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Thursday, December 16, 2010

Adelstein on Balancing Budget: Raise Sales Tax

Good grief: if Dakota War College keeps slacking off, will I have to start getting my news from Gordon Howie's wingnut blog? That's scary... but it's the case this morning.

In a public discussion attended by hardcore Black Hills Tea-o-crat (rhymes with theocrat) Ed Randazzo, State Senator Stan Adelstein said Saturday he plans to float a bill in the 2011 session raising the state sales tax by one penny. Adelstein would impose this emergency tax for just three months of the year for three years. The temporary extra penny would raise $50 million a year to help erase South Dakota's looming budget shortfall.

Adelstein notes this plan has the added benefit of getting 26% of its money from tourists.

Mr. Randazzo hyperventilates over the plan with his usual Glenn Beck bromides. Randazzo opposes tax increases that allow the growth of government. He misses the point, however, that Adelstein's tax increase would only allow the reduction in cuts of state government.

Randazzo then opens his rich trove of wingnut contradiction by saying "We must cease the dependence on the 'trainload of money' from Washington to balance the budget." In Ed's fantasy-land, South Dakota is entirely self-sufficient and doesn't depend on Uncle Sam to meet its statewide needs for roads, farm aid, Social Security, Medicaid, Indian education and other reservation services.

At least Senator Adelstein is willing to look at South Dakota's fiscal situation with honesty and guts. Tune out the wingnuts, Pierre, and pay the bills!


  1. Get people to pay use tax on Internet purchases from out-of-state vendors.

    Raise the sales tax permanently by a penny, and exempt groceries.

    Enact strict and permanent spending-restraint guidelines.

    Put revenue surpluses into rainy-day accounts, and enact strict guidelines for fund withdrawal.

    Pass a constitutional amendment prohibiting any form of income tax on individuals and sole proprietorships.

    Publish complete budget details on the Internet every year.

    Would the people go for all this?

  2. Stan, I can't speak for the people, but as for me...

    1. We can avoid the complications on taxing online purchases by simply taxing in-state income instead.

    2. Spending restraint guidelines? I can consider that... though I wonder if it's wise to let one year's legislature set spending rules for every future legislature.

    3. Robust reserves? Reasonable.

    4. Constitutional amendment banning indiv/sole-prop income tax? No. Trade you: impose income tax, ban obsolete property tax?

    5. Complete online budget details: yes yes yes! I think the <a href="http://www.sdbudgetandpolicyproject.org/'>SD Budget and Policy Project</a> would agree that's vital to better policy and participation.

  3. The property tax hits me pretty hard. I would shed no tears if it went away. But I think most of it comes from the local level, not the state level. So even if they got rid of the state property tax, the impact would still come down with a lot of force. Am I wrong?

    The income tax would create a whole new layer of bureaucracy, and a whole new bunch of paperwork for businesses to fill out. Every minute spent on that paperwork would represent one less minute of productivity. For a small business and its customers, that'd be bad news.

    If we institute an income tax here, especially a personal income tax, there will be a line on the return asking about use tax. If a filer places "0" on that line, it will invite an audit. Trust me. (At least then people would pay what they owe!)

    I hope we'll see a lot of input on this issue, Cory. It ain't gonna go away in my lifetime, and maybe not in yours either!

  4. If it's paperwork you're worried about, Stan, I'll add sales tax back into the trade. Can't we piggyback the state income tax info on federal paperwork? And calculating sales tax for every employee on each biweekly or monthly paycheck can't be any more complicated than calculating sales tax on every business transaction. And it must be easier than trying to empower Pierre to collect sales tax from Internet vendors around the world.

    Local taxation does raise questions. I'm open to suggestions on the best way for local government to tap local wealth.

  5. Sales taxes are too high already. They should be removed from food whether any other guarantee or not.

    Cities should not be allowed to have sales taxes. It is viewed by them as manna from the countryside that can be squandered on arenas and other sports facilities.

    If you want bureacracy, you can't get more faster than by having a "use" tax on internet sales. Use taxes are a court fraud allowing a sales tax banned by the commerce clause to exist under another name. If it walks like a duck in robe, quacks like a duck in a robe, etc, it is a duck.

    City sales taxes should become state sales taxes for schools. At least that way non-resident tax payers would have a voice in their use.

    As for internet sales and other distant transactions, they should be collected by the federal government and returned mostly to states on the basis of population. That way no complex databases of buyers and sellers with ever-updated addresses and personal information would be required.

    South Dakota needs something like a "blue ribbon" tax commission to consider where costs to the state come from and make some attempt to relate taxes to who benefits. Then lock the tax sources into a total for all so that we don't have Sioux Falls, Rapid City, and Aberdeen deciding we need more property taxes on agriculture and less on law offices and banks. All taxes in the set would have to be raised or reduced by similar percentages once the ratio between them had been set.

    Cities that want arenas and other options that immediately dump South Dakota to out of state promoters should let the local businesses that claim to benefit from them pay for them.

    And to start the savings, institute a unicameral legislature so the biggest waste of tax dollars in South Dakota can be eliminated.


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