Amazon Suffers When Sales Tax Is Imposed: Report - Twice

Amazon Suffers When Sales Tax Is Imposed: Report

Newegg, Best Buy are big beneficiaries
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A new study supports what retailers have been screaming about for years: Amazon has an unfair advantage in states where it doesn’t collect sales tax.

A new study supports what retailers have been screaming about for years: Amazon has an unfair advantage in states where it doesn’t collect sales tax.

Researchers at Ohio State University found that Amazon customers spent 8.3 percent less on products after sales taxes were imposed than they did before, and described the change as a “permanent decline” in purchase behavior.

Conversely, the sales-tax effect had a positive impact on competitors. Looking at the CE category, the researchers found that tech e-tailer Newegg.com — which collects sales tax in far fewer states than Amazon — enjoyed an 11.3 percent sales boost after taxes were added to Amazon orders.

But even BestBuy.com, which collects sales tax on every purchase due to the company’s brick-and-mortar presence in all 50 states, benefited when Amazon lost its exemption, with sales rising 7.1 percent on average.

The study, an update of earlier research, featured a larger sample size — 422,452 U.S. households — and “more precise” methodology, the Ohio State team said.

The findings, however, may soon become moot as Amazon continues to backfill the country with distribution centers in pursuit of ever-shorter delivery times ... since maintaining a physical presence is what triggers mandatory sales-tax collection.

Hat tip to Sarah Halzack at The Washington Post

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