The 'Amazon Tax': Empirical Evidence from Amazon and Main Street Retailers

Brian Baugh, Itzhak Ben-David and Hoonsuk Park
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Brian Baugh: OH State University
Hoonsuk Park: OH State University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Online retailers have gained a total price advantage over brick-and-mortar retailers since the formers generally are not required to collect sales tax. Recently, several states have implemented laws requiring that Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduce Amazon purchases by 11%, implying an elasticity of -1.5. The effect is more pronounced for large purchases (e.g., >= $250), for which we estimate a reduction of 25% in purchases and an elasticity of -3.5. We find some weak evidence of substitution of the lost purchases towards other online and brick-and-mortar retailers.

JEL-codes: D12 D40 L51 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-ger and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2014-05

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