NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The “Amazon Tax”: Empirical Evidence from Amazon and Main Street Retailers

Brian Baugh, Itzhak Ben-David, Hoonsuk Park

NBER Working Paper No. 20052
Issued in April 2014
NBER Program(s):   CF   IO

Several states have recently implemented laws requiring the collection of sales tax on online purchases. In practice, however, only Amazon.com 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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Document Object Identifier (DOI): 10.3386/w20052

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