My post this morning on Dr. Chicoine’s impending reliance on Monsanto for the bulk of his income got one eager reader reviewing the complete list of state employees making over $100,000 (see pp. 26–35 of Governor Daugaard’s complete FY2017 Budget Book). That reader got me thinking about how South Dakota’s elite wage earners, public and private, could cover the Blue Ribbon pay raise for our teachers.
From $557,308 for USD Med School Dean Mary D. Nettleman to $100,470 for Public Utilities Commission exec Patricia Van Gerpen, the State of South Dakota is paying 352 six-figure executive salaries totaling $53,310,378.
The Governor’s budget proposal says we have 12,701.1 FTEs in the current state budget. His budget proposal says we can cover a 2.7% “market adjustment” for all permanent state employees with $23,462,167. Dividing, I figure that those 352 six-figure-salaried state execs make up 2.8% of our state jobs and are claiming 6.1% of the state’s payroll.
Let’s think about how we could get the 20% “market adjustment” that the Blue Ribbon K-12 panel says our teachers need. (I maintain the Blue Ribboneers should aim higher, but let’s keep this post simple.)
Suppose we charged those state execs a surtax on the income they make over $100,000. For example, we won’t touch the first $100,000 that PUC exec Van Gerpen earns, but we will take a slice of the last $470.
How big a slice? Well, since we’re charging this surtax only on six-figure incomes, and since everybody in South Dakota knows that income taxes are the devil, let’s set that rate at six and two-thirds percent, 6.66%. I like that rate because, when most of those execs claim this new six-figure surtax as a deduction on their federal income tax, they’ll avoid paying at least 25% on that amount, meaning that 6⅔% state surtax is effectively a 5% tax or less.
Impose this sixer surtax on South Dakota’s 352 best-paid state employees, and we’ll get back $1.2 million.
Now, let’s figure out how many six-figure salary takers we might have statewide and how much they would pay under the sixer surtax.
Remember that I said those 352 top earners make up 2.8% of our state government workforce? If a similar percentage of all workers in South Dakota earn six figures, then out of 439,455 active jobs in October 2015, we should be able to find about 12,179 South Dakotans earning six figures (including the 352 working for the state).
The Bureau of Economic Analysis tells me that in 2014, South Dakota’s personal income totaled $38.63 billion.
If all of the six-figure earners in South Dakota are claiming the same 6.1% of personal income that state government’s six-figure earners are claiming of state payroll, then those 12,179 workers are earning $2.37 billion.
Exempt their first $100K, tax the rest at 6.66%, and the sixer surtax produces $76.8 million, which we redistribute to our 9,362 teachers to raise their pay by $8,200 each, a 20.5% market adjustment above their current average of $40,023, and a nice “thank you” to teachers for making people smart enough to earn six figures.
If the sixer surtax sounds too complicated or devilish, consider that we could get the same $76.8-million boost for teacher pay by taxing that total $38.6 billion at a rate of 0.2%.
Two dimes out of every hundred dollars you make funds the Blue Ribbon K-12 teacher pay plan. Four dimes ties us for the best teacher pay in the region.
Tax everyone? Tax the 2.8% on their six-figure salaries? There are many paths to solving the teacher shortage with competitive wages. Our legislators just have to do the math and show some guts.