In 2016, then-Representative Don Haggar of Sioux Falls voted against adding a half-percentage point to our sales tax to raise our teacher pay. (In the same Session that he and his daughter refused to send more money to public schools, Haggar also voted to send tax dollars to private religious schools—just so we understand his priorities are most certainly not the good of public education or the taxpayers.) Now full-time Koch Brothers’ mouthpiece Don Haggar wants to tinker with part of the sales tax/teacher pay plan, the infamous Partridge Amendment.
Evidently sharing Senator Jeff Monroe’s (R-24/Pierre) concern that the state will ignore or repeal the sloppily crafted plan to reduce the sales tax 0.1 percentage points for every $20 million of new online sales tax revenue we get from out-of-state vendors, the Koch Brothers are sending Haggar the Horrible back to Pierre to lobby for phasing the half-penny for teachers out over five years, regardless of the revenue we get from the Wayfair tax:
This rate decrease was based on every $20 million of online sales tax revenue… the will of the Legislature at the time was that if Wayfair was won by South Dakota, we’re going to reduce the sales tax anyway, so let’s just make it nice and simple and just reduce it by a tenth of a percent every year for five years [Don Haggar, transcribed from audio, in Jody Heemstra, “AFP-SD Initiated Measure Proposal Tackling the Sales Tax,” DRG News, 2018.12.12].
Haggar misrepresents the will of the 2016 Legislature. From the beginning, Partridge intended his proposed sales tax reduction to be revenue-neutral, to step down the sales tax percentage only if new collections would sustain the teacher pay raises that were the Legislature’s overarching goal. Haggar’s proposal is thus not the will of the Legislature; it’s the will of the losing minority and the Koch Brothers to cut taxes and potentially leave teachers hanging.
Senator Troy Heinert (D-26/Mission) understands what Haggar is really after:
Incoming Senate Minority Leader Troy Heinert, who opposes the plan, said the intent of the sales tax hike was to increase teacher salaries. The Democratic lawmaker said it’s still unclear how much revenue will be generated on purchases from out-of-state retailers.
He said rolling back the tax hike would lead to lower educator pay and losing teachers, which would affect programming and class sizes.
“The reduction … that they’re talking about hurts nobody but the students in South Dakota,” Heinert said [James Nord, “Group Wants State to Reduce Sales Tax,” AP via Rapid City Journal, updated 2018.12.13].
Interestingly, the online petition Haggar and the Kochs are asking us to sign more accurately preserves the will of the Legislature:
When the state legislature voted to increase the sales tax from 4 to 4.5 percent in 2016, the bill included an amendment pledging to reduce the rate once the state started to collect taxes from online purchases.
Now that the state is collecting online sales taxes, it’s time to lower the sales tax as promised. Please clarify, in statute, that you intend to reduce the sales tax rate by .1 percentage points for every $20 million collected online [emphasis mine; Americans for Prosperity, online petition, downloaded 2018.12.13].
The Haggar/Koch initiative isn’t up on the Secretary of State’s 2020 ballot question webpage yet, but Americans for Prosperity’s sponsorship of a ballot question raises questions about how, if the Legislature doesn’t act, Haggar will get Koch money to push his initiative once Initiated Measure 24 kicks in on July 1 and prohibits the Koch Brothers and anyone else from outside South Dakota from contributing to ballot question campaigns. In campaigning against IM 24, Don Haggar reported receiving over $6,000 in in-kind donations from Virginia-based Americans for Prosperity. In 2016, Americans for Prosperity sent $590,000 in cash and about $60,000 in in-kind donations from Virginia to fight IM 22. Come July 1, IM 24 clamps that money hose shut.
The Koch Brothers’ interest in cutting South Dakota’s sales tax shows another angle of the unfairness of banning out-of-state residents from speaking up (i.e., contributing money) for or against South Dakota ballot measures. Now that we claim the authority to impose our sales tax on businesses in other states, those taxpayers (or shall we call them conscripted tax collectors?) seem to at least have the right to lobby our Legislature and, if that fails, the voters of South Dakota, to lower their tax bill.
In addition to Haggar and fellow Kochites lurking the Capitol lobby this winter, expect two actions from the Koch Brothers:
- If the Legislature fails to cut the sales tax, expect the AFP Virginia office to write a big six-figure check to Haggar’s ballot question committee on June 30.
- Whether or not the Legislature acts favorably on sales tax rates, expect AFP to file a lawsuit against IM 24, which lawsuit they will easily win, since IM 24 is unconstitutional.
If the legislature wants to put the 1/2 penny sales tax back up for discussion, then it should be worth remembering that part of that 1/2 cent also went to property tax reduction. Maybe it is the proportion that went to property tax reduction that should be re-instated/offset with sales tax revenue reduction? I am not making the argument that the offset of property tax made for a total net reduction, but I really see SD charting the path Kansas took where the continued reduction of taxes (the GOP mantra) demonstrably lead to the collapse of important state functioning.
I just found this at an old favorite blog-otherwords.org
Wriiten by a tax lawyer and newer contributor to the site.
Thanks for that reminder, O! As I recall, only 64% of the sales tax hike went to fund K-12 teacher pay. 33% went to property tax relief, and 3% went to vo-tech teacher pay. That half-penny was supposed to generate about $100M per year; thus, Partridge proposed tying each one-tenth-point decrease to each $20M in new revenue.
Suppose Wayfair balances everything out and, in five years, we’re seeing $100M in revenue each year that we wouldn’t have seen otherwise. Either way, under Partridge or Haggar, cutting the sales tax rate to 4% would drop that Wayfair revenue to $89M. So there’s a flaw in the tradeoff formula right there. If that flaw arises, how should we make it up—all from clawing back property tax relief? Proportionate reductions in that relief and K-12/vo-tech teacher pay assistance?
Newest koch bros- Charles son Chase- wants kinder libertarianism. He doesn’t like politics and wouldn’t send money to ND senator elect protectionist Cramer.