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Tsitrian: State Income Tax Progressive and Passable at the Polls

Sensible Republican blogger (the terms are not mutually exclusive) John Tsitrian says it’s crazy that South Dakota doesn’t have an income tax and it’s crazy to think we’ll ever get one.

Tsitrian doesn’t end as pessimistically as he begins. He says our Legislature will never muster the two-thirds majority necessary to impose a state income tax, but he believes voters could be persuaded to enact an income tax by ballot initiative, if they just understood that making our tax system less regressive would bring more tax fairness to a majority of taxpayers:

On a national scale, individual income taxes generate about a third of total state tax revenues, with slightly less than that share coming from sales taxes. South Dakota is a much different story. Sans income tax revenues, South Dakota in 2013 got an astounding 80% of its total tax revenues from sales and excise taxes.  Talk about regressive, good grief.  The tax burden in this state falls heaviest on the lower tiers of wage earners, who carve out taxes from a much larger share of their incomes than the well-to-do [John Tsitrian, “It’s Crazy (x2): South Dakota Has No Income Tax,” The Constant Commoner, 2015.12.27].

John Tsitrian
John Tsitrian: if he can bag a pheasant, can he bag votes for a state income tax? (Photo from Franky Slawson Productions, podcast, 2015.06.04)

Tsitrian says an income tax ballot initiative would at least give us the chance for public debate to “clarify and instruct.” That’s the noble mission Tsitrian has chosen for his blog, but would any legislative or gubernatorial candidates dare follow him on that mission and fight for progressive taxation in 2018? Given that an income tax initiative would have to wait until 2017 for circulation and 2018 for a vote, would any 2016 legislative candidates be willing to plow that policy road?

Putting on my campaign advisor hat, I couldn’t advise a 2016 candidate to make state income tax a major campaign issue. I agree that South Dakota needs a more progressive tax system, but we have corruption, teacher pay, and Medicaid expansion to run on; that’s a three-point speech right there. Those three issues are easier winners than saying, “South Dakota needs a state income tax,” which opens the door for cheap attacks from the opposition and expensive explaining from the candidate advocating such good sense.

But hey, John Tsitrian! Maybe you could help lead the way to that conversation in 2016. What Legislative district do you live in again?


  1. larry kurtz 2015-12-28 12:00

    Good on Mr. Tsitrian for showing how a South Dakota Democrat can register as a Republican and shine some light on the legislative process.

  2. Douglas Wiken 2015-12-28 12:47

    Tsitrian thinks farmers and ranchers should be screwed on behalf of city slicker school systems to increase teacher pay. My guess is most farmers and ranchers probably pay about 10 times as much to educate their kids K-12 as it is. My wife works full-time all year and her whole pay goes to pay her property taxes. We get mediocre roads and road service in rural areas. In the 40 some years we have lived here, the townships have bladed snow of rural roads to our farm house twice.

    The idea of taxing land by the square foot of productivity would be OK if first we taxed business offices, doctor offices, lawyer offices, speculator offices, on a square foot basis based on profits per square foot. Until then, I don’t think farmers and ranchers should have more taxes mulcted from them to make city and town taxes less.

  3. bearcreekbat 2015-12-28 13:02

    Tsitrian is right. I sometimes wonder if our state’s fear of an income tax originated in response to the crazy SD personal property tax repealed many years ago.

    As for the idea that a family pays taxes to educate their own children – isn’t that a bit myopic? Are we forgetting that we all benefit from educating every single person in our state? And are we forgetting that each of us, and each of our family members who came before us, obtained an education at the cost of other taxpayers? Educating our youth is civilized society’s life blood.

  4. Flipper 2015-12-28 13:09

    Unfortunately, even whispering anything about a state income tax is political suicide in South Dakota.

  5. larry kurtz 2015-12-28 13:12

    Bernie Hunhoff is dead?

  6. John Tsitrian 2015-12-28 13:13

    Thanks, Cory. The state needs to consider an income tax, if only out of a desire for some fairness in our tax system. I think I can make a moral and fiscal case and will continue to do so. Mr. Wiken, what the h*ll are you talking about?

  7. jerry 2015-12-28 13:39

    I agree with John T. I have seen the state income tax workings in Colorado. It works there and I did not find anyone that I spoke with that said they did not like it. When I told them of what my property taxes were, they were in disbelief as their’s were considerably lower. I think that the more you know about how a state income tax would work, the more it would be accepted. At least treat us citizens as adults and let us make the call.

  8. larry kurtz 2015-12-28 13:43

    Odd that those who say they loathe the IRS and tout states rights would deny Pierre those federal tax-deductible proceeds.

  9. jerry 2015-12-28 13:50

    Indeed Mr. Kurtz, indeed.

  10. larry kurtz 2015-12-28 14:15

    amen, jerry.

  11. grudznick 2015-12-28 14:17

    Indeed, my good friend Lar has a point about that fellow who is really a democrat. Insaner than a hatter is he.

  12. Eve Fisher 2015-12-28 14:41

    For 7 years, I lived in Tennessee, which had no state income tax, right on the border of Virginia, which did. Tennessee was a very poor state; Virginia a well-off one. TN ranks 47th of “best states to live”, VA, #5. TN 7.1% unemployment, VA 5% unemployment. TN roads were awful, VA roads were great (sort of like the difference when you cross the border into Minnesota). Yes, housing cost more in VA (but it was pretty good housing), but food, utilities were about the same. TN had, and still has, the highest sales tax in the country, 9.45% local and state sales tax (with the result that those who could, went across the border to VA to buy stuff). Property taxes were high. And those sales and property taxes increased the cost of living in TN the same way it does in SD, whether people up here want to admit it or not.

  13. mike from iowa 2015-12-28 15:07

    Tax is a dirty 4 letter word because wingnuts say so.

  14. Dana P 2015-12-28 16:02

    I used to live in Colorado. The home I used to live in was recently assessed at $248,000 and the property taxes for that assessment were $2176.

    My home in South Dakota was recently assessed at $176,174 and property taxes I paid for that assessment were $2792. Yes, you get more bang for your buck on purchase price of house here, but look at the difference! House in Colorado, assessed at $71,826 MORE than my South Dakota home, but paid $616 LESS in property taxes. Wow

    And yes, in Colorado, we did pay a state income tax. But between my property taxes and my state income tax (combined) , I actually ended up paying less taxes in total, than I do in just property taxes here. Good grief.

    Yes, a state income tax is sorely needed here. As long as people are convinced by party leaders in this state that a state income tax would be bad, they will continue to vote against their own interests.

  15. caheidelberger Post author | 2015-12-28 16:27

    Eve, it seems that Tennessee:Virginia::South Dakota:Minnesota.

    Bearcreekbat, Kneip got rid of the personal property tax, right? How did that tax work, anyway? All self-reported? How did the state know how much the junk in my closet was worth? Did they ever audit folks’ underwear drawers?

  16. bearcreekbat 2015-12-28 16:58

    Cory, it was commonly referred to as the “liar’s tax.” I recall that people were supposed to self report all their personal property, including furniture, antiques, jewelry, and whatnot. Apparently most people reported virtually no possessions!

    And you are right, our Democrat governor led the charge to end the liar’s tax. He also attempted to get an income tax passed. The House went along with the proposal, but the Senate was evenly divided. Lt. Gov. William Dougherty broke the tie with a vote against the income tax. Afterwards, the Constitution was amended to require 2/3 vote before any new taxes could be adopted or existing taxes increased.

  17. Donald Pay 2015-12-28 21:08

    If you just take the income tax and try to pass it, it will go down in flames. However, if it is considered as part of a revised revenue structure and an revised spending structure, it may get more consideration.

    In Wisconsin, we have a progressive income tax, but do not tax food. There is a lot of “revenue sharing,” with the state income tax revenues plowed back to school districts and local governments for services. This keeps property taxes relatively moderate.

    Overall, the tax bite on each quintile of income is much more equal. While conservatives in Wisconsin tinker with this system and have reduced its progressivity, they haven’t wanted to get rid of the income tax. They have gotten rid of other taxes and reduced the corporate income tax, that was also the case with the previous Democratic governor, too.

    There are still fights about what should and should not get funded, but the tax system is, at least, fairer.

  18. caheidelberger Post author | 2015-12-28 23:04

    Donald, I like your plan, have liked it all along. We shouldn’t just add an income tax on top of everything else. A state income tax should be part of a well-planned tax reform package, designed to provide enough revenue to better fund education and other neglected priorities and provide relief from the inequities in property and sales tax. The rates should be calculated on the best economic data available.

    The Liar’s Tax—I can just imagine the chicanery! Without something equivalent to the county assessor coming out and sizing up your house to provide a reliable tax roll, that tax sounds doomed to fail.

  19. Douglas Wiken 2015-12-29 10:35

    Farm equipment was taxed as personal property. I don’t remember much about the tax other than it was a pain in the rear. One thing I do remember however involved three new John Deere 4430 tractors in our township. There were thousands of dollars difference in the “value” of those tractors. I was not as good a liar as the others in the township.

    There needs to be a tax revision council, blue-ribbon committee or whatever. We need to start looking at what generates costs and who pays. Too often the current systems tax those generating the most costs nearly the least. The prime example is the tax on light cars versus the tax on heavy trucks. There is a lot more room for rationality and fairness in South Dakota’s tax system.

    To note a previous comment: I am well aware that we all get benefits from education. We need doctors, teachers, veterinarians, bloggers, newspaper writers, and more, but that suggests we should all pay equally not that some of us should be screwed blind by the tax systems while others are nearly free loaders.

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