Problems with the state sales tax are large and growing. It has been the victim of two accelerating trends: more consumption of services, which are scarcely taxed in most states, and more consumption via e-commerce and other types of remote sales, which can make tax collection difficult if not impossible. Meanwhile, the revenues states lose to these developments continue to mount. Developments in California could shift the e-commerce debate to Congress, where expanded state taxing authority might get a better reception than it has in recent years, in light of the prospect of declining federal aid for states.
