Republican blogger John Tsitrian criticizes Governor Dennis Daugaard for more reactive budget stinginess. Tsitrian says that instead of constantly retightening the belt and hoping things get better, South Dakota should go where the wealth is and create a fairer, smoother tax system—yes, that means a state income tax!
We’re too self-fixated on our status as a state with no income taxes, as I often hear, but I think some comprehensive tax reform that reduces sales taxes, puts a freeze on property taxes with strict limitations on annual increases, and initiates a progressive tax on income, both personal and corporate, merits consideration. Ideally it would result in a tax shift, not a tax increase. Using U.S. Census Bureau data, the financial information website 24/7 Wall Street reports that income growth in South Dakota households from 2011-2015 ranged from 5% in the middle levels to nearly 10% in the upper. The story lists us as one of the 9 states in the country where the middle class is being left behind, income growth disparity (definitely a subject worth pursuing in another post) being a good reason why. Given the trend, a graduated income tax seems like a reasonable way to expect people making good money here to bear their share of the burden, which they now escape given our regressive and bumpy sales tax-dependent system. The dots between tax fairness and smoother government revenue streams look connectable to me [John Tsitrian, “Some Dot-Connecting Between Fairness and Efficiency,” The Constant Commoner, 2017.05.14].
Note that Tsitrian takes the same line I do: the state doesn’t necessarily need to collect more revenue; it just needs to collect revenue more fairly, in ways that reflect how South Dakotans are actually making their money.
Income tax—it works for the federal government and for 43 other states; it can work for South Dakota.