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Nesiba Joins Wismer in Backing Daugaard’s Sales Tax Enhancement

Democrats are helping Republican Governor Dennis Daugaard tamp down any election-season concerns about the increase in tax collections the Governor has called on legislators to approve at the September 12 Special Session. Following Rep. Susan Wismer’s (D-1/Britton) sharp rebuke of anyone who calls enacting the Amazon/Wayfair remote online vendor sales tax a tax increase, economist and Senator Reynold Nesiba (D-15/Sioux Falls) says he doesn’t view the as-yet-unseen legislation from the Governor’s office as a tax increase:

Sen. Reynold Nesiba
Sen. Reynold Nesiba

If I buy a book at Amazon or through the Amazon marketplace… should I be able to buy that at a six and a half percent discount rather than buying it at Prairie Pages in Pierre or Barnes and Noble in Sioux Falls? Why should our brick-and-mortar stores be at a tax disadvantage because they’re here? I don’t see this—I see this as a way of leveling the playing field [Sen. Reynold Nesiba, transcribed from audio, “South Dakota Legislators Waiting on Special Session Details,” WNAX Radio, 2018.08.23].

Nesiba and Wismer both won their primaries and thus face no general-election pressure. They are free to talk sense about good policy without calculating how voters will react just weeks after passage. I agree that acting as soon as possible to enact the tax policy that Attorney General Marty Jackley barely convinced the Supreme Court to authorize for us in June.

But it is good policy—and Governor Daugaard is hastening to enact it with a Special Session—specifically because it puts more money in state coffers right now (well, not  now now, but October 1, the blink of a policy eye). 2018s HB 1001 will increase the amount of tax revenue the state of South Dakota collects. I know we don’t want to call that a tax increase because some nervous Republicans can’t bear to admit, less than two weeks before South Dakotans start casting ballots, that putting more money in government coffers is good, and this bill won’t pass without lots of nervous Republican votes. Plus, if we call it a tax increase, we’d have to field two-thirds majorities to pass it, and that could increase the chances that a nervous Republican revolt would sink our shot at a few months of increased sales tax revenue. (But why worry: the original legislation seeking to conscript out-of-state online vendors as tax collectors for South Dakota, 2016 SB 106, passed unanimously in the 2016 Senate and with only two Nays in the House.)

The September Special Session will result, for a few months, at least, paying more sales tax than they would otherwise. The state’s tax revenues will increase. And in this case, that’s fine.

But apparently the outgoing Republican Governor needs safely incumbent Democrats to help tamp down that simple fiscal fact and sell his revenue-enhancement plan.


  1. Lee Schoenbeck 2018-08-24 09:53

    You realize this is about enforcing an existing tax, not enacting a new tax. In each instance, somebody was stiffing their local community and their state out of paying what they owed. Now, more will be paying what the law always said they should pay

  2. Donald Pay 2018-08-24 10:30

    I don’t understand the need for some to try to hide from the truth. To them, apparently, the truth isn’t the truth.

    No one paid this tax before. There was no real infrastructure in place to collect the tax. There was a Supreme Court case stating states couldn’t collect this tax. There was the hope that some out-of-state retailers would voluntarily collect money somewhat equivalent to the amount of a sales tax and remit that money to the state. Some did, most didn’t. There was the hope that state taxpayers would voluntarily pay the amount equivalent to a sales tax. Some did, most didn’t. I wasn’t aware that voluntary contributions were taxes, but truth isn’t truth, you know.

    Don’t pretend this is not a new tax. I’m OK with this new tax, by the way. This new tax will hit the middle class and the wealthy harder than the poor, because most poor folk aren’t buying much on-line. It is, in essence, an income tax disguised as a sales tax, since the wealthier among us have long used these catalogue and on-line purchases to skip paying their fair share of taxes. Even with this new semi-income tax in place the wealthy get by without paying their fair share. The money collected should go toward elimination of the tax on food purchases.

  3. Porter Lansing 2018-08-24 12:25

    Of course it’s a tax increase and it was demanded by Republicans. It’s a Republican Tax Increase, Mable!! An analogy is smoking cigarettes. Everyone is going to die and everyone pays taxes. Smoking is just asking to speed up the process and demanding South Dakotans pay a tax no one was bothering to collect is like asking to speed up taxation.

  4. Cory Allen Heidelberger Post author | 2018-08-24 12:45

    I realize that, Lee. But the net effect is exactly what I said: the state will collect more tax revenue from more South Dakotans. Tax revenues will increase due to a new law reaching across state borders to require individuals not in South Dakota to work for the state.

    And would someone remind me just how the state will hold those conscripted out-of-state collectors accountable? Will SDHP officers travel to Vermont to ticket or arrest online vendors who resist?

  5. Jason 2018-08-24 12:52

    Now the State will be able to reduce the sales tax percentage.

  6. Porter Lansing 2018-08-24 14:35

    … If it’s not a tax increase would a “real Republican” recommend that the special session be used to develop a plan and institute the process where South Dakota citizens submit their sales receipts from online businesses [to the state] for refund of the monies submitted? Or, will Republicans use the session to spend the money even before it hatches?

  7. John Kennedy Claussen, Sr. 2018-08-24 20:52

    But it is not “about enforcing an existing tax,” because to do that would require an ingenious way to better collect the use tax, which is not what is happening here. The Wayfair decision gives South Dakota a new form of taxation by allowing it to have a long arm reach when it comes to collecting sales taxes, which were not collectable before.

    The inability to adequately collect use taxes – when some still pay use taxes – was a known and planned understanding; and to now have the ability to expand the use tax via a sales tax collection method is in essence a tax increase. Did the State expect these tax dollars prior to the Wayfair decision? A course they did not, nor did they budget for it, thus it is a tax increase.

    To say that this is not a tax increase is to suggest that all of this is just revenue neutral, but if there is a windfall for the State, which there is, then how is it neutral?

  8. grudznick 2018-08-24 21:55

    Pay your bills, you scofflaws! Stop being tax cheats like Mr. Howie is and pay the taxes on your bills. This is just a way to send the goons to your door with a stout stick to bonk you on the head, which is what you need if you are scofflawing like Mr. Pay would be doing if he actually lived in South Dakota.

    Side note: studies have now shown that only 16% of the bloggers on Mr. H’s web place are from South Dakota. That means that my opinion, as a South Dakotan, carries 6.25 times the weight of any of the out-of-staters. My opinion was already twice as good, so now I’m 12 times better!!

  9. Debbo 2018-08-24 23:04

    This reminds me of how Reagan cut taxes. Somehow the subsequent 11 times he raised taxes doesn’t count. I never did understand why. Because he was a Republican?

  10. Cory Allen Heidelberger Post author | 2018-08-25 06:58

    Jason, recall, as I said in the original post with a link to the supporting evidence, that sales tax reduction is unclearly worded, uncertain, and does not happen until the next fiscal year, if at all. In 2018 and into the first half of 2019, the Special Session collects more revenues.

  11. Cory Allen Heidelberger Post author | 2018-08-25 07:01

    JKC is right: the essence matters. South Dakota government has too long a history of taking more money out of the public’s pockets and reaching for euphemisms to preserve Republican anti-tax rhetoric. I’m uneasy about Democrats helping Republicans maintain their cover.

  12. John Kennedy Claussen, Sr. 2018-08-25 14:08

    Exactly Cory! With all due respect to my fellow Democrats, who claim this is not a tax increase, it is time we offer as a political party an alternative and not just be “Alternative Republicans.” Any manner – which allows the SD GOP to enhance a regressive tax – is not a win for the people of South Dakota, but it is a win for the wealth class in this state. It’s the duty first and foremost of the South Dakota Democratic Party to look out for the people and not just be an enabler to wealth interests in this state, but by signing off on the South Dakota GOP spin on this issue, the South Dakota Democratic leadership has allowed itself to be co-opted, and as long as we continue to be co-opted, then why should anyone vote for us, when there is a real Republican Party already in this state?

    Any good Republican knows that when you transfer wealth from the private sector to the public sector, that that is a tax increase. No guilt trip about hiding from a past use tax or sales tax takes away from the fact that the State will now garner more tax monies as the State further abandons the use tax system in place of a broaden sales tax system, which is compliments of a conservative SCOTUS that used judicial activism to reach its decision with the help of a law enacted in South Dakota that from day one was unconstitutional and in violation of the oath that all public figures take concerning holding up the rule of law and the State and US constitutions….

  13. Lanny Stricherz 2018-08-25 16:36

    The point at which Nesiba is wrong, is the same place that his Democratic predecessor in District 15 was wrong. Instead of backing an internet sales tax, he should be working to decrease the sales tax on all sales particularly food. His predecessor Senator Kirshmann coauthored a bill in 2016 to increase the city and municipality sales tax from 2 to 3%. That is a 50% increase. That bill made it through the House committee, the House and the Senate committee before being killed by the Senate on the floor. That was the same session that added 1/2 penny (a 12 1/2% increase) to the state’s portion of the sales tax to give the teachers a pay increase.

    Paying for the needs of this state with a sales tax is so discriminatory against those with less, that any legislator that supports increasing it should be kicked out of office.

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