One issue in particular has frustrated the 42-year-old South Dakota Republican for years: her state’s inability to collect sales taxes from purchases made online by its residents. As more consumers shop online, this issue has gained traction in legislatures throughout the country. By some estimates, states are collectively missing out on more than $23 billion annually in potential sales tax revenue. But progress has been minimal. States have lobbied Congress unsuccessfully for more than a decade to give them taxing authority over Internet commerce.
In South Dakota, Peters has watched her state — which does not tax income and is thus dependent on the sales tax — see a steady decline in sales tax growth. She has testified multiple times before Congress on the issue and has been a leader in the so-called streamlined sales tax effort to make state tax codes similar to one another so that paying online sales taxes would be simpler for retailers.
Finally, the impatient Peters got tired of waiting on Congress. This year, in consultation with the governor and state attorney general, she wrote and shepherded through legislation that allows South Dakota to make online sales tax collections. Anticipating a lawsuit, the legislation was written in a way that fast-tracks the case through the courts. That was prescient: The first day the law went into effect, retailers immediately obliged by suing. It’s possible the case will make its way to the U.S. Supreme Court as early as next year. Considering the gridlock in Congress on the issue, it represents a chance, however uncertain, for states to see a reversal of the court’s 1992 decision that limited them to taxing only those sales by retailers based within their borders.
Peters is president-elect of the National Conference of State Legislatures, and she has used her position at NCSL to make a broader push on the sales tax front. This year, 34 bills in 22 states have been introduced that would let states collect sales taxes from online transactions. About a half-dozen of those bills have moved forward, although South Dakota was the first state to enact a law. “She’s clearly a leader on this issue and doesn’t take the easy way out,” says Bill Pound, executive director of NCSL. “The reason South Dakota was so fast at [getting the case to court] was because of her.”
Peters’ role in this legislation is a departure from her usual one of being a hustler in the background. As chair of the Senate Appropriations Committee, her biggest job each year is to shepherd the state budget through to a floor vote. But as one of the longest-serving legislators and one known for her skill at consensus building, she’s often sought out for her leadership and advice.
Peters’ energy and determination have been evident since her first foray into state politics in 2004, when she and three other candidates -- including two incumbents -- were running for two seats in the South Dakota Legislature. Not only did Peters the newcomer win a seat, she was the top vote-getter.
— By Liz Farmer
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