JOURNAL OF LEGAL, ETHICAL AND REGULATORY ISSUES The Journal of Legal, Ethical and Regulatory Issues

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  • Volume 19, Number 2 Print ISSN: 1544-0036 Online ISSN: 1544-0044

    JOURNAL OF LEGAL, ETHICAL AND

    REGULATORY ISSUES

    L. Murphy Smith, Editor

    Murray State University

    Katherine Taken Smith, Co-Editor

    Murray State University

    The Journal of Legal, Ethical and Regulatory Issues is owned and published by Jordan Whitney

    Enterprises, Inc. Editorial content is under the control of the Allied Academies, Inc., a non-profit

    association of scholars, whose purpose is to support and encourage research and the sharing and

    exchange of ideas and insights throughout the world.

  • Authors execute a publication permission agreement and assume all liabilities. Neither Jordan

    Whitney Enterprises nor Allied Academies is responsible for the content of the individual

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    Board is responsible for the selection of manuscripts for publication from among those submitted

    for consideration. The Publishers accept final manuscripts in digital form and make adjustments

    solely for the purposes of pagination and organization.

    The Journal of Legal, Ethical and Regulatory Issues is owned and published by Jordan Whitney

    Enterprises, Inc., PO Box 1032, Weaverville, NC 28787 USA. Those interested in

    communicating with the Journal, should contact the Executive Director of the Allied Academies

    at info@alliedacademies.org

    Copyright 2016 by Jordan Whitney Enterprises, Inc., Weaverville, NC, USA

    mailto:info@alliedacademies.org

  • EDITORIAL REVIEW BOARD MEMBERS

    David Arnesen

    Seattle University

    Stephanie Huneycutt Bardwell

    Christopher Newport University

    Eugene Calvasina

    Southern University & A & M College

    Robert Cope

    Southeastern Louisiana University

    Debbie DuFrene

    Stephen F. Austin State University

    J. Keaton Grubbs

    Stephen F. Austin State University

    Theresa Hrncir

    Southeastern Oklahoma State

    Sandra McKay

    Southeastern Louisiana University

    Brian Winrow

    Winona State University

    Raymond Zimmermann

    The University of Texas at El Paso

    Suzanne Pinac Ward

    University of Louisiana at Lafayette

    Leigh Johnson

    Murray State University

    D.J. Parker

    University of Washington - Tacoma

    Taylor Klett

    Sam Houston State University

    Mohammad Fateh Ali Khan Panni

    City University Bangladesh

    Thomas R. Tudor

    University of Arkansas at Little Rock

    Treba Marsh

    Stephen F. Austin State University

    Roselie McDevitt

    Fairfield University

    Carlton C. Young

    Mississippi State University at Meridian

  • Table of Contents

    ONLINE SALES AND ITS IMPACT ON STATE AND LOCAL GOVERNMENT REVENUES: IS THERE A

    SOLUTION?............................................................................................................................ ................................1

    Thomas Bennett, Valdosta State University

    Raymond J Elson, Valdosta State University

    AN ANALYSIS OF THE ACCOUNTING AND FINANCIAL EFFECTS OF INCONSISTENT STATE AND

    FEDERAL LAWS IN THE RECREATIONAL MARIJUANA INDUSTRY…………………………………..11

    Kimberly Taylor, Murray State University

    Randall B. Bunker, Murray State University

    Leigh Redd Johnson, Murray State University

    Ray Rodriguez, Idaho State University

    TAX LOTTERIES: THE CROWDING-OUT OF TAX MORALE AND LONG-RUN WELFARE

    EFFECTS……………………………………………………………………………………………………...…26

    Marco Fabbri, Erasmus University Rotterdam

    Daniela C. Wilks, Universidade Europeia-Laureate International Universities

    MANAGING SOCIAL ENTERPRISES IN THE PHILIPPINES: CHALLENGES AND

    STRATEGIES……………………………………………………………………………………………………39

    Raymund B. Habaradas, De La Salle University

    Patrick Adriel H. Aure, De La Salle University

    THE PROPERTY TAX DEDUCTION - IMPACT ON GOVERNMENTS AND TAXPAYERS……………...57

    Tina Owens, Valdosta State University

    Raymond J. Elson, Valdosta State University

    USING CAFRS TO ESTIMATE THE COSTS OF CORPORATE MISCONDUCT ON SOCIETY A

    FRAMEWORK FOR CIVIC ACTION………………………………………………………………………….68

    Shirley A. Hunter, University of North Carolina at Charlotte

    MANAGEMENT DISCRETION OF ACCRUALS PRIOR TO THE DEMUTUALIZATION OF PROPERTY-

    LIABILITY INSURANCE COMPANIES………………………………………………………………………90

    Jane M. Weiss, University of Wisconsin-Whitewater

    USING PERSONALITY TESTING AS PART OF THE EMPLOYEE SELECTION PROCESS: LEGAL AND

    POLICY ISSUES FOR EMPLOYERS…………………………………………………………………………112

    Gerald E. Calvasina, Southern Utah University

    Richard V. Calvasina, University of West Florida

  • Journal of Legal, Ethical and Regulatory Issues Volume 19, Number 2, 2016

    1

    ONLINE SALES AND ITS IMPACT ON STATE AND

    LOCAL GOVERNMENT REVENUES: IS THERE A

    SOLUTION?

    Thomas Bennett, Valdosta State University

    Raymond J Elson, Valdosta State University

    ABSTRACT

    State and local governments are challenged to find alternative revenue sources to offset

    the approximately $23.3 billion lost from their inability to collect sales taxes from e-tailers. The

    issue is also impacted by the approximately 10,000 jurisdictions that might be entitled to sales

    tax remittance. Since the sales tax collection and remittance involves interstate commerce, any

    solution must be addressed at the federal level. However, Congress response has been slow, so

    states are developing individual action plans to move the conversation forward.

    The paper discusses the legislations that have been proposed to address sales tax

    collection and remittance, and their correct status. It offers a potential solution that might end

    the stalemate between Congress, states and local governments, and e-tailers.

    INTRODUCTION

    State and local governments are facing fiscal challenges due to declining revenues

    without a corresponding change in expenditures. As a result, these entities are exploring

    alternative revenue sources, such as the $23.3 billion in lost sales tax revenue in 2012 (most

    recent year available) that they are prohibited from collecting on online and catalog purchases

    (Hamilton, 2015). Alternative revenue sources such as an increase in property and income taxes

    are not feasible since tax increases are unpopular with the public.

    Sales taxes are an important revenue source for most jurisdictions, as it represents

    approximately 20% of annual revenue (Streamlined, 2016). In fact, the Tax Foundation reported

    that 45 states and the District of Columbia collect statewide sales taxes, and that 38 states collect

    local sales taxes (Drenkard & Kaeding 2016). The collection of sales taxes is complicated by the

    number of justifications (approximately 10,000) involved in the process (Harpaz, 2015), and the

    different tax rates across states (Drenkard et al, 2016). The sales tax rates are depicted in Tables

    A and B.

  • Journal of Legal, Ethical and Regulatory Issues Volume 19, Number 2, 2016

    2

    Table A

    Source: Drenkard & Kaeding (2016)

  • Journal of Legal, Ethical and Regulatory Issues Volume 19, Number 2, 2016

    3

    Table B

    SALES TAX RATES BY STATE

    STATE STATE RATE RANGE OF LOCAL RATES

    LOCAL RATES APPLY

    TO USE TAX

    Alabama 4.000% 0% - 8.5% Yes/No (1)

    Alaska 0.000% 0% - 7.5% (4), (7) Yes/No (1)

    Arizona 5.600% 0 - 7.10% (4), (7) Yes/No (2)

    Arkansas 6.500% 0% - 5.50% (4), (7) Yes

    California 7.500% (11) 0% - 2.5% (11) Yes

    Colorado 2.900% 0% - 8% (7) Yes/No (1)

    Connecticut 6.350% (8) 0% -1% N/A

    Delaware 0.000% (3) 0% N/A

    District of Columbia 5.750% 0% N/A

    Florida 6.000% (8) 0% - 1.50% (4), (7) Yes

    Georgia 4.000% (8) 1% - 4% Yes

    Hawaii 4.000% (5), (8) 0% - 0.5% N/A

    Idaho 6.000% 0% - 3% (7) No

    Illinois 6.250% (8) 0% - 4.75% (7) No

    Indiana 7.000% 0% N/A

    Iowa 6.000% 0% - 2% (7) No

    Kansas 6.500% (8) 0% - 5% (7) Yes

    Kentucky 6.000% 0% N/A

    Louisiana 5.000% (8) 0% - 7.75% (