I do believe it is pretty obvious. Your analysis ignores the fact that in-state retailers pay property taxes, income taxes, user fees, and employ people within

I do believe it is pretty obvious. Your analysis ignores the fact that in-state retailers pay property taxes, income taxes, user fees, and employ people within the state who in turn pay taxes. If you convert the traditional cost-benefit analysis into a cost analysis, then you can prove that literally anything is a bad idea. But that's not a serious way to argue a point.