The “Amazon Tax”

From Brian Baugh, Itzhak Ben-David, and Hoonsuk Park:

Several states have recently implemented laws requiring the collection of sales tax on online purchases.  In practice, however, only has been affected.  We find that households living in these states reduce Amazon expenditures by 9.5%, implying an elasticity of -1.3.  We find the effect to be more pronounced for large purchases, for which we estimate an elasticity of -3.2. Further, we find that the decline in Amazon purchases is offset by a 2.0% increase in purchases at local brick-and-mortar retailers and a 19.8% increase in purchases at the online operations of competing retailers.

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