The amount of revenue that would be generated by a mandate to collect remote sales tax depends on three primary factors: (1) The dollar amount of taxable e-commerce sales on which taxes currently are due, but not collected; (2) the applicable tax rates on these sales; and, (3) the “reach” of the mandate, i.e., the revenues that would be exempted if, for example, small businesses were not covered (or, realistically, if there was a significant amount of noncompliance).
Unfortunately, none of these three magnitudes is directly observable, and it is therefore necessary to develop estimates. For example, while there are both public and private estimates of the total amount of retail online sales, it is necessary to estimate the proportion of these sales accounted for by products (e.g., food products, intangibles) that are exempt from state
and local sales taxes.