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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and local
levels. We are a 501(c)(3) nonprofit
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Online Sales Tax Revenue
Presents an Opportunity for Permanent,
Comprehensive Tax Reform in Wisconsin
• On June 21, 2018, the U.S. Supreme Court handed down a landmark decision
in South Dakota v. Wayfair, Inc., expanding states’ authority to require out-of-
state businesses (primarily online retailers) to collect and remit sales taxes on
transactions involving in-state residents.
In its decision, the Supreme Court overturned longstanding legal precedent
that previously limited states’ online sales tax collection authority to sellers
with property or employees (“physical presence”) in a given state.
• The Wisconsin Department of Revenue has announced plans to issue a
remote sales tax rule that complies with Wayfair and to begin remote sales tax
collection effective October 1, 2018. Expanded remote sales tax collection is
expected to bring in $90 million in additional state sales and use tax revenue
for Wisconsin in 2018-2019, followed by $120 million annually in subsequent
In 2013, the Wisconsin legislature enacted a law requiring the state to reduce
state individual income tax rates across the board in proportion to any new
revenue generated from expanded online sales tax collection.
• As the state prepares to authorize expanded online sales tax collection in
compliance with Wayfair, Wisconsin lawmakers have the opportunity to
expand upon the 2013 law and dedicate any new revenue toward permanent,
comprehensive tax reform.
• Academic research consistently finds that broad-based, low-rate systems