The same rule is being applied today to Internet sales. In the heyday of catalog sales, it was relatively easy to show that a seller had a physical presence in the taxing state. Local and state tax officials are left scratching their heads. They fear that as Internet sales really take off, state and local governments will be faced with shrinking tax revenues and will be unable to pay for basic services such as schools and roads. Several bills have been introduced in Congress to make the Net tax ban permanent.
None appear to have sufficient political momentum.
State and local interests forcefully counterpunched. Rather than being forced into the corner, futilely chasing Internet merchants and their sales tax revenue, these officials favor the creation of a nationwide system that would levy a sales tax on every Internet transaction and distribute the proceeds to the state where the buyer is located. Other factions weighed into the battle as soon as they were tag teamed into the ring. Under his approach, Internet companies could rest assured that merely using an ISP or communications provider based in a certain state or creating a Web page that could be accessed by a resident of any state would not suffice to expose them to sales tax liability. Varian advocates the elimination of all sales taxes.