarketivzg, 62-64. 12. Reynolds, F. (1974, July), “An Analysis of Catalog Buying Behavior,” Journal of Markefing,47-51 13. Srodes, J. (1992, March 31). “Murdering Mail Order,” Financial World, 64-67. 14. U.S. Senate Committee o n Finance (1988). Hearingson Collection of State Sales and Use Taxes by Out-of.State Vendors, 100th Congress, 1st Session.
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MICHAEL L. KLASSEN KAREN GLYNN KATHLEEN PORTER
Sales Tax Effects on Mail Order Customer Purchasing Decisions MICHAEL L. KLASSEN is an associate professor of marketing at the University of Northern Iowa. He has published in scholarly Journals and in the proceedings of national and international conferences. KAREN GLYNN i s currently an associate professor of marketing in the Graduate School of Business at Rosary College in River Forest, Illinois. Dr. Glynn’s research and teaching interests are in the areas of consumer behavior. small business management, and marketing education. Her articles have been published in schotarlyJournals and proceedings of national and regional conferences. KATHLEEN K. PORTER is an adjunct instructor of marketing at the University of Northern Iowa and is planning to pursue a PhD in marketing.
MICHAEL L. KLASSEN
KAREN GLYNN
KATHLEEN PORTER
ABSTRACT The results of a national survey of mail order customers are shared. The findings suggest that consumers are aware of the tax benefit associated w i t h mail order and that this benefit plays a more significant role in purchase decisions than popularly believed. The results are a “red flag” for the mail order industry about the potential deleterious impact o n sales if sales tax is mandated.
D 1994 John Wiley & Sons, Inc. and Direct Marketing EdllcdtiOndl Foundation, Inc CCC 0892-0591/94/03021-09
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INTRODUCTION
The mail order industry has experienced rapid growth in sales over the past two decades, making it one of the fastest-growing retail segments. The United States Bureau of the Census reports that between 1982 and 1987 mail order sales increased 80.8 percent, compared to 43.8 percent for all retail sales (9). However, this trend may be slowing, according to the Direct Marketing Association. It reports that the number of catalogs mailed declined from 13.6 billion in 1990 to 13.4 billion in 1991. The percentage of adult population shopping by phone o r mail declined from a high of 54.5 percent in 1990 to 52.6 percent in 1991 (5). Despite this decline, industry sources say that as much as one-fourth of all U S . merchandise purchases are done by some sort of mail order transaction ( 13). Generally, sales taxes on out-of-state purchases are not collected by a mail order retailer who does not have a substantial physical presence or nexus in the order-originatingstate. Sales taxes technically apply only to transactions within a state, and the taxing jurisdiction of a state does not g o past its borders. Goods bought out of state are subject to a “use tax,” which is exactly the same rate as the order-originatingstate’s sales tax. For example, if you are an Iowa resident and purchase a sweater in Iowa in the amount of $75, you pay $3.75 in state sales tax, plus 1.75 in local option tax. If you purchase the same sweater by mail order from a company in Maine, technically you owe the state of Iowa $3.75 in use tax. However, the mail order company in Maine doesn’t have to collect the use tax for Iowa if it doesn’t have a substantial physical presence in the state. In fact, use tax revenues from most mail order sales are rarely collected. Consequently, over $3 billion in use taxes are foregone by states every year (8).
collected by mail order organizations. Mail order retailers, on the other hand, contend that mandated sales/use tax would impose an onerous administrative burden on their companies and negatively affect potential sales. Many states have sought to collect sales tax from mail order retailers by enacting their own laws applying to out-of-stateretailers who have mail order customers in their states. Some 35 states have their own tax laws which require out-of-statemail order retailers to collect and remit their respective use taxes. Since the 1992 session of the U.S. Supreme Court, states are no longer able to enforce their own laws pertaining to the sales/use tax collection issue. The Court upheld its 1967 ruling in the precedentsetting National Bellas Hess u. Department of Reuenue, which prohibits states from collecting use taxes on entities with no physical presence within their borders. The Court implied that Congress is the only place to enact the empowering legislation, since the Bellas Hess decision was grounded in constitutional law. In the current state of affairs, Congress could draft legislation based o n the Commerce Clause of the Constitution, empowering it to regulate interstate commerce. Because the decision to authorize states to impose use tax obligations on out-of-state mail order firms has been left to Congress, both sides, states and mail order marketers, will need to renew their positions o n the state sales tax (use tax) collection issue. In order to be well represented before Con. gress, both parties will have to support their positions more adequately than in t h e past. The research presented in this article lends support to mail order marketers’ desire not to change current tax laws, by identifying the deleterious effects such changes could have on mail order consumer purchasing decisions.
SALES TAX COLLECTION DEBATE
REVIEW O F LITERATURE
There are two sides to the debate over granting states the right to extend their taxing jurisdictions across state borders. States contend that mail order firms enjoy an unfair competitive advantage over their own state retailers. Additionally, as mentioned above, states experience billions of dollars in lost revenue every year which, they believe, should be
There is a paucity of research on the subject of state sales tax effects on consumer behavior in mail order purchasing decisions. Prior studies (e.g., refs. 2, 3, 4,6,11, and 12), investigating mail order consumer buying behavior, have provided information about the motivation and attitudes of mail order shoppers. But none of this literature mentions factors pertain-
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V O L U M E 8 NUMBER 3 W M M E R 1994
ing to sales tax issues or price differentials brought about by sales tax. This lack of research is not surprising as sales tax in itself is not considered a controversial topic, and the perception of sales tax has generally been more favorable relative to other types of taxes. For example, in an Advisory Council on Intergovernmental Relations (ACIR) study ( l ) , a public opinion poll found that sales tax was one of the most acceptable ways to increase government collections. At the local level, sales tax was strongly preferred to either a local income tax or higher property tax. In a 1989 poll by the ACIR, respondents were asked which among four taxes-federal income tax, state income tax, state sales tax, and local property tax-was the least fair. State sales tax was third, while local property taxes were perceived as the least fair. In an earlier ACIR poll (l), it was observed that the growing preference for sales taxes might be attributable in large part to the growing burden of payroll taxes, the perceived inequalities in the income tax, and the long-standing public resistance to increased use of property taxes. Support for sales taxes can also be attributed to the fact that they are paid frequently and in small amounts. Moreover, many taxpayers like the idea that they can control to some extent the size of their payments by saving rather than consuming, and they like the fact that all citizens are taxed. These findings may account for part of the opinion held by many mail order marketers that sales tax is not a significant factor to consider when consumers shop by mail. There has been little previous research on the topic of sales tax and the possible competitive advantages among in-state retailers and mail order companies. Additionally, little research has measured the sales tax impact o n the mail order consumer. This lack of empirical data was alluded to during the 1987 hearings before the U.S. Senate Subcommittee o n Taxation and Debt Management of the Committee on Finance. Senator Mitchell (D, Maine) while hearing arguments from opponents and proponents of bills S.639 and S.1099-which would effectively require that out-of-state retailers collect use taxes-repeatedly asked for empirical evidence substantiating the states’ position of an unfair competitive advantage over their own retailers. He also requested evidence from mail order retailers to substantiate that there is no such unfair
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competitive advantage and that mail order patrons purchase by mail for reasons other than as a tax evasionary practice. Senator Mitchell stated: “I have heard this case made for several years now. I have asked every time of people who have come here: Where is the evidence? N o one ever has any evidence on the assumption that the unfair competitive advantage is that purchasers make their decisions based exclusively or even primarily o n the differential created by the sales tax” (14). In direct response to the legislative hearings before the House and Senate, Mowen, Weiner, and Young (lo), conducted two separate studies to assess the relative impact of the presence or absence of a sales tax o n store choice decisions in relation to six other factors that may influence store choice. The issue addressed was whether o r not the presence of a sales tax would influence store choice in the presence of other important store choice variables. In addition, a choice simulation was run to explore the effect of sales tax on store choice in a market share interpretation. The researchers found that, in low price conditions, subjects strongly preferred purchasing from the in-state store regardless of whether a sales tax was charged by the out-of-state store. In contrast, under the high price conditions, a strong effect occurred based upon whether the out-of-state store did not have to charge a sales tax. When the product was high priced, subjects preferred purchasing from the out-of-statestore. The choice simulation revealed that in “tax/low price,” “tax/high price,” and “no tax/low price” conditions, subjects tended to choose the in-state store. In a “no tax/high price” condition, only 20 percent of the subjects chose the in-state store. The results revealed that the absence of a sales tax caused consumers to shift their buying patterns. The findings suggest that if a store can avoid charging a sales tax to its customers, it is likely to have an advantage in the marketplace over stores that must charge a sales tax. The authors contend that if legislation allowed states to collect sales tax from mail order firms, those firms would likely lose sales to local retailers because consumers would tend to purchase from in-state stores. Along with the possibility of lost sales due to sales tax collection, the economic impact could be negative for some mail order firms. Specifically, those companies that are unable to absorb the
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higher operating costs that accompany sales tax collection may cease to function profitably. A study investigating the macromarketing effects of the taxation of interstate mail order sales (9) found that the effect on aggregate consumption patterns due to interstate mail order sales taxation depends o n the degree of demand elasticity with respect to price. In other words, the authors contend that the use tax when applied to mail order, does not fall equally on sales and therefore on all sellers, unless all mail order sellers make the same proportion of their sales in each taxing jurisdiction. Thus the effective rates on mail order sellers would be different. There appears to be strong reason to believe that the use tax, as applied to mail order sales, is less than completely shifted to the consumer, and that the portion carried by the sellers affects their location decisions and personnel policies. The effects of taxation on aggregate consumption patterns were also examined by Mittlestaedt and Stassen (9) by distinguishing among goods with different degrees of price elasticity. For those that are highly elastic with respect to price, such as luxury items, goods can be sold at a lower price and thus in greater volume than if the tax were more evenly applied. Accordingly, extending the use tax to cover more of the sales of these products would reduce the quantity sold, at least by mail. In turn, mail order retailers would feel pressure to find cheaper sources of supply and locate where the other factors of production are more economical. To the extent these efforts were successful, the tax would then b e shifted back to the factors of production in the form of lower wages and rent, and therefore, would have less net effect on consumption. Compared to price-sensitive goods, lowering the prices of lower elasticity goods, such as necessity items, does not provide as large an incentive to consumers. By extending the use tax to those goods not previously taxed, prices will be raised in the short run, especially for those most likely to be purchased by consumers with fewer alternatives. Over the long run, the effect would be to reduce the variety available by mail to consumers in all areas. In conclusion, mail order sales are distinguished by the disproportionate weight toward nonnecessities and, therefore, the imposition of a use tax on such sales partially reduces the regressive effects of a general sales tax. But, due to the present legal
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position, many nonnecessities sold by mail escape taxation which could be seen as a disguised subsidy to the buyers of such goods. OBJECTIVES OF THE STUDY
This study seeks to obtain empirical evidence about the significance of sales taxes on purchasing decisions of mail order customers and the impact on future mail order purchasing behavior due to sales tax collection. To address these issues, four objectives have been defined. The first objective is to determine if the absence of sales tax on mail orders is a significant purchasing variable and to discern what customers perceive as important reasons to shop by mail order. The second objective is to determine the effect of sales tax collection on future purchasing habits of its customers. The study seeks to determine whether or not mail order customers would alter their purchasing habits if mandatory tax collections existed. A third objective is to ascertain respondent's knowledge of their own state sales tax. If future laws dictate that mail order firms assume the task of collecting sales tax, part of this burden rests on consumers, who must have knowledge of their state's tax and be willing to correctly calculate and submit money to cover the tax. To the extent that customers are not willing or not able to comply, administrative costs of the mail order firm are increased, as companies will need to educate consumers and determine that they remit the correct tax due. The fourth objective is to determine at what point of purchase price and sales tax rate customers begin to object to a tax burden and indicate that they would alter their ordering activities. The study will look at various purchase price levels and sales tax rates to investigate consumer perceptions intent to buy.
METHOD Sample
The respondents for this study were randomly chosen from the mailing list of a national photographic equipment supply catalog company. The mail order
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retailer has been distributing catalogs nationwide for 22 years and currently sends out 600,000 photographic supply and equipment catalogs and about 140,000 video supply catalogs annually throughout the U S . and Canada. Questionnaires were distributed to a sample of 2,000 subjects who were randomly chosen from a database of approximately 145,000 photographic supply customers. In order to not include respondents who have never ordered merchandise through the mail, the selection criteria of having ordered from the photographic supply company catalog at least once in a 24-month period was implemented. There were 64,177 potential subjects that met this criterion and, from this group, every 32nd name was chosen to yield a sample of 2,000. Of the 2,000 questionnaires mailed, 1,276 were completed, resuiting in a response rate of 63.8 percent.
TABLE 2 Mail Order ShoDDina Variable-Absence Very Important 1
%Respondents 31.3%
2 13.4%
of Sales Tax’ Not Very Important
3 104%
4 18.3%
5 7 2%
6 6.6%
7 12.6%
Percent of Respondents Consider absence of sales tax important
55.1%
Undecided
18.3%
Consider absence of sales tax unimportant
26.4%
’ Over half the respondentsindicated that the absence of sales tax on mail orders was considered to be an important mail order shopping variable merchandise by mail is $2,165.15. O n average, respondents order from catalog anywhere from six to ten times in a 12-month period. The majority of respondents (803 or 62.9%) indicated that their orders are paid for by major credit cards.
Respondent Profile
The respondents were primarily male (71.7% or 91 5 respondents) with an average age of 48. The average age of female respondents was 29. Overall, 25.3% (or 323) reported their geographic location as having a population greater than 100,000, and 19.2% (or 245) indicated they were from rural locations. The largest proportion of respondents (31% or 387) have incomes between $30,000 and $49,999. Respondents’ average amount of expenditures on
TABLE 1 Reasons to Shop by Mail Order’ Mean Score I can find more speciality items
2.14
I can order at times convenient t o me
2.29
Convenience of shopping by leafing through a catalog
2.44
Greater selection of items available
2.48
Convenience of shopping from home
2.50
To the door delivery
2.65
Takes less time t o shop
3.12
Absence of sales tax
3.27
Twenty-four hours a day shopping
3.40
No parking hassles
3.47
Easier return policies
4.13
’ Reasons to Shop by mail order, ranked in order of importance. A scale of 1-7 was used. with one being most important. and seven least important.
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Results BY MAIL ORDER. The first objective of the study is to determine why customers shop by mail order, and to identify the relative importance of sales tax as a reason for shopping. Respondents were asked to express their feelings about the importance of 11 reasons to shop by mail order. Subjects recorded their responses on sevenpoint scales, with a “1” indicating that t h e reason is very important when shopping by mail and a “7” indicating that the reason is of little importance. Table 1 contains subjects’ mean responses and lists the reasons in ranked order of importance, according to subjects’ responses. Average scores for the reasons listed all fell within the perceived importance range (1-3) except for the reason, “easier return policies.” This indicates that for the majority of the respondents, each of the items had some influence on their willingness to shop by mail. The data summarized in Table 2 reveal that the absence of sales tax is considered important by a majority (55.1% or 703) of the respondents, who responded by circling 1,2, or 3 on the scales. These results, which conflict with the mail order industry’s perception of the relative unimportance of sales tax o n buying behavior, indicate that customers, in fact, do consider tax to be an important factor in their shopping decisions. This is not to say that mail order customers make their purchasing decisions excluREASONS FOR SHOPPING
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sively o n the basis of absence of sales tax, but that even in the presence of other perceived important mail order shopping variables, the absence of sales tax plays an important role. IMPACT O F SALES TAX ON FUTURE PURCHASING. The second objective of this study is to determine the impact of sales tax collection o n future mail orders. Subjects were asked to express their feelings about having to pay sales tax on out-of-state mail orders in the future. This question deals directly with the sales tax issue and the results were evenly divided (see Table 3). The average score on the seven-point scale was 3.98. Four hundred eighty~sixrespondents (38.1%) circled 1, 2 , or 3, indicating they would continue to order by mail. Two hundred ninety-two respondents (22.9%) circled 4 , indicating either indecision or neutrality. Four hundred ninety-seven (39%) of the respondents gave scores of 5 , 6 , or 7 , indicating that they might discontinue purchasing by mail order if a sales tax were imposed. Although no clear majority attitude on sales tax and future behavior was observed, the results indicate a potentially large impact o n the mail order business. If one-third of a single company’s customer base declined to continue ordering because of sales tax collection, it would create a real financial dilemma for many companies.
A
RESPONDENT’S KNOWLEDGE O F STATE SALES TAX.
third objective of the study is to ascertain respondents’ knowledge of their own states’ sales taxes. The respondents for this study indicated that they use checks or money orders 32.8 percent of the time
TABLE 3 The Impact of Sales Tax Collection on Respondent’s Future Purchasing Behavior‘ Discontinue to Purchase by Mail Order
Continue to Purchase by Mail Order i
2
3
4
5
6
7
15 2%
11.9%
11%
22.9%
11.5%
15%
12.5%
% Of all
respondents
’
In response to the question. “lo most cases, when you buy from an outof-state mail order company, that company does not have to collect sales tax on your purchase. If they did collect it from you. how might it affect your decision to purchase merchandise?” Thirty-nine percent of all respondents indicated that they would probably discontinue purchasing by mail order.
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and major credit cards 62.9 percent of the time. Of the respondents who pay by check or money order, which included 405 or 33 percent of the total sample, 53.1 percent (or 2 1 5 ) inaccurately stated their state sales tax rate, and 46.9 percent (or 190) correctly stated their tax. For all the respondents, 54.3 percent (or 693) were inaccurate and 45.7 percent (or 583) were accurate. The results suggest that if mail order customers are required to calculate their own sales tax o n a purchase, mail order firms will have to contend with a significant number of people who incorrectly compute and submit their state sales tax. For example, customers who pay by check or money order, which includes almost 33% of the respondents in this study, represent a type of customer that catalog sellers would have to include in the use tax compliance process. Specifically, mail order retailers will have to provide information to its customers of the tax rates and exemptions for each of the 46 taxing jurisdictions, and then hope that each customer will compute and remit the required sales tax. One result would be an increased cost to catalog sellers in order to devote more copy space to reciting state tax laws. Arthur P. Hall 11, an economist with the Washington, D.C. Tax Foundation, has referred to this situation as a “compliance nightmare.” PURCHASE PRICE AND SALES TAX RATES. A fourth objective of this study is to determine what price/ tax combinations respondents would object to enough that they alter their ordering activities. Five different purchase amounts at four different tax rates were established (see Exhibit 1).For each purchase amount, the respondent was asked to determine if they would place an order if sales tax in the amounts corresponding to the four different percentages was added to the purchase amount. The purchase amounts were $50, $100, $200, $300, and $500 and the tax rates were 2 , 4 , 6 , and 8 percent. Respondents made their judgments based on the intention to purchase photographic equipment and supplies. A seven-point scale was employed, with “1” indicating that the respondent would definitely place the order and “7” indicating that he or she would definitely not place the order. At a 2-percent tax rate for all purchase amounts of $50, $100, $200, $300, and $500, the majority of respondents indicated that they would place their orders. The mean responses across all purchase
VOLUME 8 NUMBER 3 SUMMER 1994
EXHIBIT 1
amounts at the 2-percent tax rate ranged from 2.14 to 3.21. At a tax rate of 4 percent, respondents' mean ratings suggested that they either didn't know how they would respond or that they would place the order. Mean responses ranged from 2.47 at $50 to 4.04 at $500. The 6-percent tax rate appears to be the pivotal point at which respondents indicated less willingness to purchase. The mean responses ranged from 4.05 to 5.11. At the 8-percent tax rate, mean responses indicated clear unwillingness to order as they ranged from 5.08 at $50 to 5.66 at the $500 level. The data suggest that the higher percent sales tax made respondents less willing to place a mail order. Using just the dollar amount of tax, we see in Table 4 that 80.7 percent would probably order $50 worth of merchandise at a 2-percent tax for a $1.00 total tax. However, at the 2-percent tax on $500, with a
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tax bill of $10.00, the percentage of probable orders drops steeply to 60.6 percent. t-Tests for paired samples were conducted between each tax rate for each price level. The differences were significant at p < .0001 for each pair. Focusing on the percentage of sales tax collected, the results are noteworthy. Using a $100 purchase amount as an example, at the 2-percent sales tax, 79% of the respondents would probably order. At the 8-percent tax on the $100 purchase amount, only 20.5-percent would probably order. Comparing the two extremes, we find that the percentage of those that would probably place an order for $50 of merchandise at 2 percent was 80.7 percent as opposed to only 9.1 percent who probably would not. But at 8 percent on $500, only 13.7percent said they would probably order and a substantial 77.8 percent indicated they probably would not. To summarize, in
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every case of a tax increase at all price levels, the number of people who would not place an order increases and those who would place orders decreases at all price and tax points. The results also suggest that the higher the percentage of sales tax, the less likely customers would be to order. In Table 5, a tax burden of $4.00 is calculated for the purchase amounts of $50, $100, and $200, at the corresponding tax rates of 2 , 4 , and 8 percent. What is significant to observe is that when the tax was only 2 percent, 73.2 percent indicated they would probably place the order. At the 4-percent tax rate 64.7 percent indicated a yes and, at the 8-percent rate, only 24.1 percent said they would probably place the order. The progression of dissent regardless of the tax burden, which was the same for each case, indicates a clear objection to the higher tax percentage. The perception of the tax rate overshadows the dollar tax amount. Respondents are not considering the dollar amount of tax in addition to the purchase price as objectionablerather they are objecting to the tax percentage alone. This perception conflicts with the respondents’ earlier lack of concern about the sales tax variable in their reasons to shop by mail and on their impact on future purchasing behavior. When exposed to
TABLE 4
Respondents Who Would Place an Order or Not Place an Order at All Purchase Prices and Sales Tax Rates of 2 Percent and 8 Percent’ Tax
Place
% Would Not Place
Burden
Order
Order
2% X 550
= $1
80.7%
8% X 550
= 54
24 1 %
%Would
Price
Tax
2%
x
5100
8 % X $100 2%
x
5200
9. 1 % 64.4%
= 52
79.0%
11.3%
= 58
20.5%
68.1%
= 54
73.2%
16.1%
= 516
18.5%
7 1 9%
= $6
66.1%
22.5%
524
16.0%
75.1%
5500
= 510
60.6%
28.2%
8% X 5500
= 540
13.7%
77.8%
8 % X $200
2%
x
5300
8 % X 5300 2%
x
=
’
Respondents indicated that they would b e more likely to place a n order at t h e 2.percent tax rate at price levels. The percent of respondents who would place orders decreased as t h e purchasers price increased. The percent of respondents who w o u l d n o t place orders increased at each price level.
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TABLE 5
Respondents Appear to Object to the Tax Rate More than the Purchase Price and Resultinq Tax Burden’ ~~
~~~
% Would
Tax
Price
Tax
Burden
Place Order
% Would N o t Place
Order
2%
x
$200
= 54
73.2%
16.1%
4%
x Sl00
= 54
64.7%
20.3%
= 54
24.1 %
64.4%
8% X 550
‘
For a tax bill of 5 4 00 under each price level, as the tax rate increased. the percent who would place an order decreases sharply and the percent who would not Dlace a n order increases.
the realities of possible sales taxes on their purchases, respondents indicated that tax is a significant issue and provides a sufficient motivation to not place orders at the higher tax levels of 6 and 8 percent.
CONCLUSION
This study provides evidence that the absence of sales tax is a motivating factor in mail order shopping. The findings suggest that consumers are aware of the tax benefit currently associated with mail order, and that this benefit may playa more significant role in purchase decisions than previously believed. The results also indicate, however, that consumers do not seek out mail order primarily for the sales tax benefit, as their responses indicate that there are other factors considered more important in the decision to purchase from a mail order company, such as convenience and selection. This study also provides evidence that the imposition of sales tax by mail order firms would cause a number of respondents to shift their buying behavior. Specifically, the findings suggest that, under both high and low purchase amounts, the propensity to place an order was related to the sales tax applied. When contemplating the extra cost of sales tax, respondents objected to the tax at higher rates, regardless of the total purchase amount. In conclusion, mail order companies should realize that a substantial proportion of their customers patronize their firms because of the sales tax benefit. T h e results of this study serve as a “red flag” to the mail order industry about the potential nega-
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tive impact on sales if sales tax collection is mandated. REFERENCES 1. Advisory Council o n Intergovernmental Relations (1986, Aprit), State and Local Taxation of Out-OfStateMail Order Sales, Robert B. Hawkins. Chair, Report No. A105, Washington, DC: ACIR. 2. Berkowitz, E., Walton, J., a n d Walter, 0. (1979, Summer), “ J n - H o m e Shoppers: The Market for Innovative Distribution Systems,” Journal of Retailing, 15-33. 3. Cunningham, I . and Cunningham, W. (1973, Fall), “The Urban In.Home Shopper: Socioeconomic and Attitudinal Characteris. tics,” Journal of Retailing, 42-50. 4. Darian, J . (1987, Summer), “In-Home Shopping: Are There Consumer Segments?,” Journal of Retailing, 163-186. 5. Dybdahl, C. (1992, August), “Catalog Retailing Cools Down After Growth of t h e 1980s,” Chain Store Age Executioe, 38A39A.
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6. Edwards, P. (1985, J u n e 17), “Study Probes Consumers’ Attitudes o n Direct Buying,” Advertising Age, 68. 7. Gillett, P. (1970, July), “A Profile of Urban In-Home Shoppers,” Journal of Marketing, 40-45. 8. Gupta, U. (1990, March 22), “Mail-Order Concerns Fight State Sales Taxes,” The Wall Street Journal, Bl-R2. 9. Mittelstaedt, R . and Stassen, R. (1991, Spring), “The Macromarketing Effects of t h e Tazation of Jnterstate Mail-Order Sales,” Journal ofMacromarketing, 46-56. 10. Mowen, J., Wiener, J., and Young, C. (1990, Summer), “Consumer Store Choice and Sales Taxes,” Journal ofRetailing, 222240. 11. Peters, W., Ford, N. (1972, January), “A Profile of Urban InHome Shoppers: T h e Other Half,” Journal ofMarketivzg, 62-64. 12. Reynolds, F. (1974, July), “An Analysis of Catalog Buying Behavior,” Journal of Markefing,47-51 13. Srodes, J. (1992, March 31). “Murdering Mail Order,” Financial World, 64-67. 14. U.S. Senate Committee o n Finance (1988). Hearingson Collection of State Sales and Use Taxes by Out-of.State Vendors, 100th Congress, 1st Session.
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