Dakota Free Press readers want tax reform, and one key plank of that reform is adding a state income tax to more fairly and effectively tap the wealth available in this state to support public works. South Dakota taxes the income of banks and financial corporations with no destructive impact on the money-moving industry; here’s a proposal to tax personal income as well.
Dakota Free Press Bill #4: Creating a State Tax on Personal Income
FOR AN ACT ENTITLED, An Act to collect tax on personal income.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1: Every South Dakotan required to file a federal income tax return shall file a state income tax return with the Department of Revenue by same deadline established by the IRS for federal returns.
Section 2: The South Dakota income tax exemption is defined as the sum of the federal personal exemptions and the standard deduction that each taxpayer is eligible to claim on his or her federal income tax return for each tax year.
Section 3: Taxable income is defined as the each taxpayer’s total income, as reported on the taxpayer’s federal tax return, minus the South Dakota income tax exemption.
Section 4: Each person filing a South Dakota income tax return shall pay 0.6% tax (six dollars per one thousand dollars in income) on the first $100,000 of taxable income.
Section 5: Each person filing a South Dakota income tax return shall 6% tax (six dollars per one hundred dollars in income) on any amount of taxable income above $100,000.
Section 6: The Department of Revenue shall promulgate rules for the collection of the state personal income tax and penalties for failure to pay.
Section 7: The Department of Revenue shall make paper and electronic state income tax return forms available free of charge to all South Dakota taxpayers.
Section 8: The Department of Revenue shall create a secure online system through which all South Dakota taxpayers may file their state income tax returns and pay their state income tax without additional charge.
Based on recent income figures and calculations from my Sixer-Surtax proposal, I wildly guess this personal income tax could generate $230 million. Again, I invite your amendments, points of oppositions, and suggestions on whether the money raised should go toward additional state spending or reduction of other taxes.