Noem Signs Sales Tax Cut, Plays Word Games Badly

Last updated on 2023-05-02

Has Governor Kristi Noem surrendered in her weakly waged fight fight to repeal the food tax? After her personal committee testimony and threat to veto the state budget did not persuade the Legislature to approve her number one priority, the Governor has completely capitulated, signing the budget bill Monday and signing the 0.3-percentage-point reduction of the sales tax Tuesday.

But building on the linguistic marketing groundwork she started laying last week when she said calling the tax cut a tax cut is a lie, Noem now insists on calling the tax cut in House Bill 1137 a “tax holiday”:

Our people deserve permanent tax relief. The legislature has instead offered them a tax holiday for four years [Gov. Kristi Noem, press release, 2023.03.21].

The HB 1137 tax cut, like a governorship or a Presidency, only lasts four years. But I’m certainly not going to start referring to Donald Trump’s time in office as a holiday.

Speaking of Trump, the tax cuts he and Noem passed in 2017 last only eight years, but Noem has always referred to those tax cuts as tax cuts, not tax holidays. Is there some formal legal definition or magic threshold between four years and eight years that makes a holiday a cut?

I cut my finger a few days ago. It healed over; was that not a real cut but just a skin-integrity holiday?

Back in 2016, when Republicans raised the sales tax from 4.0% to 4.5% to fund teacher pay, they included a provision, the Partridge Amendment, that promised to roll back that increase once remote sales tax collections reached a certain level. That tax increase was thus temporary. But we didn’t play word games about whether the 2016 bill was a real tax increase or just a temporary or conditional revenue enhancement. A tax hike is a tax hike, and a tax cut is a tax cut, no matter how long it lasts.

Noem alleges that HB 1137 shows that legislators just want to raise taxes, but House Majority Leader Will Mortenson nicely says that’s bunk:

Noem’s letter said lawmakers made it clear “they wish to raise taxes again in the near future, and the method through which they have written this legislation allows them to do so without ever having to take another vote.”

But Mortenson suggested the opposite might prove to be the case. “House Republicans fought for a permanent tax cut since day one. With continued strong revenue, I have no doubt we’ll continue pushing hard to remove the sunset when we reconvene next January,” he said [Eric Mayer, “Gov. Noem Signs 4-Year Tax Reduction Bill After All,” KELO-TV, 2023.03.21].

Noem and her wordsmiths are spending too much time playing a too-cute word game and taking unconstructive shots at legislators and not enough time (a) spinning this tax cut as a victory for her, a good Republican policy driven by her budget and her politicking, (b) making a good case for repealing the food tax, and (c) saying what she’ll do next to fight for the repeal of the food tax. She does mention the food tax in her signing letter for HB 1137:

I advocated for a full repeal of the grocery tax, a tax that burdens every person who buys food here in South Dakota. It is supported overwhelmingly by citizens of our state because they recognize that everyone will benefit, regardless of income level or station in life. It doesn’t pick winners and losers, which is not the role of government [Gov. Kristi Noem, signing letter to HB 1137, 2023.03.21].

Pause—that passage is an entirely non-unique argument. Everything she says in favor of the food tax repeal can also be said about HB 1137’s cut of the general sales tax. The sales tax burdens every person who buys anything in South Dakota. Everyone benefits from the HB 1137 tax cut, regardless of income level. Cutting the sales tax on everything does even less to pick winners and losers than repealing the food tax; cutting the food tax targets relief more toward low-income families, who spend more of their income on basic food.

Resume:

While this legislation is not ideal or the best way to help the people of South Dakota, I recognize that the legislature has chosen this path, and some help, albeit temporary, for our people is better than none at all. Public sentiment has shown that South Dakotans want a permanent tax cut. The legislature has failed in that regard, but I promise to continue to work with them in the future to do what is right for our state. I will not stop, or as Winston Churchill put it: I will “Never give in. Never… except to convictions of honor and good sense.” Here, my honor and good sense require me to continue to fight for the permanent tax cut the people have earned.

And that’s what I will do [Noem, signing letter, 2023.03.21].

Here Noem fumbles her conclusion. She gets all excited about including a Churchill quote, but she chooses text where the qualifying clause, the “except”, takes up more space than the punchy part*. She acknowledges that the HB 1137 sales tax cut makes good sense. She loses track of the food tax repeal she’s supposedly fighting for, referring only to “the permanent tax cut” she says she and everyone else want. Those closing lines open the door for Representative Tony Venhuizen or Senator Lee Schoenbeck to walk in and say, “O.K., so if we come back next year, see stronger economic projections, and repeal the sunset clause, you’ll be happy, right?”

And most importantly, she doesn’t signal what she’s going to do to win her fight for the food tax repeal. She doesn’t say she’ll bring her bill back next Session. She doesn’t vow to sign the initiative petition to repeal the food tax or fund the petition drive and campaign (which she really really ought to!). And whatever vague fight she’s vowing, she’s making clear what she’ll do or say differently from or in addition to the futile actions she took over the last few months. Instead, her press release and signing letter to HB 1137 only highlight why she failed in the first place: she’s more interested in playing word games and needlessly antagonizing legislators in her own party than she is in attentively and effectively governing.

*Churchill in context: Prime Minister Winston Churchill was speaking at the Harrow School, his alma mater, on October 29, 1941, after months of his nation’s valiant and successful resistance to the Nazi blitzkrieg. Noem elides much of the force of his quote. Churchill buried the exception in the middle of his rallying cry:

You cannot tell from appearances how things will go. Sometimes imagination makes things out far worse than they are; yet without imagination not much can be done. Those people who are imaginative see many more dangers than perhaps exist; certainly many more than will happen; but then they must also pray to be given that extra courage to carry this far-reaching imagination. But for everyone, surely, what we have gone through in this period — I am addressing myself to the School — surely from this period of ten months this is the lesson: never give in, never give in, never, never, never, never-in nothing, great or small, large or petty — never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy. We stood all alone a year ago, and to many countries it seemed that our account was closed, we were finished. All this tradition of ours, our songs, our School history, this part of the history of this country, were gone and finished and liquidated.

Very different is the mood today. Britain, other nations thought, had drawn a sponge across her slate. But instead our country stood in the gap. There was no flinching and no thought of giving in; and by what seemed almost a miracle to those outside these Islands, though we ourselves never doubted it, we now find ourselves in a position where I say that we can be sure that we have only to persevere to conquer [Winston Churchill, speech to Harrow School, 1941.10.29].

No wonder Noem cut the meat of Churchill’s speech. “Never yield to force” makes Noem’s abandonment of Ukraine and capitulation to Putin sound positively shameful.