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Part of it is that sales taxes are set by the state, and in some cases, municipality/city, since there is no federal sales tax.

For example, in Massachusetts we pay a 6.25% sales tax. Though across the border in New Hampshire, there isn't a sales tax at all.

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Hmm, you mean it's easier for inter-state businesses to have unified catalogs? I think local businesses wouldn't care much about that, since they're located in one state, no?

Or do you pay different amounts of tax based on where you live, rather than where the business is?

Sure, it also makes the prices look lower.

I believe that if you buy in tax-free (Salem) New Hamsphire but bring the goods back into Massachusetts, you are supposed to fill out a MA tax form. Assuming you are a Mass resident

Yes, that's called a Use Tax, and it applies to things like Amazon purchases as well if they cross state lines and you weren't charged sales tax on the purchase.

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