Researchers Say Online Sales Tax Caused 10% Drop In Amazon Purchases

A 42-page paper published by researchers from Ohio State University claims Amazon shoppers in states that have enacted online sales tax laws have reduced their spending on Amazon by 10 percent.

Bloomberg.com reported on “The Amazon Tax” study which tracked the spending habits of 245,000 households that had spent at least $100 on Amazon during the first half of 2012 and followed their spending habits through 2013.

According to the report, not only did spending drop 10 percent in the states with online sales taxes, but purchases totaling more than $300 plummeted 24 percent in those same states.

Bloomberg.com reporter Adam Satariano writes:

Amazon collects sales tax in 20 states, according to its website. More are set to follow as the company has become a popular target to help state governments generate more revenue to budget shortfalls; Florida is set to begin charging a tax on May 1. States lose an estimated $23 billion a year in uncollected sales taxes from Web retailers.

The researchers discovered the online sales tax only slightly affected sales figures for brick-and-mortar stores, but had a much stronger impact on online retail competitors of Amazon.

From the “Amazon Tax” study: “We find that the decline in Amazon purchases is offset by a two-percent increase in purchases at local brick-and-mortar retailers and a 19.8 percent increase in purchases at the online operations of competing retailers.”

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Amy Gesenhues

Amy Gesenhues was a senior editor for Third Door Media, covering the latest news and updates for Marketing Land, Search Engine Land and MarTech Today. From 2009 to 2012, she was an award-winning syndicated columnist for a number of daily newspapers from New York to Texas. With more than ten years of marketing management experience, she has contributed to a variety of traditional and online publications, including MarketingProfs, SoftwareCEO, and Sales and Marketing Management Magazine. Read more of Amy's articles.