Noem Pressures GOP Leaders for Online-Sales-Tax Vote

The South Dakota lawmaker is threatening to use a discharge petition to force a House floor vote if her legislation isn’t added to the omnibus package.

Rep. Kristi Noem makes remarks at the Capitol during an enrollment ceremony for the GOP tax bill on Dec. 21, 2017.
AP Photo/J. Scott Applewhite
March 14, 2018, 8 p.m.

Rep. Kristi Noem is ready to play tough with her own leaders.

Noem is threatening to force a vote on the House floor on a bill to institute an online sales tax if Speaker Paul Ryan does not allow the legislation to be added to the omnibus spending bill expected to be voted on next week.

“My biggest hurdle right now is getting our leadership team to agree to put it in the omnibus,” Noem said. “They’re not leaving me very many options. If this doesn’t get done in the omni, I’m going to have to use whatever tool is available to get it on the floor.”

Noem and House Majority Leader Kevin McCarthy had a testy exchange outside the House chamber Wednesday, after which Noem said she was “fired up.” Holding a manila folder containing a signature sheet for supporters of her bill—which would allow states to require companies to collect online sales taxes regardless of where the companies are based—Noem reminded a seemingly perturbed McCarthy that Ryan had asked her to circulate the letter to gauge support.

In an interview following the exchange, she indicated that the effort to get signatures has been slow going. She said Judiciary Committee Chairman Bob Goodlatte has prevented her bill from getting a hearing on the panel and leaders will not intervene to go over his head and bring it to the floor.

“Chairman Goodlatte just doesn’t like my bill, so that’s what’s holding it up,” she said. “If we put this bill on the floor, it would pass. That’s what’s driving me crazy. Because we let a chairman jam us up, we have no regular order happening in the House right now.”

Goodlatte’s office did not respond to a request for comment.

The procedure to force a vote requires a so-called discharge petition. Noem would have to gather 218 signatories to show there is majority support for the legislation, and that would force leaders to bring it to the House floor. It is a risky move that can strain relationships. As a deputy GOP whip, Noem is close with leadership and is one of Ryan’s closest personal friends in the House.

Noem, however, is not returning to Congress next year, so she can afford to buck her own leaders without long-term consequence. Instead, she is running for governor of South Dakota, a state whose revenue she hopes to increase dramatically by taxing online purchases. The effort has become a campaign issue; Noem and one of her primary opponents, South Dakota Attorney General Marty Jackley, are jockeying to take credit for solving the problem.

Jackley is party to a case that will be heard before the Supreme Court next month, with the state arguing that the Court should abrogate its decision in a 1992 case which set a precedent that states should collect sales tax only if a business is physically headquartered there. Some states have gotten around that, for instance, by collecting taxes on companies that have a business relationship with another company that has a physical presence in the state.

Pennsylvania is one of those states, and Rep. Scott Perry, who represents a district therein, said the arrangement seems to work for his state. Noem visited the House Freedom Caucus this month to round up support for her proposal, but Perry, the group’s whip, said HFC did not come to a decision on the matter and that support would likely depend on which state a member hails from.

Perry said proponents of the bill say there is an urgency to codify an ad hoc set of state rules ahead of the Supreme Court case, but he said he doesn’t buy that, and would rather err on the side of not imposing a new tax on his constituents.

“My constituents are sensitive to the feeling that the internet is kind of one of the last bastions of free enterprise. At the same time, they still like their brick-and-mortar stores, too,” he said. “There’s a theory that we’ve got to get ahead of it and make the decision before the Supreme Court does, but there’s nothing to stop us after it either, and if the Supreme Court doesn’t do anything cataclysmic, then no harm, no foul.”

There is another reason Noem may be pursuing the strategy of adding the legislation to the omnibus: It may be easier politically for members to vote for the legislation as part of a sweeping must-pass package rather than as a stand-alone bill.

Rep. Kevin Cramer of North Dakota said he is lukewarm on the bill, but added that with support from governors, retailers, and other groups, the omnibus might be the best place for it. He said the perception that Congress is levying a new tax could make that a tricky vote for some members, especially as Republicans are trying to tout their tax cut bill as a win for their constituents.

“If it gets on, I’d vote for the omnibus. If it’s a stand-alone, I’d struggle with it,” he said. “I get the fairness argument. What about the consumer? Every time they get a break, we find a way to tax them again?”

Both Perry and Cramer said a discharge petition would likely be a nonstarter.

Still, adding the legislation to the omnibus could cause other problems. Sens. Ted Cruz and Steve Daines on Tuesday urged lawmakers not to add the language to an omnibus bill. It is possible it could hurt the chances of the bill passing the Senate.

Noem is no stranger to discharge petitions. In 2012 she was the first Republican to sign on to an effort to force the farm bill to the House floor, despite objections from conservatives, who, among other issues, wanted to cut funding for the Supplemental Nutrition Assistance Program, also known as food stamps.

The last time a discharge petition was successful was when then-Rep. Stephen Fincher, a close friend of McCarthy’s, spearheaded the effort to force a vote to renew the Export-Import Bank’s charter, despite objections from conservative Republicans, including Financial Services Committee Chairman Jeb Hensarling.

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