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South Dakota takes a step toward its beta test of state income tax this coming Monday (July 28) as the Agricultural Land Assessment Implementation and Oversight Advisory Task Force holds its first meeting in Pierre (State Capitol Building, LCR 1 & 2, 10:00 a.m.). The 14-member task force (and only one lady—Rep. Kristi Noem, R-6/Castlewood—in the group*? hmm...) will try to figure out how to put HB 1005 into practice and assess farmers taxes baed not on property value but on income.
Well, not income, actually. The Legislature has bent over backwards to avoid creating a direct income tax. Legislators prefer the term productivity tax: they will replace the largely arbitrary land value assessment with the somewhat more scientific but grossly complicated calculation of how the productive potential of farmland. HB 1005 calls for a calculation of how much revenue a farmer could generate on his or her land based on crop prices, soil conditions, climate, and other factors over an eight-year period.
So as I understand it, even if a farmer leaves land fallow and spends the year writing poems instead of plowing, the state will still tax that farmer on how much he or she could have made by planting the land to corn, beans, rutabagas, what have you. Still sounds a lot more complicated than just saying, "How much did you make? Multiply by 7%, send that amount to Vern Larson."
Never fear: SDSU is on the job to bring sanity to the tax system. Dr. Burton Pflueger of the SDSU Extension Service and Economics Department will be on hand to Monday to update the task force on the data collection and model for this brave new tax system. The task force will also take a half-hour of public testimony starting at 2:30 p.m. They then have 11 months to pull it all together: the new income/productivity tax for farmers kicks in July 1, 2009.
And with Gerry Lange back in Pierre next year, maybe we'll see that beta test on farmers turned into a fair income tax for all South Dakotans by 2011. Keep your fingers crossed!
*ALAIOATF members: Senators Alan Hoerth, Dave Knudson, Kenneth McNenny, and Jim Peterson; Representatives H. Paul Dennert, Kristi Noem, Larry Rhoden, and Steve Street; and Public Members Walter I. Bones III, Kirk Chaffee, Curt Everson, Larry Gabriel, Ron Olinger, and Duane Sutton.
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3 days ago
This sounds like the worst possible scenario for collection of taxes! What in the world were legislators thinking? This will make the federal income tax bureacracy/red tape look like a walk in the park.
ReplyDeleteOK, let's carry that to the next extreme if an income tax is implemented with this same insane philosophy. I have a relative who doesn't want to work - he is married and has four young kids, is about 40 years old, is intelligent with a college degree, keeps enrolling in college and pursuing various degrees for short times, but he doesn't work. He is involved in get rich schemes that don't involve work, however. Now this guy with a college education would be paying income tax based on what he COULD BE earning rather than what he is actually earning if the same tax scheme is carried through to wages instead of farm land. Do you think that would ever fly??? Of course not.
This illustrates how ridiculous the new proposed taxing program is for farm land. Good luck to those who got stuck with this committee assisgnment!
And don't count Jerry Lange in as already elected. I think his time has come and gone. And I don't think an income tax in SD will come to pass either.
I checked out the summary at the top of the bill HB 1005. It doesn't look like an income tax to me, but a property tax with some wacky provisions. The thing about the income potential of the land is so bizarre that it makes me wonder if there have been prairie fires in cannabis fields upwind of Pierre.
ReplyDeleteAs for education funding -- and this will be the driving force behind the income tax if it ever comes to serious debate -- perhaps we should enforce collection of the use tax first. I wonder what percentage South Dakotans pay all the use tax they owe? I wonder what percentage of South Dakotans even know the use tax exists?
I just googled use tax and LOL!
ReplyDeleteYeah, I can see people running out to get a form so they can volunarily pay another tax that they probably don't even know exists. This is a joke! Good luck on getting money out of this!
All of this sounds good in theory but in practice the law of unintended consequences will rear its ugly head.
ReplyDeleteThe last thing we need in this state is another tax.
If we could get rid of the land speculators and developers looking to capitalize on the free market system, then land tax reform would be fairly straight forward.
The use tax is something we pay on out of state purchases for our business. It really isn't that complicated. The state is losing substantial monies by being unable to collect on online and out of state purchases
Anon 9:26:
ReplyDeleteYou make my point. It would be illogical (and hypocritical) for anyone to favor a new tax while not paying all the taxes legally owed now.
For those who want to prevent a state income tax, it would be logical (and honorable) to pay all the taxes legally owed now.
But that's my opinion. I could be wrong.
This, like most things in SD, will be poorly implemented and terribly managed. A field of soybeans should be taxed far higher than CRP. We shouldn't trust that will occur. We also shouldn't trust that if a corner of a soybean field is under water (non-productive) that it won't be taxed as if it produced soybeans.
ReplyDeleteWhat recourse will people have if they feel the tax is unfairly applied? Like a field under water and incapable of being planted but yet taxed.
ReplyDeleteHaving listened to the legislature several different times, I realize they are all just human beings like me and that not all understand the bills or the ramifications of bills they pass or don't pass. This just demonstrates that fact!