| This dissertation examines why, after the emergence of e-commerce, some state governments put aside longstanding tax competitions to develop cooperative state agreements while other states are still considering whether or not to participate in the harmonization efforts. By applying two conceptual frameworks that draw upon fiscal harmonization in public finance and policy innovation and diffusion in political science to this question, this research investigates and describes the elements that affect a state's fiscal harmonization and innovation process to adopt the interstate sales tax agreement. For the fiscal harmonization, the study defines the process of fiscal harmonization as a dynamic process of spillover where functional, political, and institutional effects produce integrative pressures on state cooperative policy behaviors in the area of on-line sales tax policy. For the tax policy innovations, the study creates the four competing hypotheses to determine the varying pressures that may have affected state decisions on whether to adopt the Streamlined Agreement in their states using Event History Analysis. This research finds that optimal enactment of uniform state laws and voluntary participation in interstate agreements indicate a functional coordination to converge state fiscal policy preferences and to produce a basis for further fiscal harmonization. First, functional spillover enhances the process of fiscal harmonization among state governments. Second, political spillover creates opportunities for political actors to directly influence Internet tax policymaking at the national level. Finally, institutional spillover empowers a multi-state political entity for developing legislation to simplify state sales tax structures. The empirical results also show four specific conclusions. First, state fiscal condition is understood as a motivating factor of SSUTA adoption. Second, there is evidence that gubernatorial elections and business interests are potential obstacles associated with the probability of SSUTA adoption. Third, policy diffusion is an influential factor in states' decisions to implement cooperative tax innovations. Finally, we cannot find evidence that political party controls and gubernatorial powers have any effect as resources needed to overcome obstacles on the adoption of multi-state tax innovations. These results can be generalized to other harmonization efforts by providing baseline data, a methodological foundation, and references. |
