Researchers from Ohio State have published a paper on the “Amazon Tax,” saying that “only Amazon.com has been affected”.
A bunch of states have implemented laws that that demand sales tax on online purchases. Items sold by Amazon and shipped to the following states are subject to the tax: Arizona, California, Connecticut, Georgia, Indiana, Kansas, Kentucky, Massachusetts, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.
Some of these states have specific tax regulations related to the sales of wireless devices. These include California, Nevada, and Massachusetts, and Amazon explains it all here.
The researchers say, “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 retailers and a 19.8% increase in purchases at the online operations of competing retailers.”
Amazon explains, “If an item is subject to sales tax in the state to which the order is shipped, tax is generally calculated on the total selling price of each individual item. In accordance with state tax laws, the total selling price of an item will generally include item-level shipping and handling charges, item-level discounts, gift-wrap charges, and an allocation of order-level shipping and handling charges and order-level discounts.”
“The amount of tax charged on your order will depend upon many factors including Identity of the seller, type of item purchased, and destination of the shipment,” it says. “Factors can change between the time you place an order and the time of credit card charge authorization, which could affect the calculation of sales taxes. The amount appearing on your order as Estimated Tax may differ from the sales taxes ultimately charged.”
You can read the full report here.
Image via Amazon