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South Dakota Offers 7th-Lowest State/Local Tax Burden, But Not for Lowest 40% of Earners

KELO-TV shares some Wallet Hub/Tax Foundation numbers showing South Dakota’s state and local tax burden as a percentage of total personal income is the seventh-lowest in the nation, at 7.12%. South Dakota property taxes take 2.84% of personal income, while sales tax takes 4.28%.

Minnesota takes 10.2% of its residents’ income to fund its superior schools and roads. Minnesota also has one of the most nicely balanced three-legged stools of taxation in the country, with a difference of only 0.81 percentage points between the smallest leg, property tax (taking 2.93% of residents’ income) and income tax (3.74%) and sales tax falling in between (3.53%). Only four states—Wisconsin, Pennsylvania, Virginia, and Georgia—balance the three legs of the fiscal stool more closely.

Six states tax their residents even less than South Dakota: Florida, New Hampshire, Wyoming, Delaware, Tennessee, and Alaska, whose oil revenues allow the state to keep its tax burden the lowest in the nation at 5.06%. New Hampshire and Delaware have income taxes, but they both take far less of their residents’ incomes in sales taxes (1.16% and 1.17%, respectively) than does South Dakota.

South Dakota’s lack of an income tax means we rely more heavily on property and sales taxes than most other states. Our property taxes take the 23rd-highest share of personal income in the nation; our sales taxes, including our unusual and onerous tax on food, is the ninth-highest.

Our reliance on regressive sales tax (the Institute on Taxation and Economic Policy says South Dakota’s taxes are the fourth-most regressive in the country) means that lower-income South Dakotans don’t actually enjoy a lower tax burden than their counterparts in other states. An eager reader points out that the bottom 40% of South Dakotans by income pay an effective tax rate of 10.2%, the same as Minnesota’s average tax burden. In states that tax income, the lowest 40% of earners pay a slightly lower effective tax rate of 9.9%.

Institute on Taxation and Economic Policy, "Fairness Matters: A Chart Book on Who Pays State and Local Taxes," 2019.03.06, Chart #5.
Institute on Taxation and Economic Policy, “Fairness Matters: A Chart Book on Who Pays State and Local Taxes,” 2019.03.06, Chart #5.

In South Dakota and the other eight states that don’t tax income, the folks making out like bandits are, of course, the rich. South Dakota’s richest 1% pay an effective state/local tax rate of only 2.5%, less than a quarter of the effective tax rate that the 40% of South Dakotans with the lowest paychecks are shouldering. In states with income taxes, the richest 1% pay an effective tax rate of 7.5%, a touch more than three-quarters of the rate for the lowest 40% of earners. The rich always get richer, but they are taxed more fairly in states with income taxes.


  1. All Mammal 2022-04-01 10:21

    Over 70% increase on my property taxes this year. Rapid City writes up their wishlist and taxes my poor neighborhood according to their frivolous wants.

  2. ABC 2022-04-01 13:26

    A reduction of the sales tax on food and clothing (abolish it) and reducing it down to 6.0 (teachers are short changed by the school boards, why should teachers get a special half per cent, when computer programmers, dishwashers and waitresses don’t?).

    Then an income tax, top rate of 2 or 3 per cent for high income people, would bring in money to the State.

    Although if revenue is reduced and pandemic dollars from DC go away, if the money going into the state decreases, that’s OK! The religion of the R one party system is always look to increase revenue because we the government need it. Oh really? What if revenue decreases 1 percent? We can live it. State government is not a business! It is for the people, with the consent of the governed.

    Now, to wean the people off voting for a Republican government each 2 years, we Progressives have to PROVE that we can run a better more honest more transparent ship than the Republicans do! We can do this with a dues paying, t- shirt wearing organization.

    (Aside. Democrats and Libertarians run, but don’t get elected. Democrats in particular run a ship that is not in Pierre, and votes for Republican issues out of a failed policy of bipartisanship. Uh, there are more than two parties to government— the people and Independents too.)

    Dues are voluntary. So if a Progressive super organization says, Ok we can be more Elon Musk than Elon, we start by not saying, oh we lost an election in November, but we start PERMANENTLY by saying, Ok, we ll ask that each Progressive member of our nonprofit or Social business pay 5 cents a month dues to their State or County Progressive Assembly (pick a name, as in Harding County Progressive Assembly or Harding County High Wages Assembly or South Dakota Progressive Assembly. How can you build something new and fresh and exciting on the old once every 2 years Legislature and once every 4 years Governorship? Would you drink water or eat food or breathe air once every 2 or 4 years? Of course not! So why should accept the old system as valid for the people?

    The exciting part! So we sign up people into our Progressive Assemblies, County and State (one person can be in both) . So it will be a LOT different than the old machinery.

    First, it will not pass laws or levy taxes. (That’s for the Legislature, which should, in time, become center left maybe 60 percent of the seats. Over time, it will happen, as people become more prosperous, and become less addicted to beer and stuff. Moderation makes you smarter!)

    So the Assemblies income will come from voluntary dues, t shirt sales, and whatever other stuff and things the Assembly sells.

    So our Assemblies will use capitalism (providing innovative things that people want ) to grow and prosper as we teach everyone how to grow and prosper.

    What will these Assemblies do? Well, not endless debating, drinking and eating meals with lobbyists and overturning Initiatives that the people passed. That’s what the old machine does.

    Our Assemblies will propose and vote on funding Great projects that will make a difference in the lives of people. What if say, the Day County Progressive Assembly votes 57-39 to build a Library-bookstore in a certain town. The 39 people who lost that vote, they have a choice and can say aw shucks, that’s Ok, but if 2 or more of them want to do an alternative project, they can, as a Minority of 2, they can pass a Minority Resolution that says, Ok we will get a POBox in this town and build a used bookstore there (online or offline) and the Assembly will own the sales and profits of that bookstore, but since a minority passed this resolution, we will fund this project not by regular treasury money and dues, but only by Extra Dues that anyone can remit to the County Assembly!

    So you lose on the vote against a real,union, you can still build a Minority project, provided you can find 2 people to vote for it! True ultra Democracy!

    Some will say, oh you’ve got a 5 billion dollar a year State Government versus nonprofit Assemblies with a few hundred members? Ah, did you hear of David and Goliath? The better idea always wins! We are in a marketplace of ideas, not, oh this is the way we do things. We have a better way. It will grow!

    Titles and Salaries. Ok, so we eventually have 67 County Progressive Assembles, with elections every week. What do we call ourselves? (Assemblies can meet every Monday via Zoom for those who want to participate and vote on ideas and projects).

    Simple. How about Governor, Senator or Manager? You sign up, you opt in. You choose Governor as your preferred title. Now, there is no race. No campaign finances. You are a Member of thevAssembly, you pay your dues of 5 cents (if you are broke, we can have a fund to pay your dues!) and you choose Governor as your title. So every Monday morning, you don’t have to vote! A proxy voter can vote YES on all 66 Assembly Members in Day County or 2590 embers of the State Assembly.

    Salary. It can be modest at first, increasing as we do a good job of successfully launching projects and creating jobs and profits. Start you out at 3 cents a month pay, increase your pay as County and State projects bring in more money.

    So you get elected 52 times a year, you build exciting projects that the State never does, you get paid a modest salary, and you get the JOY of building, of making the impossible real 365 days a year, not once every 2 years. You name it, our Assemblies can do it and own it, hotels, bookstores, cactus gardens, software and application sales, restaurants, we can make movies, everything the world creates , we can , too!

    We can do this! Many will choose to pass this by. Those of us who do this, we will be GLAD of what we can build and enjoy in South Dakota.

    Remember, in 1994, Amazon was only an idea. 28 years later, it is huge.

    We start now. Twenty years from now, we will have Amazing things happening!

  3. ABC 2022-04-01 13:33

    Typo on above-

    “So you lose on the vote against a Resolution that passed, you can still build a Minority project, provided you can find 2 people to vote for it! True ultra Democracy!”

  4. ABC 2022-04-01 13:37

    The County Progressive Assemblies and the South Dakota Progressive Assembly can either be a Nonprofit Association, Nonprofit Corporation, or a Social Business (Dr. Yunus ). Or both.

    The 67 County Assemblies can be Nonprofit. The State Assembly can be a Social Business. Or vice versa.

    All profits in any Assemblies can go to salaries and jobs.

  5. ABC 2022-04-01 13:59

    Each person that wants to be a Member of a County Progressive Assembly or South Dakota Progressive Assembly, would simply need
    to be 18 or older, pay 5 cents a month dues, and sign a paper listing the Progressive Assembly’s Values, I agree, sign your name. That’s all.

    The office. You could choose to be a Governor, a Senator or a Manager. The proxy voter votes you in every Monday morning.

    Now this isn’t government, to be sure. It is really self-government via a Nonprofit Assembly or a Social Business. The possibilities are GREATER here. Less money initially, many Great possibilities!

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