In 1992, the Supreme Court ruled in Quill Corp. v North Dakota that companies without a "substantial nexus" in the state where their customer lived didn't have to charge sales tax.
Online retail wasn't much of a thing in 1992. Actually, even e-mail wasn't much of a thing in 1992. But Quill became a seminal case for online retailers: It meant, in essence, that they didn't have to pay state and local sales taxes. That's allowed them to undercut traditional brick-and-mortar stores on price. It's also meant that state and local governments, which rely heavily on sales taxes, have lost enormous amounts of revenue as more and more commerce has moved online. The National Conference of State Legislatures estimates the lost revenue at $23 billion annually.
