Study: Amazon Hurt in States With New Tax Laws

[rdodolak]

http://homemediamagazine.com/retaile...tax-laws-33042

A new study finds that in states that have implemented laws requiring the collection of sales tax on online purchases, practically no online business other than Amazon has been negatively affected, with the online retailer seeing a 9.5% drop in sales in those states.

The report from Ohio State University found that the decline in Amazon purchases was offset by a 2% increase in purchases at local brick-and-mortar stores and a nearly 20% increase in purchases at competing online retailers.

“Though the laws are written generally to apply to all online retailers, Amazon is usually the only retailer to have been affected by such laws because it dominates the online retail space,” the report reads. “Previous empirical work shows that consumers are sensitive to prices and to sales tax, especially in the online retail arena, yet little empirical evidence has been gathered about the effects of wide implementation of such a tax on online and brick-and-mortar retail.”

The study looked at five states that have implemented online tax collection laws — California, New Jersey, Pennsylvania, Texas and Virginia — and examined transaction data for 3 million households. It found that consumers decreased their spending by 15.5% on Amazon purchases of more than $150 and by 23.8% on purchases equal to or more than $300.

Meanwhile, there was a 23.7% increase in purchases at other online retailers and a 6.5% increase in purchases at local brick-and-mortar retailers.

“We conclude that to a small degree, the tax legislation achieved its objective of restoring retail activity to local communities, though most of the gains in ‘leveling the playing field’ are garnered by the online operations of retailers,” the report reads.

State by state, Amazon purchases were reduced the most in California (14.7%), followed by Texas (11%), New Jersey (7.8%), Pennsylvania (6.8%) and Virginia (3.4%).

The report suggests that the Marketplace Fairness Act of 2013 — which would allow every state to collect sales tax on purchases made from out-of-state retailers — would lead to an “increase in the online sales of national retailers while only modestly increasing local brick- and-mortar revenues.” The Marketplace Fairness Act has been passed by the U.S. Senate and is currently before the House.

As of January, Amazon collects sales taxes in 19 states.

[Jett Rink]

They should collect tax in all 50 states! Taxes help make life better! People seem to forget that fact.

[Chiefy]

Originally Posted by Jett Rink

They should collect tax in all 50 states! Taxes help make life better! People seem to forget that fact.

In a perfect world yes, but that is never the case. How much tax is enough? Seems like anytime there is a deficit due to revenue (tax) mismanagement/overspending, taxes are raised again. Is that the answer? I'm all for shrinking our bloated government. Take Take Take is all they do. And when that's not enough, take some more.

[rdodolak]

Originally Posted by Jett Rink

They should collect tax in all 50 states! Taxes help make life better! People seem to forget that fact.

In an ideal world yes but it seems the stated claims that Amazon was hurting B&M stores wasn't all it was cracked up to be. B&M sales only increase 2% where as sales at other online retailers increased 20%. One could state not collecting sales tax does affect local B&M stores but it's not solely Amazon. It's far from it as all online retailers have an effect on local stores. In addition the online convenience factor does have an effect on where consumers choose to shop. Not surprising Amazon was affected the most by states with the highest sales tax.

Here's the OSU paper:

http://papers.nber.org/tmp/51204-w20052.pdf

According to this paper, "Households substitute Amazon with other retailers: either online retailers who are exempt from collecting sales tax, or in-state retailers (online and brick and-mortar)."

According to those numbers all this really did, for the most part, was shift consumers to other online retailers that aren't collecting sales tax.

[fronk777]

Not sure why anyone ever thought this wouldn't be the case...

[Blaze_Chamberlin]

It's basically the government wanting more money for doing the same job. Construction, government benefits, earmarked projects, etc.

[Jett Rink]

Originally Posted by Blaze_Chamberlin

It's basically the government wanting more money for doing the same job. Construction, government benefits, earmarked projects, etc.

...Trash collection, libraries, water services, etc.

[ultlife2013]

Oh no I have to pay taxes!

[MikeCL]

I don't have sales tax from 3rd party but I think it's because none ship from CT

[rickah88]

So I live in MD, and it was stated that Amazon would start charging tax on 10/1. I've been waiting to receive my first shipping email to see the tax charged, but it wasn't charged. I went to my account, looked up the order, and no tax on the invoice?
I have not checked my CC account, but does Amazon not show the tax charge via Amazon account and only on the CC?
I preordered this item back in June, but I thought the preorder date didn't matter?

[vocalhouse]

Originally Posted by rickah88

So I live in MD, and it was stated that Amazon would start charging tax on 10/1. I've been waiting to receive my first shipping email to see the tax charged, but it wasn't charged. I went to my account, looked up the order, and no tax on the invoice?
I have not checked my CC account, but does Amazon not show the tax charge via Amazon account and only on the CC?
I preordered this item back in June, but I thought the preorder date didn't matter?

Then you'll have to report it when you file your taxes next year.

[rickah88]

Originally Posted by MikeCL

Was it shipped by a 3rd party and not sold and shipped by Amazon?

No, all my BD preorders are through Amazon.

Originally Posted by vocalhouse

Then you'll have to report it when you file your taxes next year.

[MikeCL]

Originally Posted by rickah88

No, all my BD preorders are through Amazon.

That's a odd one.. try adding something to your cart and seeing if sales tax comes up.

[MikeCL]

I don't get sales tax charged if I buy from 3rd party sellers on Amazon..

A small note back when Amazon was fighting not to add sales tax in CT Amazon said they will be removing all 4rd party sellers that shipped from CT.

[MikeCL]

Did it ship yet?

[rickah88]

Originally Posted by MikeCL

Did it ship yet?

Yes, I've got a tracking number and it's due to arrive tomorrow(release day).
Also I received another shipping email, same deal, due to arrive tomorrow for release day. No tax charged.
I wonder if the packing slip that arrives with the BD(s), will show tax charged?

[MikeCL]

Originally Posted by rickah88

Yes, I've got a tracking number and it's due to arrive tomorrow(release day).
Also I received another shipping email, same deal, due to arrive tomorrow for release day. No tax charged.
I wonder if the packing slip that arrives with the BD(s), will show tax charged?

Look at the invoice at Amazon and see if it shows? For my PS4 it shows under the order summery and invoice of the tax paid $25.40

[rickah88]

Originally Posted by MikeCL

Look at the invoice at Amazon and see if it shows? For my PS4 it shows under the order summery and invoice of the tax paid $25.40

None of my preorders show any tax.
I did notice this at the bottom of each invoice: Please note: This is not a VAT invoice.

[MikeCL]

Originally Posted by rickah88

None of my preorders show any tax.
I did notice this at the bottom of each invoice: Please note: This is not a VAT invoice.

Was it shipped by a 3rd party and not sold and shipped by Amazon?