The study’s authors, economists at Ohio State University, focused their analysis on five states that adopted “Amazon taxes” between 2012 and 2013. These taxes require Internet sellers to collect sales tax on purchases made by residents of states where the sellers have no physical presence in the form of stores, warehouses, or employees. They’re known as “Amazon taxes” because they target sellers like Amazon.com that pay commissions to independent Internet affiliates who refer buyers to the company through Internet links.
The authors hypothesized that Amazon taxes would lead to a decline in Amazon’s sales and substitution to alternative retailers. According to their findings:
- The introduction of the tax resulted in a large decline across such states of 9.5% in the value of products purchased on Amazon.
- The total dollar amount spent on Amazon, including taxes, decreased by 2.8% in the wake of the law’s implementation.
- Consumers decreased their spending by 15.5% on purchases over $150, and by 23.8% on purchases of $300 or more.
- The likelihood of shopping at Amazon during any particular week decreased by 0.7 percentage points, representing a relative decline of 3.7%, following the tax’s implementation.
- Amazon shoppers increased their purchases at competing retailers by 19.8% and at local brick-and-mortar retailers by 2.0%.
- After the tax went into effect, sales of Amazon Marketplace merchants, who are generally not subject to the Amazon tax, increased by 60.5% for sales of $300 or more.
