A free market success story? Hardly. Amazon's built on a billion-dollar loophole, and they're still manipulating it
(Credit: iStockphoto/alexsl/Salon)
Thanks to a new study by the National Bureau for Economic Research, we now have data that reinforces something many people probably understood intuitively: A large chunk of Amazon’s success came, not as the result of private-sector brilliance, but because of a simple tax loophole.
For most of its 20-year history, Amazon.com enjoyed a substantial advantage over real-world retailers. Unlike these competitors, Amazon did not have to charge its customers for state sales tax. That deprived states of much-needed revenue, while also giving Amazon a competitive advantage at government expense.
That’s not exactly a “free market” success story, is it?
The NBER study used data from five states that began collecting taxes from Amazon – California, New Jersey, Pennsylvania, Texas and Virginia – and found that Amazon’s sales fell by nearly 10 percent when the sales-tax advantage was removed.
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For most of its 20-year history, Amazon.com enjoyed a substantial advantage over real-world retailers. Unlike these competitors, Amazon did not have to charge its customers for state sales tax. That deprived states of much-needed revenue, while also giving Amazon a competitive advantage at government expense.
That’s not exactly a “free market” success story, is it?
The NBER study used data from five states that began collecting taxes from Amazon – California, New Jersey, Pennsylvania, Texas and Virginia – and found that Amazon’s sales fell by nearly 10 percent when the sales-tax advantage was removed.
More
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