Todd Epp of Northern Plains News finds an interesting report from the Tax Foundation stating that South Dakota is the fifth-best state for stretching a dollar:
Only Mississippi, Arkansas, Missouri, and Alabama can make a dollar go further. Dollars shrink the most in the District of Columbia, Hawaii, New York, New Jersey, and California.
The Tax Foundation used these same data earlier this year to calculate that South Dakotans have the fourth-highest adjusted per capita disposable income in the U.S. (which per-capita figure does not take into account concentration of wealth at the top).
Take these data at face value, and we run into a policy implication that might alarm South Dakotans: to ensure the same desired economic and social outcomes across all states, South Dakotans should pay more in federal taxes and receive less in social assistance. Consider the federal child tax credit: leaving $1,000 in a South Dakotan's pocket provides significantly more help than leaving the same amount in a New Yorker's pocket. To enable the New Yorker to buy as many diapers and boxes of Cheerios as the South Dakotan, the IRS should allow the New Yorker a child tax credit of $1,154 and the South Dakotan $882. Maybe New Yorkers should start a riot over that IRS unfairness.
But notice that the Tax Foundation's read of dollar-stretchability doesn't square with other data we've looked at this year. The ACCRA cost of living index for South Dakota in 2014 Q1 was 98.3% of the national average, suggesting we South Dakotans only get $1.73 stretch out of every hundred dollars. Adjust our median wage (ah, there we start capturing some sense of wealth concentration) by cost of living, and South Dakota is at a regional low for purchasing power. So are adjusted teacher salaries. Even when we look at adjusted average wages, South Dakota families can get by on one average full-time income in only 13 of our 66 counties.
Dollars do stretch in South Dakota, but we need the state and employers to shake more dollars loose so workers can enjoy those bargains.
Are Dakotans thrifty by nature or by necessity?
My theory on this is that producing states provide the subsidy that allows money to "stretch" in the taker states. It all come back to South Dakota being on the federal dole.