Muellers Should Focus on Taxing Luxury Goods and Mansions, Not Groceries

One of the greatest failings of the Muellers’ proposal to abolish property tax and impose a retail transaction tax is that it would make South Dakota’s tax system even more regressive, burdening the working class far more than the wealthy. Charging a flat $1.50 for any trip to any store is all the more regressive because it ignores the increasing role of luxury shoppers in sustaining the economy:

For some consumers, luxury is no longer a special treat, but a lifestyle. And more companies see that as opportunity. Because, as [marketing professor Katherine] Melchior Ray put it, “the people who are spending money for $19 melons don’t care.”

Yes, luxury fruit exists, too. Because a dollar is a dollar is a dollar, unless you make so many dollars that your perception of value is skewed. And the number of upper income households in the U.S. has nearly doubled in the last 50 years.

“The rising wealth in much of the world, in China and the U.S., doesn’t show any signs of diminishing,” said Gregory Carpenter, a marketing professor at Northwestern University.

Those high earners are also on a spending spree. Households with the top 10% of incomes now account for nearly half of all consumer spending in the U.S., despite inflation.

Aaron Cheris, who heads e-commerce at Bain and Company, said luxury brands are often more insulated during times of economic stress because their customers are more insulated, too.

“Why do I focus on the high end consumer? It’s where the money is,” he said [Kristin Schwab, “For Some Consumers, Luxury Is Not a Treat—It’s a Lifestyle,” Marketplace, 2025.09.08].

The Muellers claim to be loyal followers of the free market, so it’s strange that they don’t follow the wisdom of the market expressed by e-commerçant Cheris and follow the money: impose higher taxes on higher-priced items. They’d have a better shot of generating enough revenue to replace property tax by targeting retail transactions for luxury goods. Luxury goods are easy to define: things consumers don’t need but deeply desire. South Dakota already dabbles with a luxury tax by levying extra taxes on non-necessities like tobacco and alcohol. The Muellers could easily follow that track by charging higher taxes on luxury goods like private jets, jewelry, watches… you know, the things Kristi Noem likes to buy.

Or the Muellers could focus their luxury tax on luxury homes. They could call for the sort of Taylor Swift tax that is catching on in other states and give tax relief to regular homeowners by placing higher levies on the second homes and mega-mansions that are driving up property taxes for all South Dakotans. If the Muellers insist that taxing property is immoral, they could focus on reforming and retargeting South Dakota’s real estate transfer fee. The state currently charges 50 cents for every $500 of value on every real estate transaction, effectively a 0.1% tax. The real estate transfer fee on a $2-million house would be $2,000. Scale that tax up to a mere 1% (well below Delaware’s nation-leading 4% conveyance tax) for every dollar of value above $1 million, and the sale of a $2M house would generate $11,000, an amount that’s still a pittance for the buyer who wants the most impressive house on the block.

Go where the money is, Muellers! Tax luxuries, not the stuff of life.