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Sutton Campaigns Counterproductively on False Republican Mythology About Income Tax

Billie Sutton remains wrong-headedly triangulative on income tax. Todd Epp asks the Democratic gubernatorial candidate what he thinks of a state income tax, and Sutton says, “I’m opposed to a state income tax.”

Epp: Why should we not tax people with money?

Sutton: …what I’ve heard from folks in South Dakota that’s important to them is to make sure that we are attracting more people here and attracting businesses here. We have a very good welcoming business community and culture here in South Dakota. …we want to keep it that way [Sen. Billie Sutton, interviewed by Todd Epp, “Sutton—Government Should Be ‘Accountable, Responsible’,” KELO Radio, 2018.07.19].

Sutton doesn’t tie the answer to the question explicitly, but he’s basically affirming Republican mythology, which is generally a good way to help elect Republicans.

Republicans want us to believe that low taxes and specifically the lack of an income tax make South Dakota a better place for business. That’s a myth. CNBC just ranked South Dakota 20th on its scorecard of state business climates. CNBC ranked several states that have income taxes, like Minnesota, Iowa, and Nebraska, above us. Fortune 500 companies, the companies with the brains and resources to move to places that would offer optimal business climates, appear to agree: South Dakota and Wyoming are the only states that do not tax corporations’ income or gross receipts, but not one Fortune 500 company has moved its headquarters here. Banks and insurers are among South Dakota’s biggest businesses, and we tax their income without any apparent deleterious effect.

As sociologist Cristobal Young explains, Republican low-tax/no-tax philosophy does favors for the rich while strangling public services and driving young people elsewhere:

…red states seem blind to the very real consequences of their tax and spending policies. There, years of  tax cuts (often tilted toward higher-income households), along with balanced budget requirements, have created funding crises in their education systems. Red state budgets tend to be very regressive – giving benefits to the already well off at the expense of others, especially the poor. But as Young points out, “cutting funding for education to finance tax cuts for the wealthy is a classic intergenerational transfer from the young to the old.” As such, the policies ignore who really is mobile across state lines: young people, who are leaving red states in droves….

…if red states want to attract highly skilled workers, they need to invest in public goods – such as infrastructure, schools, and health care – that make a place appealing to young people looking to start families. “This can be paid for with modest taxes on the late career working rich,” Dr. Young concludes, because these residents “have already laid down roots and are not going anywhere” [Vanessa Williamson, “What Republicans and Democrats Can Learn from ‘The Myth of Millionaire Tax Flight’,” Tax Foundation: TaxVox, 2018.04.20].

The Republican mythology leads to exactly the opposite outcome of what Sutton says he wants to achieve (and he talks in this same interview with Epp about wanting to give young people more reason to stay in South Dakota). It’s states like South Dakota that have trouble attracting people and businesses, specifically because we make up monster tales about taxes and under-invest in schools, roads, and other public goods that benefit businesses and workers.

Instead of parroting Republican mythology to avoid upsetting Republican voters, Sutton and other Democratic candidates need to critique and change that erroneous thinking. Income taxes don’t kill business, workforce, or culture. A lack of investment in education and public goods does. Ask Minnesota. Ask the young South Dakotans who move there.


  1. Jason 2018-07-20 07:57

    Texas, Florida, Nevada, Washington, Alaska, Tennessee, New Hampshire, South Dakota, and Wyoming are doing just fine with no State income taxes on earnings.

    Shall we discuss the number of fortune 500 Companies in Texas vs Minnesota?

  2. Dana P 2018-07-20 08:14

    Dammit…….Disappointing Mr Sutton

  3. Donald Pay 2018-07-20 08:55

    Let’s take Texas, Alaska, and Wyoming out. They tax extraction of minerals. Nevada has long had gambling taxes as an alternative form of taxation.

    South Dakota already taxes income in various ways from mining interests and from financial institutions, and the state gets revenues from gambling, so if there is some philosophical or religious or ideological or economic theory behind South Dakota’s tax and economic system it appears to be this: we want to keep people poor, over tax the those people who make it to the middle class and let rich people have the good life. It isn’t opposition to taxing income.

    You can tax income, and lessen the tax burden on the poor and middle class by shifting taxes. Right now the wealthy do not pay their fair share. A modest and graduated personal income tax coupled with reduction in sales and property taxes would distribute the tax burden evenly.

    But, there is a welfare queen philosophy in South Dakota’s ruling elite, where the wealthy refuse to pay while demanding favors from state government that allow them to keep the poor and middle class down. And the wealthy control the levers of state government. Until people decide they want tax fairness, the ruling elite and their lackeys in both parties will rule the roost.

  4. Jason 2018-07-20 09:15

    How does a State income make poor people rich?

  5. Dicta 2018-07-20 09:17

    Jason: kinda comparing apples to oranges, aren’t we? Texas has 28 million people. Minnesota has 5.

    Ironically, as of 2015 (according to the US Census Bureau info found here:, Minnesota had less debt per capita $3,026 vs $3,829) than South Dakota. My concern is that the lower tax rates don’t seem to be breaking even with spending, even with the more business-friendly environment you seem to be leaning on.

  6. OldSarg 2018-07-20 09:25

    “Republicans want us to believe that low taxes and specifically the lack of an income tax make South Dakota a better place for business.” The Republicans are right. If, considering all conditions, the location of the business cost the business less to operate it is a better environment for the business.

    “South Dakota and Wyoming are the only states that do not tax corporations’ income or gross receipts, but not one Fortune 500 company has moved its headquarters here.” The reasons for this do not simply boil down to taxes. It also depends upon the location of resources, work force, transportation, transportation cost and on and on.

    “Banks and insurers are among South Dakota’s biggest businesses” and that makes since as Banks and Insurers do not require resources other than communications. They have no need for mass product transportation. The majority of South Dakota workers have a accent neutral voice making it easier for customers to understand them over the phone.

    So, rather than trash someone for views that differ from one’s own, a business needs to look at the conditions they can control and those they cannot and make the decision on where the business is best located. Take for example ADM. Their HQ is in Chicago, centrally located in the breadbasket of the Nation and their 40 or so other sites are scattered around the major grain producing areas yet all of the sites have ready access to less expensive transportation via water or train yet the HQ is in the highly taxed Chicago. . . So why did ADM move to Chicago in 2014? TAXES

    To simply say that the cost to operate in a location, whether it be due to taxes, cost of labor, cost of transportation or whatever, should not be a consideration and that is isn’t a consideration but rather a myth is the mentality of someone that has never owned a business, operated a business, or farm, or hair dressing shop, or vaper store not been responsible for the livelihood of employees. Welcome to the world.

  7. Cory Allen Heidelberger Post author | 2018-07-20 09:27

    No, Jason, we shall discuss the falsehood of the GOP mythology that Sutton is repeating. Taxing income or gross receipts does not appear to cause states to have a bad business climate. I make no claim that state income taxes “make poor people rich.” I’ll argue the claims I make, not the statements you want to shove into other people’s mouths to relieve yourself of the need to listen, think, and responsibly rebut.

    You may discus how many Fortune 500 companies Minnesota and Texas have, but you will have to note that, by Census estimates of 2017 population and the above linked F500 figures, Minnesota has 3.4 F500 company HQs per million people while Texas has 1.8. Only places with higher F500/million-pop ratios are Connecticut and D.C.

  8. Cory Allen Heidelberger Post author | 2018-07-20 09:28

    But wait—Dicta’s point about per capita debt suggests that absence of an income tax does not prevent people from incurring more debt and becoming poorer.

  9. Cory Allen Heidelberger Post author | 2018-07-20 09:30

    Thank you, OS, for supporting my argument against the Sutton/GOP mythology.

    Yes, the reasons that guide business decisions “do not simply boil down to taxes. It also depends upon the location of resources, work force, transportation, transportation cost and on and on.” Many factors are more important than tax policy, and Sutton should emphasize those factors.

  10. jerry 2018-07-20 09:33

    And to think, I thought Agriculture was the big business in South Dakota. Guess all those acres of highly taxed (and now priced in the tank) corn and soybeans were at the top of the list for the top.

    In fact, I am right! woo woo. Agriculture ranks number 1 in the state. Banking and insurance are not even listed in the top 5. Back to the drawing board for you. Oh, and welcome the real world, Comrade

  11. jerry 2018-07-20 09:38

    ADM is international and does a lot of business with the EU, so it makes more sense to come to Chicago with its airport hubs that go all over the world. Oh, and then there is this”

    “The company did not release the exact cost of the move, but Chief Financial Officer Ray Young said in a recent discussion with industry analysts that ADM recognized $31 million in pretax costs related to the global headquarter relocation along with restructurings and integration under way at European agribusiness Alfred C. Toepfer International and at livestock feed ingredients business Alliance Nutrition.”

  12. Jason 2018-07-20 09:49

    Cory, you brought up Fortune 500 Companies.

    My question was for Donald.

    Debt has nothing to do with the type of tax.

  13. mike from iowa 2018-07-20 10:07

    ow bad is the state’s budget situation?

    Pretty bad. For the next two years, Texas is projected to be significantly short of the money needed just to maintain the current meager level of services.

    According to Comptroller Glenn Hegar, lawmakers have a relatively paltry $105 billion to spend. But the Center for Public Policy Priorities (CPPP) estimates that paying for the current level of services would cost $109 billion. Factor in the increasing cost of providing state services, and the figure rises to more than $111 billion.

    Sure Texas is doing just fine.

  14. Richard Schriever 2018-07-20 10:40

    So far this year, I’ve paid income taxes in 3 different states (IA, MN, WI). That’s where the work is – all of it government (tax) funded to date. I’ve paid no taxes and DONE NO WORK in SD – why? Because there is evidently no work in SD – at least no government (tax) funded work.

    Hey – all you “business” Repubs. – how can a state affords to pay people to improve it’s infrastructure when it ails to provide a revenue stream to fund same? Why would a business want to locate in a state where the infrastructure is neglected – apparently deliberately I might add – and there is no plan in place to fund it in the future. It’s kinda like thinking that a renter should be more attracted to a run-down poorly maintained apartment vs. a well maintained one – for 2% more3 rent. Isn’t it?

    You all “conserva6tives” need to drop the invalid ideological rhetoric off by the side of the road and put your thinking caps on.

  15. Richard Schriever 2018-07-20 10:48

    Jason, instead of relying on 4-year old data from a notoriously biased and inaccurate “news” site; try checking out the recent trends and changes in SD economic dynamics provided by the State itself. You will see that SD ag has been in severe decline in its roll in SD’s overall economy.

    Please – try to live in the present reality – not your fantasy – OK?

  16. Vance Feyereisen 2018-07-20 10:55

    Sutton should look to Bill Clinton to see the results you get when you try to triangulate with the GOP’ers. The repeal of Glass-stegall had much to do with the great recession. Repukes are like a rubber band, always exerting pressure to the right. They will win every battle with an honest man because sneaky, secretive, dirty cheating is in their DNA.

  17. OldSarg 2018-07-20 11:02

    Genius amongst us “I’ve paid income taxes in 3 different states (IA, MN, WI). That’s where the work is – all of it government (tax) funded to date. I’ve paid no taxes and DONE NO WORK in SD – why? Because there is evidently no work in SD”

    Dear Genius: Had you worked in SD you would not have paid taxes on your income allowing you to earn even more dollar to dollar. . Example: Minnesota’s 2018 income tax ranges from 5.35% to 9.85%. At the lowest level had you earned $1.00 in Minnesota you get to keep $0.94. In South Dakota you get to keep $1.00. Do you see how that works? It’s like getting a raise and not having to work for it but then you didn’t do any work here so guess how much you owe? never mind. . .

  18. OldSarg 2018-07-20 11:19

    Dear Genius2: The “Great Recession” was due to commercial bank failures caused by credit losses on real estate loans. The banks that failed sought high-risk strategies that combined nontraditional funding sources with subprime lending. Glass-Steagall would not have stopped any of this. It couldn’t have stopped standalone investment banks, even Lehman Brothers from getting in trouble. The “Great Recession” was actually caused by our very own government. When President Clinton and HUD established their private homeowner goal of 70% they also had Fannie Mae (government controlled) to commit $1,000,000,000,000.00 (that is 1 trillion) for affordable housing. Our very own home loan guarantee government orgs were given specific goals to meet to guarantee the loans. We were not able to meet to goals so they had us lower our credit requirements. So your fellow genius government employees guaranteed all these high risk loans provided through banks to high risk borrowers, the loans were bundled together and sold as investments through your government controlled Fannie Mae and the bottom fell out. Glass-Steagall would have been non effective at stopping any of this. I think about 2002 I met with a Fannie Mae attorney in Pierre who was trying to convince us it was a good thing to make these high risk loans and I specifically asked her if we (as government employees ) did not have a fiducial responsibility to the American people. She stared at me for a minute and then turn away.

  19. jerry 2018-07-20 11:32

    Comrade Old Soviet, did it ever enter your mind that Iraq and Afghanistan had a whole lot to do with the complete failure of the system? Those were both unfunded mandates. I remember clearly when Bush and Cheney both said that they had it under control and that we should all go to the mall. BTW, Bush and Cheney were after Bill Clinton. If you met with anyone in 2002, that was when Bush and Cheney were in charge who could have very easily re instated Glass-Steagall.

  20. mike from iowa 2018-07-20 11:42

    So who is to blame? There’s plenty of blame to go around, and it doesn’t fasten only on one party or even mainly on what Washington did or didn’t do. As The Economist magazine noted recently, the problem is one of “layered irresponsibility … with hard-working homeowners and billionaire villains each playing a role.” Here’s a partial list of those alleged to be at fault:

    The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
    Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
    Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
    Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
    The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
    Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
    Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
    Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
    The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
    An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
    Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

    The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

    –by Joe Miller and Brooks Jackson


  21. Kal Lis 2018-07-20 11:43

    Leaving the merits of an state income tax aside for a second, why did Sutton let himself get baited into answering the question at all.

    If he wins, it will be a narrow victory and he will not provide coat tails that bring enough Dems to the legislature to even consider passing a state income tax. Further, few Republicans will vote for him solely because he doesn’t want an income tax, and this stance is not going to increase his support from South Dakota’s Democrats

    His answer to this little gotcha should be, “I will work with Republican legislative leaders to make South Dakota’s taxes more fair, but politics is the art of the possible. Given that the legislature will be dominated by Republicans, passing an income tax is not within the realm of possiblity”

  22. Cory Allen Heidelberger Post author | 2018-07-20 13:22

    Again, Kal Lis reads my internal political briefs. How are you not running for Legislature, Kal Lis… or maybe party chair come December?

  23. Adam 2018-07-20 13:23

    Billie will get the Dem turnout no matter what, but he’s on his own when it comes to earning the crossover vote.

    It is hard for Dems to find the inspiration, by Billy’s words, to go to the heart of their conservative social circles and sell Billy’s message.

    Sutton is better off taking his message out to rural conservatives, like him, to see if he can get them all worked up about his particular brand of conservatism. If he can learn to speak with some authority, the more retarded the rural messaging, the better. If he were to talk about ‘mistakes SDDP has made over the years’ or ‘where the Dems went wrong’ conservatives would eat that sh!t up like no tomorrow.

    To earn significant enough crossover vote, Billy would have to slam Dems enough to give the impression that he too is an anti-liberal. Unfortunately, by doing that, he would loose a bit of his base.

    Billy’s primary asset is the inherent weakness in/of his opponent. He needs to make his race about Kristi Noem being lazy, misguided, dishonest and incapable.

    Too bad though, Billy just simply does not have the guts to CALL OUT huge fundamental shortcomings and weaknesses when he sees them – or he’s particularly blind in addition to paralyzed. I wish his team could/would whip him into shape, but they seem to be nothing but Mr./Mrs. Nice Guys all up in there – no heavy hitters.

    I am afraid, even if Sutton were to win, it would be nothing to rejoice about. Sugar-free Republican, yay.

    Go get ‘em Billy.

  24. Cory Allen Heidelberger Post author | 2018-07-20 13:28

    Yes, Jason, I did bring them up, and you’re retreating to your word games because you see we’re going to whip you on that metric.

    State income tax is a minor if not insignificant determinant of a healthy state business climate. Sufficient and effective investment of public resources in public goods is a far larger determinant. Minnesota appears to support that contention.

  25. Jason 2018-07-20 13:41

    Cory wrote:

    State income tax is a minor if not insignificant determinant of a healthy state business climate.

    Cory, thanks for proving my point that we don’t need a State Income tax.

    SD just ended the 2018 budget year with a $16.9 million dollar surplus.

    @ Richard S. You have me confused with someone else because I didn’t mention any 4 year old stats.

  26. Cory Allen Heidelberger Post author | 2018-07-20 15:29

    My statement proves none of Jason’s points. Jason misrepresents my words to pretend that I was arguing some other thesis than what I posited in the original post.

    Billie Sutton is as wrong as Dennis Daugaard and Kristi Noem when they say that imposing an income tax would hurt our business climate.

    A state income tax would stabilize our state revenues (i.e., provide the third leg of the three-legged stool that the vast majority of states use) and allow us to create a more progressive tax structure.

    I have often said that if we reach the point where a state income tax enters the realm of the possible (see Kal Lis’s excellent pragmatic messaging for Sutton) I would be happy just to do a dollar-for-dollar replacement of income tax dollars for sales and property tax dollars. However, I will contend that a state income tax would allow us to lower the regressive burdens of our sales tax, ease the impact of property tax on farmers during crop/beef price slumps, and increase state revenues by accessing the wealth of taxpayers who can bear a notably larger tax burden.

    But again, the main point here is that Sutton is perpetuating GOP mythmaking. The data (not Jason’s imagining and wordplay, but the data, which is killing Jason) show that a state income tax does not sink a state’s business climate. Regressive tax systems sandbag the poor, lead to less investment in the services that help everyone climb the ranks into the skilled workforce, and leave states in rougher shape, thus driving young people away. That was all said at the top. Jason hasn’t addressed any of that. He tried one trick with F500 companies without looking, got hammered, and ran back to more word games.

  27. Jenny 2018-07-20 17:48

    Old Sarge doesn’t mention that notorious evil food tax that SD has.

    MNdoes not have a food or clothing tax.

  28. OldSarg 2018-07-20 17:54

    Genius level Idiot: “Comrade Old Soviet, did it ever enter your mind that Iraq and Afghanistan had a whole lot to do with the complete failure of the system? Those were both unfunded mandates.” Get it? UNFUNDED MANDATE

    And when did a war occur that was preplanned and funded beforehand?

  29. grudznick 2018-07-20 20:00

    I have a couple of alt-left friends who admit that taxing food is fair for everybody who eats food. If you eat more, like I do, you pay more. And I’m OK with that.

  30. mike from iowa 2018-07-20 20:02

    Dubya’s wars are the first two to be paid for by credit card. All other wars taxes were raised to pay the costs.

  31. mike from iowa 2018-07-20 20:07

    Dear Genius: Had you worked in SD you would not have paid taxes on your income allowing you to earn even more dollar to dollar. .which is about average pay in Northern Mississip… South Dakota.

    Minnesota pays much better.

  32. jerry 2018-07-21 00:19

    Comrade Old Soviet, World War II was pre planed with the Lend Lease Act for starters. The Korean War had some issues, but put troops on the line in a pretty short stead. Vietnam had ample time to amp up the ramp up to 1968-1969. Iraq was being planed since the Bush’s about got iced by Sadam, but was not declared so there was no funding set for the circus. And…here we are today.

  33. Richard Schriever 2018-07-21 08:59

    Dear blinders on OS – evidently you don’t understand that PREVAILING WAGES for the same work done in WI, MN and IA are HIGHER to what they are in SD. The difference more than makes up for the income taxes paid in those state. I had the same experiences last year with CO and FL. CO has an income tax – FL does not. CO prevailing wages are HIGHER to FL. Enough higher that 4 people we hired in FL – MOVED to CO for continued employment. Get it?

  34. Jason 2018-07-21 09:09


    There are house prices, other taxes, and crime to consider also. Get it Richard?

  35. Richard Schriever 2018-07-21 22:44

    Jason, yes – I do – I have lived in 7 different states and just recently purchased house number 38. I have also consulted to global business entities. Sorry man. but in my estimation – you sir, are a rookie.

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