When I recommend reforming South Dakota’s tax system by replacing our regressive sales and property taxes with a progressive income tax, Republicans go ape with negative propaganda. How will they respond when one of their own proposes the same thing?
Republican Meade County Commissioner Galen Niederwerder responds to Republican blogger John Tsitrian’s advocacy for a state income tax by saying he will support an income tax only if it replaces property tax. Niederwerder says property tax is “truly the most regressive form of taxation“:
Ag property does produce income; however, the taxes due are not based on the actual income produced, but rather a Department Of Revenue bureaucrat’s theory of what it should be able to produce. Commercial properties are taxed the same amount, even if they’re vacant. And a homeowner is penalized for owning a mere object that has no innate ability to produce the dollars required by the state to pay the tax due on it. Fact: Property taxes are not based on one’s ability to pay, they’re based on a government official’s opinion of value. Taxing real property is as senseless as the Personal Property Tax that was outlawed 40 years ago. The system needs to be overhauled [Galen Neiderwerder, “Property Taxes Need Overhauling as Part of SD’s Tax Reforms,” The Constant Commoner, 2016.12.27].
Niederwerder calls for a constitutional amendment implementing an income tax in conjunction with eliminating property tax or assigning property tax to exclusive local control. It’s worth noting that we don’t need a constitutional amendment just to get an income tax: Article 11 Section 2 already empowers the Legislature “to impose taxes upon incomes and occupations, and taxes upon incomes may be graduated and progressive and reasonable exemptions may be provided.”
So, Republicans, will you be blanketing Meade County with postcards to oust Niederwereder in 2018 for his progressive thinking on taxes? Or will you accede to your own Al Novstrup’s assessment that our property tax system, at least for agriculture, is “broken” and work on tax reform in the 2017 Session?
Of course Republican legislators go ape when anybody suggests a personal income tax. They have higher taxable incomes. They also don’t care about the unfairness of property and regressive sales taxes.
I have lived in two states where I paid personal income taxes: Minnesota and Ohio. In neither state did I feel burdened by taxes as I do in South Dakota. I own property in two counties and pay the same amount of tax on a loaf of bread as do my neighbors who make much more money than I do.
Make a little, pay a little. Make a lot, pay your fair share.
C.H THEY WILL DO NOTHING FARMERS WILL CALL FOR AG LOANS.rEPUBLICANS WHO SAY THEIR CONSERVATIVE. WILL VOTE FOR MORE FARM SUBSIDIES.but say were fiscal here about. like slick mike the mayor in sioux falls.
Moses6, what the hell are you trying to say?
I would like to seem much less reliance on property taxes, but some costs to counties and cities result directly to providing services to property and property owners.
We get next to nothing for such taxes in rural Tripp County. Sheriff and office are worthless. We have had car windows smashed so that batteries can be stolen and about 25,000 bushels of grain stolen. Sheriff and deputies spend all their time sitting on their dead asses at court house and do nothing to combat rural crime. These crimes never end up being reported in local weekly paper, so what I have learned from other people victimized is hearsay. One woman said their farmhouse had been broken into, interior doors and antique furniture was smashed and trashed. Just this week a farmer rancher south of town had all batteries in tractors stolen. Ranchers in the north end of the county pay somebody to check their farms every two hours if they themselves are not at home. Another woman said she had a car stolen, but they had cameras working and the thief was caught at Mission, SD.
Sales taxes on basic foods should be removed. Leave them on cafes, bars, and junk food like soda.
Niederwerder finds property tax more regressive than sales tax. I’m surprised by that assessment: at best, the two are equally regressive, taking no account of ability to pay. But I can see his point: The sales tax at least hits you just once, when you can afford that loaf of bread. The property tax hits you after you’ve bought the house and comes back every six months for another bite, whether or not you could afford to buy a similar house.
But the Institute on Taxation and Economic Policy will have none of that. They show with data on burdens by income bracket that sales tax is far more regressive than property tax.
It’s funny; I never thought conservatives were afraid of the word regressive. It happens to be the perfect opposite of the word progressive and therefor regressive must be a good thing -> has been their traditional position.
Maybe there’s an opening here, Adam. We heard conservatives in the Legislature using “regressive” to attack the sales tax for teacher pay last Session. Maybe we can use their words and Niederwerder’s as the first line of assault to push for tax reform that includes a progressive state income tax to replace regressive state taxes.
Like Wayne F, I lived in a state (Colorado) where there was a state income tax. The taxes that I paid overall (property, state income, fed tax, sales, etc) ended up being FAR less than what I am paying now, overall, while living in South Dakota. And, I felt I got more bang for my buck in Colorado. On top of regressive taxation here, South Dakota just loves the “fee fee” type of taxation. “hey, we are going to raise this fee – add that fee – but at least we aren’t increasing your taxes!!” Then they pat themselves on the back, wipe their foreheads, and say, “see, we can fool these folks all of the time!”
The property taxes I am paying now are almost double what I was paying on my Colorado home – that had a much higher assessed value than my South Dakota home. Go figure.
I can understand the argument against property taxes in that the value of property is often a guessing game. I am also not a fan of the complex system of determining the rate of taxation. Do you live in the home? Then you might qualify for an owner occupied reduction, but only if you file this specific form prior to November 1st, and then that reduction only applies to the following taxable year, but you pay those taxes the year after that so if you buy a house in December you will likely pay much more in taxes for the first year.
If you are elderly you can get a reduction, and I think there may be some type of reduction for disabled people. Ag land is taxed at one rate, commercial at another, residential land is taxed separately from residential structures…. it goes on and on. They you have special assessments for this or that, perhaps a school board opt out etc. At the end of the day it is almost as if they make the system overly complex to confuse the public.
That said, property taxes do serve a purpose. They ensure there is a cost associated with holding property. Without any form of property tax, you could see developers hold on to large sections of land or you might see out of state property owners just ignore there properties and let them sit idle. This results in urban sprawl and cases where properties fall into disrepair which can decrease property values in neighboring areas. Thus we still need a form of property tax, but it could be reduced and greatly simplified. Owning property should not be a semi-annual burden but instead should result in financial security.
Dana … It’s SoDak Republican mythology that the citizens in the state pay less taxes. Next time Cory is interviewed on the Aberdeen radio show and the announcer claims he lived in Texas and the state income tax was a burden, there will be commenters like you and me to offer the other side of the assertion.
Dana, Porter, we should definitely get you two on the radio to talk about your experience with those other states’ tax burdens.
Interesting: Colorado appears to have a flat income tax, 4.63% of federal taxable income for everybody. Working on the basis of taxable income tamps down some regressivity by incorporating federal exemptions and deductions. I appreciate their keep-it-simple approach, but is that progressive enough?
Minnesota has a higher base rate, 5.35% on the first $36,820 of a couple’s taxable income, up to a top marginal rate of 9.85% on couple’s income over $259,420.
Craig, I appreciate the rationale—cost for holding property—for retaining some property tax. I’ll keep saying three-legged stool, just like the majority of states. We need a better, more progressive mix of taxes.
I keenly appreciate the “guessing game” aspect of property tax that Craig points out. We don’t guess on income and sales tax: we take a percentage of what you make and what you spend. Taxing me based on what some unknown buyer might pay for my house if I sold it is too arbitrary. Taxing farmers based on what their land might have produced if they had planted optimal crops and enjoyed optimal weather and prices matching an Olympic average ventures even farther into fantasy. I’ve always been bothered by the idea that my property taxes could go up because rich people move in next door and build fancier houses than mine. Why should my taxes depend on how my neighbors use their property?
I wonder: could we drop county assessments and simply tax property by last sales price multiplied by an annual index factor?
That would qualify as “highly boring radio”. he he I could say (like Dana) that Colorado’s state income tax isn’t a burden and someone else could say it is a burden. My anecdotes are just opinions but I do like what the state income tax (less than $200 a month on a $4,000 paycheck) is used for. Many of the nice things CO has that attract tourists; our main industry. Three legged stool.
Greedy people are not necessarily interested in fairness in taxation and have proven they are more inclined to love the regressive taxes of sales tax and property tax; and lest not forget the poor people’s tax Video Lottery.
Good question, Cory. I haven’t lived there in about 11+ years, so some of those details are a little fuzzy to me. But no, it sure doesn’t seem like it. The other thing is Colorado didn’t “fee fee” us to death. Wages for similar jobs, much higher. (wages here for entry level jobs? was the same as I was making back in the 80’s)
Porter – you are absolutely correct. In SD, “they” like to sell it as the lowest taxes ever. And the other big one — “cost of living here are the lowest in the nation”. Why do people buy this propaganda? Up is down. Backwards is forwards. Black is white. It has been a mind blowing trip for me.
Dana P … SHHHHHHHH!!!! Don’t say those things, even if they’re true. The low cost of living is what makes all the hardships, sacrifices and inconveniences worth it. That and the fat pheasants. It’s why there’s no safety net. Why there’s no Medicaid for the neediest. Why seniors that need SNAP have to hide it from their families and friends. Praising the low cost of living is what allows one party Republican control and gives Republicans an excuse. So many have heard it, so many times that they ignore what people who’ve moved away have to say. That it’s really no cheaper in the long run to live in South Dakota and you have to put up with having a lot less. The state sits on a pile of rainy day money in a rainstorm instead of investing it back into the state for growth. So, shhhhhhhh. Keep that talk to yourself, Dana.
With Medicaid Expansion, the property taxes would go down drastically. We could then put in an amendment to keep them low while instituting an income tax. It is clear that Daugaard, and NOem were lying their fannies off about repealing Obamacare so they should be called on it to help ag producers stay in business. Lower property tax by Expanding Medicaid to make South Dakota Great Again.
Porter – oops! I gave the “secret” away, didn’t I? What was I thinking? :-)
It’s not cheaper to live in South Dakota. To live in South Dakota you have to learn to live cheaper. Lower wages, fees on everything, tax on groceries, high priced health insurance, higher priced retail products. Not that it’s a bad place to live, at all. It’s a great place with good neighbors, if you keep your liberal mouth shut. ha ha ha If you don’t keep your liberal mouth shut, you’ll be shunned like a Hutterite.
~Troy says, “The neighbors made the homeowners a pariah in the neighborhood. After two years of overt unfriendliness and noncooperation (ala joint snow-blowing, trimming trees after the ice storm, non-invitation to block parties), the couple moved.
~John says, “The neighbor’s gentle and kind demeanor was misinterpreted as weakness. That demeanor, aka, Minnesota / South Dakota “nice”, with its roots from the Scandinavian ‘logam’, in modern times morphed into ‘Jantelaw’ by the 1933 fictional writing of Aksel Sandermose. It is often in practice a deep cultural flaw, sometimes a near-fatal social flaw, rather than an asset. Minnesota / South Dakota “nice” is a cultural flaw when one forces another to ‘read ones mind’ for context, for resolve. Often direct speaking, brandished with likely consequences, resolves issues prior to escalating fights or court action. Then again, some folks will ignore direct speaking.