|Report: Online Sales Tax In US Stated Is Reducing Amazon Sales 24 pct|
This has to be affecting other businesses that are in those states. What are the individuals doing with their purchases? Are they shopping elsewhere, offline, or through some other means to acquire their purchases? Or, are they actually reducing their purchases by almost a quarter?
|Amazon.com Inc. (AMZN) is taking a hit in states that are collecting an online sales tax. |
In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that donít have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled ďThe Amazon Tax.Ē Report: Online Sales Tax In US Stated Is Reducing Amazon Sales 24 pct [bloomberg.com]
"The biggest sales uptick -- 61 percent for big-ticket items -- went to merchants that use Amazon Marketplace. These outfits pay Amazon a fee to offer products through the Amazon website, yet donít collect taxes. The products are typically available alongside Amazonís own listings."
So they still shopped at Amazon, they just picked an available alternative that didn't charge sales tax - not really a "sales drop for Amazon" in most people's minds.
Amazon favors the Mainstreet Fairness Act, that would impose a nationwide, simplified sales tax everywhere.
What he said AND
I shop at Amazon if I can get free shipping, which kind of balances out the sales tax. But often I will prowl Amazon for the reviews and whatnot but then buy the item elsewhere online, where they don't charge sales tax. Even though Amazon bought abebooks, for instance, the latter does not charge sales tax (and often the same book is cheaper with them than with Amazon). So I buy most books from them instead of Amazon.
I live in a state in which the governor signed an internet sales tax into law. I won't talk about how unconstitutional that is, because i could type about that all day.
The day the sales tax went into law, Amazon essentially fired every one of its associates in the state. We are only one of more than a dozen states they have done this to.
Fewer affiliates means fewer doorways into the Amazon site and thus fewer sales.
That's my opinion, anyway...
|The day the sales tax went into law, Amazon essentially fired every one of its associates in the state. |
Yeah, yhay happened to us in Minnesota too.
Anyone seen a number for how many affiliates were dumped?
Be interesting to know how much of the drop can be attributed to those affiliate sites being dumped.
|Amazon essentially fired every one of its associates in the state... Fewer affiliates means fewer doorways into the Amazon site and thus fewer sales. |
What the states fail(ed) to grasp is that those affiliates earned money from Amazon, which was already being taxed by the state. The states have since lost that revenue stream.
Many affiliates have chosen to leave those states to move where they can keep their affiliate relationships with Amazon (and other affiliate partners). So the states lose not only the taxes on the Amazon affiliate income, but other revenue streams as well:
- taxes on all the other affiliate income made by those affiliates
- taxes on all the other income made by those affiliates
- sales tax on all the purchases made by those affiliates
When affiliates (or other businesses) move out of state, that means less money being spent at the local businesses left behind. That in turn means even less income tax revenue and more businesses laying off workers (so more money being paid for unemployment benefits). Eventually, some of those people decide to leave the state, further hurting the businesses left behind.
Has this caused the individual states to collapse and go bankrupt? No. But I would love to see a study showing how much the states ended up actually losing because of forcing Internet retailers to become tax collectors.
I spoke to our governor personally and repeatedly about what the consequences of his signing that law would be. He didn't get it.
I have hounded him on radio and television shows since then, as have others in the same boat.
We have moved our business to another state which does not have the nexus tax. But we could not keep our old affiliate ID.
We are still in the process of changing literally thousands of pages of affiliate tags to the new one. But at least it happened.
Ken_b: I have no idea about other states, but I do know that our state -- which has the oldest population in the union and the least tech-savvy citizens as well -- had well over 1,500 affiliates let go.