The California Senate passed a bill last week that would force internet merchants to pay sales tax to the state for sales done within California.
Such a tax, dubbed an "Amazon Tax," is similar to the New York State law that requires the payment of sales and use tax by out-of-state retailers, should they have a commission agreement with an in-state resident based on the referral of customers. Of course, that New York resident would have to earn in excess of $10,000 from in-state sales in order for this law to apply.
The purpose behind such a tax is similar to the legislative intent behind the oft-forgotten "use" tax. Essentially, a buyer can cross state lines and buy an item in a state that has less sales tax. The sales tax, as it is collected at the point of sale by the seller, is a burden on in-state companies since they are often required to collect it and to remit it to the state. If buyers go out of state to purchase items, due to sales tax, the local and in-state businesses suffer.