Question

Some experts believe that the growth in e-commerce will cause states and local governments to lose tax revenue, unless Internet transactions are subject to sales tax. What is one argument that supports this view

Answer 1

There are no options listed, but the most common argument used by state governments that want to tax internet sales is that at least half of the participants of the transaction live in their state. E.g. Amazon is based in the state of Washington, but it is actually incorporated in Delaware (like most corporations). But considering Delaware's small population, most of the people who purchase things on Amazon live someone else. The buyers' home states argue that since buyer doesn't live on Delaware, instead they live on New York, California, Texas, Georgia, or wherever, the sale actually took place on their state and not in Delaware. You might agree with this or not, but it is almost certain that the buyer lives somewhere else.