That's because California has tax-hungry laws concerning what defines a "nexus" (a business's presence in the state). It's difficult for many companies to avoid creating a California presence, so they're stuck collecting California sales tax as if they were based there.
Doesn't every state have similar laws? Indiana does - yet I don't normally pay sales tax online, because most of the companies aren't based in Indiana, whereas online companies really do tend to be in California.
Lots of states, but not every state. California is also of particular importance because it's so big: nobody would care as much if Delaware had laws like this.
However, in California, even if you only have a physical presence in some remote part of northern CA, suddenly that affects your ability to sell to 37 million other people.
I have firsthand experience in online retail and if California is 'tax hungry' for that reason, then every other state in the country is, also. If you have payroll in a state, you collect sales taxes for physical items shipping there.
Likewise, back when CDNow.com was it's own company it was located right outside of Philadelphia. Living in Pittsburgh, having to pay sales tax when buying from CDNow was always a consideration when deciding to buy music from them or someone else.
