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

Brian Baugh, Itzhak Ben‐david and Hoonsuk Park
Authors registered in the RePEc Author Service: Itzhak Ben-David

Journal of Finance, 2018, vol. 73, issue 4, 1819-1855

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 their Amazon purchases by 9.4% following the implementation of the sales tax laws, implying elasticities of –1.2 to –1.4. The effect is stronger for large purchases, where purchases declined by 29.1%, corresponding to an elasticity of –3.9. Studying competitors in the electronics field, we find some evidence of substitution toward competing retailers.

Date: 2018
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1111/jofi.12687

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Working Paper: Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax” (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:73:y:2018:i:4:p:1819-1855

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