Dive Brief:
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Amazon.com's sales drop in states where it collects sales taxes, and other e-retailers and brick-and-mortar stores benefit, according to research from Ohio State University. Authors of “The ‘Amazon Tax’: Empirical Evidence from Amazon and Main Street Retailers” looked at five states with online sales taxes ranging from 5% to 8.2%.
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The value of products bought in the states studied fell 9.5%, the report found. E-retailers benefited the most when Amazon collected taxes, with a boost in purchases of nearly 20%, and local physical stores saw a 2% sales increase.
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Amazon now collects sales tax in 20 states, and that list is growing as it builds more fulfillment centers.
Dive Insight:
The online sales tax is an apparent no-brainer that nevertheless is having trouble getting enacted. E-retailers like overstock.com remain steadfast against state sales tax collection, but Amazon is not. For one thing, the e-retail giant already collects sales taxes in 20 states, and that number is rising as it continues to build more fulfillment centers that allow it to speed up delivery.
Amazon maintains that it can compete, with or without sales tax added. Look for Amazon to advocate harder for tax fairness, as the “Amazon tax advantage” increasingly no longer applies to Amazon.
