I understand the problem that small businesses may have some difficulty adjusting. But I question how big a hurdle it really is, and unfortunately I think buyer-side taxation ultimately makes more sense. (We lost the fight to have the laws applying to an internet transaction be the server side a long time ago, see: porn, online gambling, banking, etc.)
* "78 tax rates across 28 markets"? Cry me a river, the US has what, thousands of different sales tax regions?
* If somebody is selling on the internet, they really really should not be running their own shopping cart and billing software. Once you cross this hurdle, the software providers manage the extra complexity, not you. (Yes, it sucks paying an intermediary.)
* If you're calculating it by hand, an extra lookup in your cumbersome manual process doesn't kill you. Making quarterly payments to a lot of different tax authorities may hurt. I think we'd be better focused on solving that problem than fighting against the tide here.
I really don't get what "simply cannot comply with this law" means. Sole traders can either do the extra work or not sell outside their borders, but what exactly is the high cost of compliance here? Is that too US-centric an attitude?