Is it more profitable for a retailer to pay your sales tax than give you a discount up front?

It will depend on the amount of sales tax in their jurisdiction and the amount of the discount. If the tax and the discount are the same, it is more beneficial to the purchaser to get the discount. To the Seller, it makes almost no difference!

At 6% tax rate:

On a $100 item -> You pay $100 and store pays $6 tax. Store gets to keep $94.

On a $94 item ($100 with 6% discount)-> You pay $94 and you pay $5.64 tax (total $99.64). Store still gets to keep $94.

There is a slight advantage to the store in that in most jurisdiction there is a tax free amount each month, to cover the cost of the bookkeeping and reporting of taxes, but in a big volume store, that will be a very small percentage of the total amount.