It's because in single player if you get arrested then time skips forward a bit and you get teleported to a police station. They can't implement the arrest feature into Online because time would just magically skip forward every time someone gets arrested.
At least that's my educated guess...
Thats a fair point but it would be so easy to code a spawn outside a police station similar to when dying and spawning outside a hospital. The mechanics are all there.
I have a sneaky suspicion that cops shooting and killing you (when hospital fees where $2K) was originally linked to cash cards.
Now you don't pay anything to be killed by a cop, the elite aiming of these swat trained cops is pretty poor imo