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News of an executive branch "deal" with is bad news for the online retailer's Utah customers. Starting Jan. 1, Amazon will collect state and local sales taxes (determined by buyers' Zip codes) on all orders shipped to Utah addresses and then remit (most of) the revenue to the State Tax Commission.

Gov. Gary Herbert estimates that imposing Utah sales taxes on Utahns' purchases from all remote sellers, not just Amazon, will generate about $200 million in additional revenue every year.

Thus ends shamefully for Utahns a controversy that has been simmering for more than three decades following a 1992 U.S. Supreme Court decision, Quill Corp. v. North Dakota, 504 U.S. 298, barring states from collecting sales taxes on orders of goods (office supplies in Quill's case) from out-of-state sellers unless those sellers maintain a "physical presence" (a retail outlet, a warehouse or a distribution center, for example) in the buyer's state.

State governments have been pushing the U.S. Congress to overturn Quill ever since, but Congress has refused to do so and, in fact, has imposed several moratoriums on states requiring remote retailers to collect sales taxes on orders shipped to other states, whether placed by telephone, mail or online.

Utah caved and unilaterally has undone Quill. Roughly six other states, including California, have negotiated similar agreements.

OK, Utah gets something less than $200 million in extra tax revenue, but that is money Amazon's customers, if it remained in their pockets, would use more wisely than state and local governments will. The public sector is profligate because it spends other people's money rather than its own.

Utah, like most states, requires consumers to keep track of and to pay "use fees" (equivalent to sales taxes) on out-of-state purchases, but, unsurprisingly, no one does, except perhaps for automobiles and trucks, which cannot be licensed in buyers' home states unless the use fee is paid. So, public officials here say that the Amazon agreement does not impose a new tax, but merely facilitates the collection of an existing one. Utah's hard-pressed taxpayers will disagree.

Taxing internet purchases has been justified seemingly forever by arguments that it offsets remote retailers' "unfair" competitive advantages over local brick-and-mortar stores. That argument, however, ignores local retailers' own competitive advantages, such as customers' ability to "touch and feel" merchandise prior to purchase, immediate delivery, and no "shipping and handling" charges. "Leveling the playing field" by tilting it against Amazon's Utah customers promotes more public sector spending and bigger state and local governments.

Utah's agreement leaves other internet retailers off the sales-tax-collection hook, but in a largely rural state forces buyers to search out and find remote sellers of books, clothing, personal care products and other items that may not be available at all closer to home.

Amazon agreed to be one of Utah's sales tax collectors simply because it gets to keep 1.31 percent of the revenue it extracts from Utahns as a "handling fee" — the same concession Utah has made to in-state brick-and-mortar retailers.

Amazon's sales to Utahns will fall as after-tax prices rise; it is hard to predict by how much, but to the extent that shipments decline, Utah's state government will lose income and motor fuel tax revenue from UPS and others who deliver packages to local customers. Some UPS drivers will lose their jobs.

Herbert's action undermines interjurisdictional tax rate competition, weakening state and local governments' incentives to keep sales tax rates down. Consumers regularly shop across borders to take advantage of lower tax rates in nearby states. The internet's easily crossed "virtual border" explains why online commerce has been growing by leaps and bounds over the past decade or so. It will not grow as fast in Utah any more.

The agreement possibly can be challenged as an unconstitutional delegation of the Utah Legislature's tax-collecting authority to an out-of-state private business enterprise. Any takers?

William F. Shughart II, research director of the Independent Institute, is J. Fish Smith Professor in Public Choice at Utah State University's Huntsman School of Business.