Amazon Sales Suffer in States With Sales Tax

An Ohio State University study has found that Amazon sales have taken a hit in states that are now collecting sales tax.

Households in tax-charging states reduced their purchases by 10 percent, and online purchases of more than $300 fell by 24 percent.

Amazon currently collects sales tax in 20 states, according to its website. They are: Arizona, California, Connecticut, Georgia, Indiana, Kansas, Kentucky, Massachusetts, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.

Florida is set to join that list on May 1.

The study also found that brick-and-mortar stores received a 2 percent increase in total purchases in states with sales tax and a 6.5 percent increase in purchases of more than $300. Competing online retailers received a 20 percent increase in total purchases, and a 24 percent increase in purchases of more than $300. Amazon Marketplace vendors, who pay a fee to appear on Amazon.com but do not have to charge sales tax, received a 60 percent increase in sales on purchases of more than $300.

The authors of the study conclude: “Overall, our study shows that Amazon experiences a decline in sales following the implementation of an Amazon tax. Households substitute Amazon with other retailers: either online retailers who are exempt from collecting sales tax or in-state retailers (online and brick-and-mortar).” 

The entire study can be read here