Governor Rounds Wants Another Income Tax

Folks give my neighbor Gerry Lange heck for fighting for a state income tax. So where's the outcry against Governor Rounds, who seems heck-bent on replacing the property tax with variants of income tax one industry at a time?

First Governor Rounds advocates the quasi-income tax for farmers, dreaming up a wildly convoluted productivity formula to get his hands on $14 billion of taxable value currently denied to the state. Now Governor Rounds wants an income tax for wind turbine owners. He calls it a tax incentive, but the plan, embodied in HB 1320, is the same switcheroo as in HB 1005: instead of paying property tax based on the value of the land and improvements upon it, wind turbine operators would pay a tax based on the generative capacity of the wind turbines and on their gross receipts.

Governor Rounds says the current property tax discourages landowners from building wind turbines. A big wind tower that costs $2 million makes the property tax on a parcel of land go up $8500. Governor Rounds's proposal would tax the owner $3 per kilowatt of energy-producing capacity, which on a 1500-kW tower would bring in $4500. The governor would also impose a gross receipts tax of 2% and offer rebates of up to 90% for reinvestment in transmission lines and other facilities [see Chet Brokaw, AP, "Governor Proposes New Tax Incentives for Wind Energy Towers," that Sioux Falls paper and elsewhere, 2008.02.01].

That's not a property tax. That's not a tax incentive. That's an income tax, or something darn close to it. It's a tax based on the principle that your taxes shouldn't be based on what you own, but on how much money you make.

And I'm o.k. with that. I'll bet Gerry Lange is as thrilled as I am to see Governor Rounds recognizing that income is a better, fairer basis for taxation than property.