Customers are spending less money at Amazon.com in states where it collects sales tax, according to a recent study from the National Bureau of Economic Research, which focused on five states--California, New Jersey, Pennsylvania, Texas and Virginia. The study found that households living in states where Amazon began collecting sales tax reduced Amazon expenditures by 9.5%, with the effect more pronounced for larger purchases.
NBER found that consumers buying less from Amazon increased purchases at the online operations of other retailers by 19.8% and at local bricks-and-mortar retailers by 2%. For purchases over $300, the "substitution effect is more pronounced."
The study concluded 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.... 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)."
"Tax collection does seem to have the effect of increasing competition in the marketplace, but it's not necessarily driving consumers to go back to the mom and pop stores that once filled Main Streets of the country--unless mom and pop also happen to have a good e-commerce aspect to their operation," Consumerist wrote.