Thus, Internet sales won't destroy ''real'' retailers, just as catalog sales haven't. States aren't hurting either. It appears that there will be a sizable revenue windfall this year, too. With revenues pouring in so rapidly, it's just not credible to argue that e-commerce is undermining state tax collections. Second, differentiated tax rates create healthy competition that helps keep local rates under control.
Electronic commerce serves as a similar safety valve for excessive taxation.
If state and local governments feel compelled to tax their citizens more heavily, they still have the tools to do it. There will always be income taxes, property taxes, gas taxes, hotel taxes and the like. Perhaps what states are really looking for isn't equity or revenue security, but a new source of funds that doesn't require voter approval. But there is something unsettling about states exercising legal authority outside their jurisdiction. Even if it were constitutional, it would set a dangerous precedent with enormous potential for conflict.