The state would be able to collect taxes through its existing sales tax structure and would have the freedom to set
whatever rates and policies it deemed were in its best interests. However, California would likely see a drain in both its businesses and its transactions base. Consumers and businesses will go to the states that can afford to minimize taxes on electronic commerce. As a greater proportion of commerce is conducted electronically, the "Freedom of States" policy would
place California, with its high infrastructure costs and high population, at a competitive disadvantage.