The state is trying to change the property tax into an income tax, at least for farmers. But this year's HB 1005 is still a crazy plan compared to a simpler and saner straight income tax. Instead of trying to guess how much a farmer might make given a statistical evaluation of statewide soil, climate, and market data, wouldn't it be easier to just tax the farmer on how much he actually did make?
I ran a poll South Dakota's tax system on my KELO blog channel. I asked, "Suppose you were governor and could simplify South Dakota's tax system by replacing every tax on the books with one tax to fund all government functions. Which tax would you pick as the least bad tax?" The results:
| Preferred Tax | Votes | Percent |
| Sales | 81 | 45% |
| Income | 78 | 43% |
| Property | 12 | 7% |
| User Fees | 9 | 5% |
I'm no fan of sales tax, but even I can acknowledge it's a fairer, more predictable, more budgetable tax than the dismal property tax. Create an income tax, expand the sales tax, come up with some new creative tax... there's got to be a better tax system than the guesswork-property tax system we have now.
Cory, your plan makes too much sense to have any hope of realization. I've read the description of your plan in the link on the main blog page.
ReplyDeleteSturgis and Deadwood (at least) would rebel at the notion of abolishing the sales tax in their cities.
All cities and counties would rebel at the notion of the state telling them to get rid of their property taxes.
We'd end up with a "hybrid" tax system in which the income tax was simply piled on top of all the other taxes. Everyone would pay more, state government would grow, and businesses would have to contend with more red tape.
The sales tax could perhaps be made less regressive. Get rid of the tax on groceries and medicines, and increase the rate on other items to make up the difference. The people might go for that. It's nowhere near as good in theory as your idea, but it might work in practice.
Here in Lead, I pay one of the highest property tax rates in the state. But it is low compared to the rates in some parts of the country such as New Jersey, where the combined federal, state, county, and city tax burden is so great that one of my colleagues from Out East questions why he should even bother to have a job.
Of course, some people may argue that growth of the public sector would be good for the people of South Dakota. To that I would say, "Be careful what you wish for. You might get it."
I'd rather make too much sense than too little. :-D
ReplyDeleteWhile the valuations of ag property will increase dramatically in the first year under the new plan, I believe it will balance out under the levy formula causing very little increase, if any, to property taxes for our farmers. If we're patient, this may end up being a good program.
ReplyDeleteI'd rather go for the fair tax proposed by Neil Boorts (sp?). Basically a sort of sales tax on most items - you buy, you pay.
ReplyDeleteProperty tax in Clay County already takes half the cash rent off 80 acres to pay the property tax on about 120 acres. Nearly $20 per acre on 40 acres. This is absurd.
ReplyDeleteCorporate and personal income taxes need to be added, but put into a formula so they are tied to all the other taxes so that rate cannot be increased independently of other taxes.
There needs to be some attempt to semi-rationally apply taxes to differing assets or income wo that they relate at least somewhat to services and costs related to the assets or income.
Ag land gets next to zero in return for RE taxes paid.
SD needs a "Blue Ribbon" tax commission to rationalize the system, but also put it together in a coordinated way so that no particular group, income, sales, or asset bears a grossly unfair tax charge and also can't be arbitrarily increased in a single category.