Rookie Representative John Hughes (R-13/Sioux Falls) wants to give family businesses a tax break. He proposes House Bill 1218, which would require that school property tax levy on a new class of property, “commercial-operator nonagricultural property”, at least 25% lower than the levy set on “commercial-investor nonagricultural property”.
HB 1218 defines “commercial-operator nonagricultural property” as “(1) A family business; and (2) Nonagricultural property, except residential property, where the ownership holder, qualified entity, qualified spouse, or qualified relative materially participates.”
Give local mom-and-pop shops a tax break while continuing to soak the corporate/hedge-fund raiders who scoop up South Dakota businesses. But some of those moms and pops are operators like Pat Prostrollo and G. Mark Mickelson, who already have piles of cash. (You know, if South Dakota had an income tax, it would be a lot easier to target tax relief at the people who really need it instead of every tax break helping increase the concentration of wealth in the state.)
It also seems odd that Hughes would not extend this favor of local operators over lazy investors to agriculture. Reduce taxes for the family tractor dealership but not for the family farmers buying tractors from Jeff and Tom? We already assess agricultural land at a much lower levy than other property, but why not tinker with that rate to favor real family owner-operators over any overlord investors cashing in on corn and cattle?
Despite these flaws, a law distinguishing folks doing real work from folks letting their money work for them is one of Rep. Hughes’s better ideas. HB 1218 awaits a date with House Taxation.