The Amazon Tax Problem: What Collecting Sales Tax Costs the Online Retail Giant [View all]
Amazon (NASDAQ: AMZN ) has either made deals to or been forced by law to collect sales tax in a number of states -- sales for the site to households in those states have decreased by 9.5%, according to a study by researchers at Ohio State University.
The study also showed that the effect is "more pronounced" for larger purchases and that Amazon's loss becomes a 2% increase in purchases at local brick-and-mortar retailers and a 19.8% increase in purchases at competing online retailers.
If those numbers track out as Amazon either agrees to (or is forced to) collect sales tax around the country, the impact on business could be enormous (though less than a 9.5% drop in business because some states don't have a sales tax in the first place).
Amazon has been such a huge success that it has taken business away from traditional retailers and affected sales tax collection across the country. Tax collection in general has fallen more into focus as the so-called "Great Recession" lowered revenues across the board and caused an increased demand on services. That has led a number of states to evaluate their tax collection systems. Amazon has fallen under scrutiny because the site not only avoids paying taxes to the state (which hurts the state), but not charging sales tax gives the online retailer a pricing advantage over actual stores.
More at http://www.fool.com/investing/general/2014/04/23/the-amazon-tax-problem-what-collecting-sales-tax-c.aspx .
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