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Friday, February 6, 2009

Whom Would You Tax?

I have yet to hear a convincing case that South Dakota's state budget woes can be blamed entirely on wasteful spending. I don't think a single legislator has offered a plan that corrects either the immediate shortfall or the structural deficit entirely through budget cuts. Even Governor Rounds himself, who has often vowed not to raise our taxes, has coupled his proposed budget cuts with plenty of revenue enhancements.

So, for the sake of this argument, assume we have to find more tax revenue. Whom should we tax? Let's compare approaches. Our man Gerry Lange would increase taxes on the following:
  1. Video lottery establishments, who activity imposes external social costs (HB 1191†);
  2. Folks with the money to buy and maintain motor homes (HB 1193);
  3. Investors making more than $1,200 on interest and stock dividends, with further exemptions for retirees and the disabled (HB 1195†);
  4. Corporations (HJR 1001†) .
And lest you think Rep. Lange is just a tax-hungry liberal, note that Lange would also decrease taxes on farms and households auctioning off their property (HB 1131†), contractors (HB 1194†), and folks who buy food (SB 199).

Meanwhile, Republicans like Rep. Gordon Howie (R-30/Rapid City) would raise the sales tax 50%, which imposes a greater burden on lower income folks, in order to lower property taxes (SB 196). This switch would provide an inordinate benefit to rich property owners... like Gordon Howie himself. Go figure.

So whom would you tax?

†Deferred or otherwise defeated in committee—alas, our man Gerry has a tough time finding fellow travelers out under the dome. But keep up the good fight, Gerry!


  1. We don't NEED new taxes. We need to stop spending the money we don't have as a state.

    We NEED a governor that spends less than he takes in.

    We NEED to use technology to become more efficient.

  2. Anon above is right. Cut the gov't spending. Don't spend more. I am planning to do a "Geitner" or "Daschle" this year, and if I get caught then I'll pay up. Actually, not really, but boy am I tempted. When I see all the state and fed gov't waste of my hard-earned tax dollars, I am just sick of it. And I feel equally sick of all the SD poltiicians eagerly awaiting our piece of this porky pie from DC.


  3. If we were to get rid of the sales tax on groceries and then increase the basic sales-tax rate just enough to zero out the shortfall (but no more), I'd be okay with that. But I oppose any other change in the tax code at the state level.

  4. Cory, based on your hypothesis that we have no choice but to raise taxes (analogous to the hypothesis that I have no choice but to gain weight, which, if you were to look at me, you might support), I would recommend an increase in taxes on items that tend to destroy life, property, the infrastructure, or the environment, such as:

    + Cigarettes;
    + Gasoline;
    + Gas-guzzling vehicles owned by private individuals;
    + Vehicles intended primarily for recreational use (dirt bikes, snowmobiles, and boats)

    A higher sales tax rate on certain luxury items might be tolerable as well, although one would have to be careful when defining "luxury."

    That said, I do not subscribe to the initial hypothesis. I think the state should do what any fiscally responsible individual would do in hard times: Cut spending across the board and simply endure the pain until things get better.

  5. Stan, thank you for understanding the difference between exploring a hypothesis and supporting it. Your willingness to go down certain roads for the sake of argument makes the conversation richer.

  6. Stan, I agree with you about things that could have higher taxes. As far as taxing luxery items go, I am old enough to remember when there was a national luxery tax. I don't know how many years it was in effect, but it was dropped in the really late 50s or real early 60s. The only things that I know for sure had this tax was make-up and jewelry(this is because as a teen ager those were the things of interest to me.) This tax wasn't just on expensive things, it was on the things that you would buy in an old fashioned dime store too. These were stores similar to the old Woolworths stores that used to be around. I can't remeber how much this tax was, but it was there.


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