“If local video rental stores have to pay this tax, it is reasonable for Netflix to have to pay it as well. Otherwise, this is simply discrimination amongst various types of businesses.”
following that logic, then all merchandise and services purchased on the internet should be taxed at the same rate as the jurisdiction that the merchandise or service is delivered to. However, FYI, the Supreme Court has ruled it is illegal to collect such taxes for out of state businesses unless they have some kind of physical business presence in the taxing state.