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Whether or not that is legal in the merchant's state, the fact remains that most states have Use Tax laws, and they require state residents who make purchases from out of the state to pay a use tax. Whether compelling payment through the fiction of an affiliate nexus or by some other method, such as a actual presence of the merchant in the state, what would result is double taxation. NY is still going to enforce their nexus tax law for online purchases and use their powers to collect the tax even if the consumer was charged and paid a Utah tax on a purchase made from a Utah merchant.
It could only be a solution if every state agreed, but why would NY or any other large state give up their revenue stream? NY or California would never agree to a system where their state residents would be paying a sales tax to Arkansas for purchase made online from Walmart.
I could also see a migration of major retailers to states that do not have sales taxes or have very low sales taxes. That could cause significant revenue problems in states that are dependent on giant merchants for employment as well as state revenue.
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