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  • Peters Invokes States’ Rights to Fight for Online Sales Tax

    State Senator Deb Peters (R-9/Hartford) skipped chairing the July 24–25 meeting of the Government Operations and Audit Committee to go fry fiscal fish in Washington. Specifically, Senator Peters testified in her capacity as the President-Elect of the National Conference of State Legislatures against the No Regulation Without Representation Act, which seeks to codify the Quill decision and make clear that states can’t collect sales tax from out-of-state online or transient vendors.

    Senator Peters, a key player in South Dakota’s effort to overturn Quill and collect more sales tax, told House Judiciary that the No Regulation Without Representation Act violates states’ rights:

    Sen. Deb Peters, House Judiciary, 2017.07.25.
    Who you callin’ Hon?

    The Tenth Amendment is the cornerstone of constitutional federalism as it reserves broad powers to the states and to the people. States have used this sovereignty to enact laws protecting the health, safety, and welfare of their citizens and local businesses, as they should, as their governments are vested with that responsibility. While the Supreme Court has made clear that the Commerce Clause allows Congress to regulate interstate commerce, it has also noted that the Commerce Clause “does not elevate free trade above all other values.” Therefore, states have the constitutional right to enact laws that are not only in the best interest of their citizens and businesses, but that reflect the popular approval of their citizenries, which is the underlying value of democracy and American Federalism.

    State sovereignty, or states’ rights, is not a doctrine of convenience. Rather, it’s the idea that states, and their citizens, know best how to govern themselves. All too often, members of Congress will tout the importance of “states’ rights” to justify a position on an issue, and then preempt states on other issues that don’t suit their agendas. This ideological impurity is why the American people are frustrated. Therefore, it is the prerogative, no, it is the obligation of states to remind Congress that there are 50 stars on the American flag, not 535.

    The No Regulation Without Representation Act is one of the most coercive, intrusive, and preemptive legislative measures ever introduced in Congress. If enacted, this law would prove congressional indifference for the role of states in American governance. Therefore, due to its egregious nature, NCSL adamantly opposes this legislation and urges members of Congress to oppose it as well [Sen. Deb Peters, written testimony, presented to U.S. House Judiciary, 2017.07.25].

    Interestingly, sponsor Rep. James Sensenbrenner (R-WI) contends the No Regulation Without Representation Act upholds states’ rights:

    At its core, NRRA is about states’ rights. When the actions of one state infringes on the rights of the other 49, the overreach must be curtailed in accordance with the Constitution, which gives Congress the exclusive authority to regulate interstate commerce.

    …The No Regulation without Representation Act extends this premise to its logical conclusion and forbids regulatory actions of one state that could severely limit the practices of another [Rep. James Sensenbrenner, “No Regulation Without Representation,” The Hill, 2017.05.05].

    I love watching a Republican who wants more taxes battle a Republican who wants more federal regulation.

    I would suggest Senator Peters gets the upper hand in this argument. Congressman Sensenbrenner would contend that South Dakota’s contested “Main Street Fairness Act” requiring online vendors to collect and remit South Dakota sales tax severely limits the tax collection practices of other states. However, one could argue that South Dakota’s requirement does not stop another state from imposing its own taxes on online vendors or exempting those vendors from local requirements, any more than the federal sales tax that Donald Trump likes a lot would stop South Dakota from collecting its state and municipal sales taxes. If a business wants to enter South Dakota’s marketplace, it has to play by South Dakota’s rules.

    But there is the fundamental conflict in the Commerce Clause that Peters, Sensenbrenner, and the rest of us must resolve. To what extent do we have fifty separate marketplaces subject to state control, and to what extent do we Americans inhabit a single marketplace better controlled by federal rules?