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Wismer: Special Session Is About Compliance, Not Raising Taxes

I’m having a lot of fun pointing out that our Republican Governor is asking Republican legislators to vote to collect more sales tax from South Dakota voters less than two months before most of them face reëlection. Rep. Susan Wismer (D-1/Britton), who has already won her promotion to Senate and faces no immediate electoral backlash from a potential vote in the September 12 Special Session to raise taxes, tells me to quit calling the potential vote a tax increase:

Anyone that talks like that is encouraging non-compliance. We have a voluntary tax system, and every citizen has an obligation to pay that tax, and the fact that they choose not to pay it is only inefficient administration, and when they call that a tax increase, as far as I am concerned, they are just encouraging not following existing tax law, and that’s not healthy [Rep. Susan Wismer, audio transcribed from “Support Growing for South Dakota Special Session,” WNAX Radio, 2018.08.13].

I disagree with the honorable representative from my favorite town almost in North Dakota. I’m not encouraging people to flout existing law. Unlike the Aberdeen City Council, I agree completely with the good Representative that South Dakotans should pay the full sales tax demanded by law on every purchase. I think it would have been far more constitutional and respectful of state sovereignty for our Legislature and our Attorney General to pursue compliance from South Dakota taxpayers on their online purchases rather than luring the Supreme Court into putting political convenience over the Constitution and granting South Dakota tax collectors jurisdiction over online vendors who have never set foot in South Dakota.

But there is no error in describing the September 12 Special Session as an invitation to get more sales tax. The Governor’s clear intent in calling this special session is to hasten the implementation of the Wayfair ruling and increase the sales tax revenues that South Dakota and its municipalities collect.


  1. El Rayo X 2018-08-14 08:54

    Let me see if I have this right. So when a income tax dodger is caught, you’re saying the federal government is raising taxes?

  2. Donald Pay 2018-08-14 09:52

    I agree with Cory, here. Just because you have the legal authority to raise taxes doesn’t mean you have to raise taxes. This is a tax increase on state citizens who buy on-line. I don’t know how you can deny that. Of course there is a tax fairness question that comes into play, too. The wealthiest among us buy much more from on-line sources. I could talk myself into the idea that this is really an income tax disguised as a sales tax. The horror!!! Have fun with that, Lance and Stace.

    Tax fairness has never been of much concern to Republicans, though. If they were concerned about the fairness in taxation, they would find a way to decrease reliance on some sales taxes and property taxes and institute a corporate and personal income tax to tax income streams more fairly.

  3. Gail 2018-08-14 10:36

    I am glad the state won this case. Online buying has radically affected the state’s ability to collect sales tax it would normally receive through our purchases. If we want to have good highways, funded education and other public services we rely on the state to provide, we have to fund it. SD is not raising taxes, it is collecting the taxes it is owed.

    Expecting us to voluntarily report sales tax is cumbersome and unrealistic.

    Of course sales tax is regressive and a better option is needed. But it’s what we have to work with right now.

  4. Rorschach 2018-08-14 10:54

    I agree with Susan Wismer. This is a change in collection method and not a tax increase – although the change in collection method will result in higher collections because it is more efficient and will result in less tax evasion. Calling it a tax increase is political campaign rhetoric.

    I’m glad the state won this case, but more than a little bit surprised we won. If not for judicial activists on the supreme court overturning precedent, the court would have ruled that the issue of collecting sales taxes from online sales is one for congress to decide. I believe the only reason the Supreme Court overturned its own precedent on this is because it has no faith in congress to do anything.

  5. John Kennedy Claussen, Sr. 2018-08-14 11:17

    It is definitely a tax increase, because prior to the SCOTUS decision on this case, the only way to tax South Dakotans with these online purchases was through a use tax system, which lacked any serious form of enforcement. So to use the sales tax system to replace a use tax potential is revenue neutral in theory only – although a theory lacking due to enforcement issues – but in practicality it is a tax increase. Because when you think about how the negativity that surrounds the idea of any tax increase is the idea that it takes money out of the private sector for further economic growth, that such a reality truly does exist in this example by expanding the sales tax potential or the ability of the state to collect taxes.

  6. dave 2018-08-14 12:03

    I believe that this is not going to be the cash cow everyone hopes that it will be. sure the big online retailers can collect the sales tax… but i can search on amazon for a product, find the seller, and purchase directly from them. it is unlikely they will have the volume to trigger the tax collection, especially if they charge me $1 for the product and $19.99 for shipping and we are back to business as usual.

  7. Sheldon Osborn 2018-08-14 12:33

    You are right about many things Cory but you are way over the top wrong on this one. What the Supreme Court did and what the SD Legislature will apparently do is re-balance a business model that encourages its customers to break the law and not report or pay taxes they owe South Dakota for their on-line purchases. Local businesses collect sales tax at the point of purchase from their customers. It is only fair that on-line businesses do the same. Or, as an alternative, allow local businesses to forgo the collection and require customers to report and pay the tax on all of their purchases, local or online. That way they can both place the burden on the customer, with a wink and a nod of course. The point is a level playing field. It is simply unfair for one set of merchants to have a 6 1/2 percent price advantage over the other.

  8. Jake Kammerer 2018-08-14 20:20

    Sheldon-is it or isn’t it a tax increase if the state is frothing at the mouth in anticipation?

  9. Cory Allen Heidelberger Post author | 2018-08-15 17:10

    Sheldon, I deny none of what you say about balancing the playing field. I reject none of what Rep. Wismer says about compliance. But Jake is on the right trail. What I have said consistently is that the intended result of the Special Session is that the state will collect more tax revenue. Is that incorrect?

  10. Jason 2018-08-15 23:21

    More revenue from following the law is not a tax increase.

    The good news is that now that the correct tax will be collected, the SD Republicans can reduce the sales tax.

    I think a 3% State sales tax could cover the expenses. I would keep the local tax at 2%.

  11. Sheldon Osborn 2018-08-15 23:54

    Yes, Cory. They hope to increase compliance and require everyone to pay the sales taxes they owe under the law. It will increase tax revenue hopefully but increased compliance and resulting increases in tax revenue is not a tax increase. Unless, of course, one contends that increased tax revenue is a tax increase.

    If that is the case, we have a semantic dispute. Gentlemen, mark off 30 paces and define your terms.

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