During last year’s debate over raising sales tax to raise teacher pay, conservative Republicans like Representative Elizabeth May justified their opposition to the plan by endorsing my argument that our regressive sales tax favors the rich and beats up the poor. Rep. May and some of her Republican colleagues said charging more tax on food is bad for poor, hungry kids.
Those Republican resistors of regressivity didn’t show up to committee Tuesday. House Taxation took up House Bill 1119, this year’s iteration of Democrats’ long-standing effort to ease the burden of sales tax on the poor by taxing food at zero percent. To keep the plan revenue neutral, prime sponsor Representative Ray Ring (D-17/Vermillion) balanced the food-tax cut by raising the tax on other goods and services by 35 hundredths of a penny, from 4.5% to 4.85%.
A South Dakota Budget and Policy Institute analysis of competing sales tax proposals last year found that zeroing the food tax and raising the rest of our sales taxes to 5% imposed less burden on the lowest 20% of income earners and no more burden on the next 75% of income earners than the general half-cent increase that we imposed last year. Only the top 5% of income earners would have paid more under the 0% food/5% else plan. Rep. Ring presented a similar analysis Tuesday, showing that cutting the food tax relieves the poorest South Dakotans of a significant tax burden imposed on their basic survival.
Every Republican present at House Taxation (except for Rep. Kyle Schoenfish—thanks, Kyle!) rejected Rep. Ring’s proposal to make South Dakota’s sales tax fairer. Democratic Representative Susan Wismer joined Ring and Schoenfish in casting the lonely ayes for fairness.