Death to Internet Taxes!
C-NET's recent article on internet taxes got my ire up! We already have enough taxes! And, at least in California, we're already required to pay sales tax on tangible items purchased over the internet. (The article incorrectly states paying the taxes is voluntary. The CA Franchise Tax Board and Board of Equalization don't consider it voluntary).
It seems to me the obvious and relatively simple solution is reporting. Business already do a lot of it & you can expect more soon.
Internet sellers of tangible products, like books, would send the equivalent of a 1099 of annual customer purchases over say $100. The only tricky part is businesses would have to report each customer's sales by state. Centralized reporting to the IRS would help make that a lot easier.
The states could then setup matching programs to make sure customers are reporting their sales tax due. You could easily add a provision to exempt reporting by small businesses with sales under a certain amount, say $1 million.
In an increasingly electronic age, it seems a lot better to add reporting than impose a new tax when we already have taxes in place that could be enforced with minimal effort.