Web Retailers, States Tussle Over Tax Rules

States trying to cash in by taxing online purchases are finding out the hard way that, instead of paying online sales tax, companies will simply avoid doing business in that state. Heh, that's what you get for being greedy.

Several states say the Internet retailers should charge sales taxes in states where those affiliates are based. The financial benefits may not be quite what the states anticipate, though. Rather than gearing up to collect taxes, Amazon and other Web retailers are simply shutting down their affiliate marketing programs. As the small businesses that participate in these programs get cut off, a state could lose tax revenue rather than add to it.

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