When the Streamlined Sales Tax Project got underway in 2000, even some of its staunchest supporters expected it to fail. Not only were state and local sales taxes woefully complex to administer but they also were threaded with loopholes and favors for home-state businesses. Tax administrators from around the country had tried several times before to simplify the system, and every time they got mired in minutiae. Disagreement over seemingly simple questions, such as whether to define grape juice as a beverage or a fruit, could bring the whole national effort crashing down.
Diane Hardt knew all this when she agreed to co-chair the Streamlined Sales Tax Project. She also knew that it was more crucial than ever for reform to succeed. The number of consumers dodging sales taxes by shopping on the Internet has been increasing exponentially, punching a small but fast-growing hole in state and local revenues. The only way to rectify that situation was to simplify sales taxes enough that it would become less of a burden for Internet retailers to collect them.
Nearly four years later, the sales tax project has moved ahead much further and faster than anyone expected. And much of the credit for this has to go to Diane Hardt. As state tax officials from around the country niggled over hundreds of tiny details, Hardt, administrator of the Division of Income, Sales and Excise Tax in Wisconsin, kept them constantly focused on the big picture. “There was really a lack of vision among a lot of the tax administrators,” says one of them, Bruce Johnson from Utah. “It took real patience and diplomacy to keep that group moving on the right track.”
Hardt is a veteran of the sales tax debate, going back to the pre-Internet days when it was mail-order-catalog sales that everyone was worried about. Those experiences convinced her that the current project would founder, like the others, if she didn’t gain the trust of the business community. Hardt invited the private sector not only to testify before her group but also to fully participate in its negotiations. The gesture won over many skeptics, including big-name retailers, who offered helpful advice and gave the effort political legitimacy. Within state tax circles, Hardt became famous for patiently listening to industry gripes and accommodating them where she could. “She really grew the respect of the business sector and the trade associations,” says Warren Townsend, director of sales, use and product taxes for Wal-Mart. “Diane is very open to listening and finding compromise.”
Hardt, 48, doesn’t just run the project’s regular meetings. She is also its head cheerleader. In a cross-country blitz fueled by gallons of Diet Coke, Hardt has spoken at dozens of conferences and pressed her case before numerous state legislatures. She reminds people that sales taxes help pay for important services such as schools and police, and that taxing Internet sales is a simple matter of fairness to Main Street retailers who have always had to collect sales taxes. Her constant campaigning is paying off. Key states that had resisted participating in the tax talks, such as California and New York, are joining them. Meanwhile, 20 states already have passed tax laws based on the model Hardt’s group came up with — more than even she had expected at this point.
For all the nights and weekends she dedicated to the sales tax project, not to mention to her regular job, Hardt remarkably managed to simultaneously take business classes at the University of Wisconsin-Madison and earn an M.B.A. If her work ethic is legendary among her colleagues, however, it isn’t singular. There are plenty of others who have helped move sales tax reform along, including Charles Collins, a tax administrator from North Carolina who shared co-chair duties with Hardt until he retired last year. Many gutsy state lawmakers have also stepped up to sell the streamlined sales tax to their legislatures.
But nobody has done more than Diane Hardt to put a goal that once seemed impossible within reach. “Nobody got everything they wanted,” Hardt says. “But we had the right people at the table from the business side and the government side and just kept talking through the issues with an eye on the big picture. That’s what leadership is all about: the art of compromise.”
— Christopher Swope
Photos by Brent Nicastro