Dang! I was hoping that House Bill 1045, the Governor's proposed repeal of the regressive bank franchise tax rates, would provide a big windfall for the South Dakota budget.
Alas, my hope was predicated on the assumption that some of our banks must be making more than $400 million dollars a year, the threshold after which current statute decreases the bank franchise tax rate from 6% down to as little as 0.25%. The Governor's people dash cold water on my fiscal bank-soaking hopes:
Since the [2008] crash, no bank in the state has had more than $400 million in income and benefitted from the descending rate.
"We haven’t had any taxpayers meet that threshold for a number of years. Essentially we’re looking at it as an unnecessary, regressive scheme that’s in the statute," said Michael Houdyshell, director of the Property and Special Taxes Division of the state Department of Revenue. "Based on the fact that those rates haven’t been used for several years, we decided perhaps it was a good time to bring that to the Legislature’s attention."
Jason Dilges, Daugaard’s budget director, said the change came out of Daugaard’s search for obsolete statutes.
"If the banking world has changed and assumptions that were put in place under old laws and rules of banking don’t apply any more, it would seem to conventional wisdom that the tax environment needs to change with it as well," Dilges said [David Montgomery, "Gov. Dennis Daugaard Aims to Adjust Bank Franchise Tax," that Sioux Falls paper, 2013.01.17].
Montgomery reports that Citibank is the only bank that's ever crossed the $400-million threshold. Citibank and the South Dakota Bankers Association don't like the bill... and perhaps rightly so. The Governor's people are saying don't worry, no one right now would end paying the higher rates... but they can't avoid the fact that, if the banking industry does kick into high gear again, and if Citibank and friends do cross the $400-million threshold, the Governor wants them to pay higher taxes...
...at which point I happily support Governor Daugaard and HB 1045. Hee hee hee!
Denise Ross on Bill Janklow's idea of public radio moments ago: SDGOP in deep crisis.
Dagnabit. No french-math-calculated $3000 million dollars to spend on good teachers.