The first serious study of the effect of Amazon customers in 20 states having to pay sales taxes for purchases made through the online merchandising giant has demonstrated that having to pay the sales tax does impact purchases through Amazon, which declined about 10% once the sales tax went into effect.
As Bloomberg News reports, researchers at Ohio State University tracked about 245,000 households that spent at least $100 on Amazon during the first six months of 2012. About one third of the households surveyed lived in California, New Jersey, Pennsylvania, and Virginia, states where sales taxes on Amazon purchases were implemented during the period studied. In states that implemented the tax on online purchases, "households reduced their purchases through Amazon by about 10% compared to those in states without the levy."
The "sales tax effect" was even more pronounced with more expensive items as researchers found that online purchases of more than $300 fell 24% in states with the levy.
The bad news for brick-and-mortar retailers is that only about 2% of the missed sales opportunities from Amazon went to stores with actual physical retail locations. The big winners who got most of the sales that customers took away from Amazon were other online retailers who did not charge sales tax, especially vendors in the Amazon Marketplace.
So it appears that for brick-and-mortar retailers to really benefit, customers of all online vendors would have to pay sales taxes on their transactions. It truly is a fairness issue with brick-and-mortar retailers unfairly penalized by online competitors, but it is also a “revenue” issue for the states involved, which lose an estimated $23 billion a year in sales taxes on online purchases.
But even without more robust imposition of sales taxes on online purchases, there is still an effect, and brick-and-mortar retailers, especially those who deal in a sizable percentage of high-ticket items like Best Buy, have already diagnosed it and are acting on their research (see "Sales Tax Matters").
Study Involves 245,000 Households
Posted by ICv2 on April 23, 2014 @ 12:00 pm CT
MORE GAMES
From Maestro Media
December 20, 2024
Maestro Media will release a new card game in the property’s 45th anniversary year.
Is 'Guardians of the Galaxy'
December 20, 2024
WizKids has revealed Marvel HeroClix 400: Guardians of the Galaxy, the next miniatures set in their new series of boxed sets.
MORE COMICS
From Marvel Comics
December 20, 2024
Doctor Doom's T-Rex counterpart makes a roaring return in new One World Under Doom "Doomasaur" variant covers.
From Dynamite Entertainment
December 20, 2024
Here's a preview of Vampirella Helliday 2024 Special #1, published by Dynamite Entertainment.