Conversation with Dr. Palleria

It sounds like Madison School District has in its new superintendent, Dr. Frank Palleria, an eager advocate for better education funding. I commented below on Dr. Palleria's call for a 1% sales tax dedicated to education. I also e-mailed similar comments to Dr. Palleria Monday evening. Much to my delight, Dr. Palleria sent two replies on Tuesday:

[Reply #1 2005.08.16 10:38] South Dakota I believe has about the smallest sales tax of any state with a sales tax (4 cents on the dollar). In addition to that, much of sales tax collected comes from visitors to our state. Yes, a sales tax is regressive but I am afraid that a state income tax would never sell in this state. I still believe the easiest way to raise money for education would be the one cent sales tax increase. Either way, our state legislature has been neglecting education for far too long. Two of my daughters live in Oregon. Oregon has no sales tax but has property taxes and a state income tax. They are here visiting us now and I asked them their feelings on the sales tax vs income tax and they both agreed that they would rather pay the sales tax any day. Thanks for your letter. We will continue to fight for education dollars.

[Reply #2 2005.08.16 15:04] I did go to your website and read your arguments for a state income tax. I think you make some good points but I still think it would be most difficult to convince the legislature that is the way to go. What is North Dakota's income tax like? I think they have all three legs of the tax stool (income, property, and sales). I think a rural state such as North Dakota would be a close comparison to our state. Good luck in your new school.

Doc Palleria

Dr. Palleria makes a good point that we should perhaps look to North Dakota for lessons on income tax. There lies a fruitful course for future study.

Below are the relevant portions of the response I e-mailed Madison's superintendent this morning:

I agree that the income tax will be a hard sell. Gerry Lange, my neighbor, one of our state legislators, and longtime income-tax advocate (he's gathering signatures for an initiated measure to impose a corporate income tax to help education and other state functions), says the same thing. What I find funny is that the difficulty of selling the income tax to the legislature always seems to be the main point of opposition people cite -- "Oh, it would work, but no one will ever vote for it." Such opposition reminds me of Dennis Kucinich's response during the 2004 Presidential election to a journalist who asked why he was running if he wasn't "electable": "I'm electable if you vote for me!"

In terms of the sales tax being the easiest way, well, as Doc Miller can attest, you're talking to an idealist here. Why settle for the easiest way when we can strive for the fairest, best way?

Tourists and sales tax dollars: I certainly don't mind getting every dollar we can out of our visitors (tell your daughters to buy lots of t-shirts!). But South Dakotans pay the vast majority of sales taxes: in 2004, visitor spending in South Dakota was $752 million, which, taxed at 4%, gives the state $30 million. I don't have total sales tax numbers for 2004 handy, but in 2005, the state took in $536 million in sales and use tax. Assuming our sales tax revenue in 2004 was similar, say an even $500 million, visitor spending contributed a mere 6% of our sales tax revenue.

Consider instead that if we ditch the sales tax, we entice our friends from Minnesota, Iowa, etc., to come spend more money here, which means more income for our businesses, from which education can still get its share through an income tax. Either way, we'll still get those tourist dollars to pay for our textbooks.

Dr. Palleria and I may disagree on methods, but we share the same goals: giving our kids the best deal possible. I am also pleased to see a superintendent who will take time to communicate so openly with the public, even during these hectic days when he is settling into his new job and getting ready for the beginning of the school year.