Can Taxes Shape an Industry? Evidence from the Implementation of the "Amazon Tax" / Brian Baugh, Itzhak Ben-David, Hoonsuk Park.

Format:

Book

Author/Creator:

Baugh, Brian.

Contributor:

National Bureau of Economic Research.

Ben-David, Itzhak.

Park, Hoonsuk.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20052.

NBER working paper series no. w20052

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

For years, online retailers have maintained a price advantage over brick-and-mortar retailers by not collecting sales tax at the time of sale. Recently, several states have required that online retailer Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduced Amazon purchases by 9.4% after sales tax laws were implemented, implying elasticities ranging from -1.2 to -1.4. The effect is more pronounced for large purchases, for which we estimate a reduction of 29.1% in purchases, corresponding to an elasticity of -3.9. Studying competitors in the electronics field, we detect some evidence of substitution toward competing retailers.

Notes:

Print version record

April 2014.