Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”

Brian Baugh, Itzhak Ben-David and Hoonsuk Park

No 20052, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: For years, online retailers have maintained a price advantage over brick-and-mortar retailers by not collecting sales tax at the time of sale. Recently, several states have required that online retailer Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduced Amazon purchases by 9.4% after sales tax laws were implemented, implying elasticities ranging from –1.2 to –1.4. The effect is more pronounced for large purchases, for which we estimate a reduction of 29.1% in purchases, corresponding to an elasticity of –3.9. Studying competitors in the electronics field, we detect some evidence of substitution toward competing retailers.

JEL-codes: D12 D40 L51 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-ind and nep-ure
Note: CF IO
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Citations: View citations in EconPapers (3)

Published as BRIAN BAUGH & ITZHAK BEN-DAVID & HOONSUK PARK, 2018. "Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”," The Journal of Finance, vol 73(4), pages 1819-1855.

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