A new report from the Tax Foundation finds that in 2011, South Dakotans enjoyed the third-lowest state and local tax burden as a percentage of per capita income in the nation:

State Local Tax Burden 2011 Tax Foundation

South Dakota's state/local tax burden actually dropped 0.7 percentage points from 2010, as we paid 2.5% less in non-federal taxes while boosting our per capita income by 8.3%.

As we discussed when the Tax Foundation issued its previous report on this topic in 2012, our low total state/local tax burden remains low just as the percentage of state and local taxes that we pay to other states remains high. That amount (what shall we call it: revenue flight? tax leakage?) jumped by 7.7% from 2010 to 2011. 44.3% of the state and local taxes we pay go to other states. New Hampshire's tax leakage is just a tiny tick higher than ours, at 44.5%; Wyoming's is the highest in the nation at 53.2%. Minnesotans export just 24.1% of their state and local taxes; the only state with lower tax leakage is California, at 20.7%.

Think of those numbers this way: Out of each thousand dollars we South Dakotans spend to incur taxes, we're spending $443 outside of South Dakota. Out of each grand our Minnesota cousins spend to catch the eye of the tax man, they spend just $241 outside of their home state.

Minnesota's state and local governments thus enjoy a double advantage (or call it a whammy and an advantage, if taxes make you cross) over South Dakota's: Minnesotans choose to make more of their wealth available for public spending with their higher tax rates. They then compound that revenue by spending more of their income in-state, meaning their state and counties and towns have more revenue to pay teachers and patch potholes.

And here's a kicker: even after you assess Minnesota's whopping 10.7% (sixth-highest!) state and local taxes, average per capita income in Minnesota is still $534 higher than it is in South Dakota.

Governor Daugaard will surely tout that third-lowest tax burden on his next trip to the Mall of America. But it appears he'll be heard by a lot of South Dakotans who take their tax-generating business to Minnesota to help that state get even richer.


Gun sales have boomed over the past few years due to right-wing paranoia and the failure of fearful people to recognize that guns produce less practical, daily return on investment and produce more risk than groceries, clothing, appliances, power tools, or just about any other household item.

But there is an upside to all this gun nuttery: America's Gooney McBuckshots are helping to fund conservation. The Pittman Robertson Wildlife Restoration Act levies a 10% tax on handguns and an 11% tax on rifles, shotguns, muzzleloaders, ammunition, and archery equipment. The Pittman Robertson tax generated $760.9 million for the U.S. Fish and Wildlife Service to distribute to states this fiscal year for conservation projects. That's up 42%, not counting another $20 million carried over and restored from the sequester.

South Dakota will get $12.4 million for wildlife funds and $1.4 million for hunter education. States like Minnesota and Washington use some of that money to buy land for conservation areas, the kind of sensible conservation action that drives gun-loving Republicans like Sen. Dan Lederman to conniptive falsehoods.

Guns helping the government acquire land for public use and conservation—that makes me feel much better.

1 comment

I'm John McClane; Pat is Sgt. Powell.

Fake U.S. Senate candidate Annette Bosworth and her scheming husband Chad Haber are charismatic scammers, exerting almost cultish power over their followers. But we can overcome their manipulative control.

Witness Pat Powers. For months, Powers has drunk the Bosworth-Haber Kool-Aid (I hear Chad Haber uses that Kool-Aid language himself in his political strategy meetings). He has fallen for Haber's lies, treating Bosworth as a serious candidate, parroting her press releasesignoring big stories that would hurt Bosworth, and responding to my reporting on Bosworth's suspicious activities by accusing me of theft from a non-existent locked desk.

But now eight months of serious blog coverage from the Madville Times, Jonathan Ellis's strong exposé in Sunday's Sioux Falls paper of Bosworth's questionable fundraising business practices, and the overwhelming weight of facts and public statements from a wide variety of people cheated by Team Bosworth-Haber have turned Powers back to truth in blogging.

It was hard: while he acknowledged on Sunday that the Ellis article was "critical," Powers still tried to bury it by moving a Saturday evening post on Bosworth's cheesy television ad up above that mention in his blog order, along with a quick repost, without commentary, of Bosworth's USD cheerleader tweet.

But then the tips started getting to him. Monday, Powers ran a post on former Bosworth employee Mathia Rall contradicting the Bosworth alibi on the infamous Che Guevara t-shirt. After the Madville Times broke that story in June and won Bosworth some scornful national attention, Bosworth and Haber tried to claim the shirt was an innocent joke, just something she'd received as a gift in Haiti. Powers reports that Rall says Haber made the Che shirts.

Tuesday, Powers felt compelled to note that Bosworth's raffle scam and stiffing of Florida ad company SSC are getting press outside South Dakota.

And now, eight months after falling under Chad and Annette's spell, Powers finally wakes up and does his first honest-to-Gaia blogging on Team Bosworth-Haber. Powers reports that Chad and Annette had three tax liens filed against them by the state of Utah. While those liens have been resolved, a fourth against Annette remains open.

The most telling phrase of Powers's report is at the end:

I did contact the Bosworth campaign early this afternoon for comment, but I haven’t heard anything back as of this writing [Pat Powers, "Bosworth Financial Troubles Don't End at the State Border. 2013 Utah Tax Lien Still Pending," Dakota War College, 2014.02.25].

When Chad stops returning Pat's phone calls, it's clear Haber and Bosworth are on the run.

Welcome to the party, Pat. It's too bad it took this much heavy fire to get you to realize who the real criminals are.


Rep. Rev. Steve Hickey (R-9/Sioux Falls) had another good idea shot down in the Legislature last week. Continuing to confound those of us who'd like all Republicans to fall into a neat category of people who are always wrong, Rep. Hickey proposed House Bill 1227, which would have significantly changed the way we use video lottery funds.

Currently, South Dakota uses its cut of video lottery revenue to reduce property taxes. HB 1227 would have reduced the amount going from video lottery to the property tax reduction fund by ten percentage points each year until FY 2024. From that point on, no video lottery proceeds would go toward alleviating the burden on property tax payers.

Where would Hickey have put the video lottery money? Education. HB 1227 would have used increasing percentages of video lottery money to build a 700-million-dollar education enhancement trust fund, from which up to 4.5% of the market value would be eligible each year for distribution to education and property tax reduction.

4.5% of $700 million: that's over $30 million. Used properly, that additional funding could raise teacher pay over $3,000 a head... which would vault South Dakota from 51st in the nation for teacher pay to 50th.

But House Taxation lacked the courage to take that bold step and killed HB 1227 on a 9-to-4 vote.

Gubernatorial candidate Rep. Sue Wismer will tell you that video lottery is already supporting education funding and that the real solution for South Dakota's K-12 budget woes is to work up our fiscal courage and tap new revenue streams. But I appreciate Rep. Hickey's effort to more clearly dedicate video lottery money to education.


The U.S. Chamber of Commerce supports a tax increase! Chamber chief Thomas J. Donhue went before the Senate Committee on Environment and Public Works Wednesday to invoke Ronald Reagan in the Chamber's call for a higher federal gasoline tax:

...let’s build upon the support for a gas tax increase that already exists within the business comunity, organized labor, the construction industry, shippers, truckers, and AAA. There's also political support in the states. Last year six states—three with Republican governors and three with Democratic governors—enacted bills to increase overall state gas taxes. The sky didn’t fall, and their economies have not collapsed. Both Republican and Democratic presidents have approved modest gas tax increases, including Ronald Reagan. So, it can be done [Thomas J. Donohue, "It's Time to Raise the Federal Gas Tax," U.S. Chamber of Commerce blog, 2014.02.12].

Donohue's tax-hike advocacy fits with the Chamber's overall support for higher costs at the pump, as evinced by their support for the Keystone XL pipeline, which will increase prices at American gas pumps much more than it will increase employment numbers.

The South Dakota Legislature doesn't appear inclined to raise state gasoline taxes, but they are working to make sure new technology doesn't sneak out from under our tax umbrella. Senator Mike Vehle and Rep. Mike Verchio offer Senate Bill 93, which makes sure we include liquid natural gas among our taxable motor fuels. SB 93 sets the tax on liquid natural gas at 14 cents per gallon, below the 22 cents per gallon for traditional motor fuels, though not as cheap as the 6 cents per gallon Mike Rounds and Jeff Sveen get to pay for their aviation gasoline.

SB 93 would increase tax revenue. It would tax more stuff and more people. But I'm sure the Republicans voting for it (SB 93 passed Senate Transportation, the full Senate, and House Transportation with minimal dissent) will tell us SB 93 is not a tax increase.

I'm also sure our legislators will have fun talking with South Dakota's Chamber members at the Chamber's Business Day this Thursday about whether they support the Chamber's call for higher gasoline taxes overall to fund road and bridge repairs.


In 2000, South Dakotans voted 80% to 20% for Amendment C to abolish the state inheritance tax. 14 years later, they finally, fully, get their wish.

House Bill 1057 would repeal South Dakota's inheritance tax. That tax is still on the books because the state inheritance tax had a twelve-year statute of limitations. For the last twelve years, the state treasurer has still been collecting tax on inheritances from folks who died before Article 11, Section 15 outlawed the inheritance tax on July 1, 2001.

According to Mike Houdyshell of the Department of Revenue,* South Dakota last cashed in on inheritance tax in FY2011, when we collected an heir-y $154. In FY2012 and FY2013, no one coughed up any heirballs. The major fiscal impact of repealing the inheritance tax thus took place long ago; repealing it now will not bump revenues one penny.

HB 1057 also repeals the state estate tax. South Dakota's estate tax is keyed to the federal death tax credit, which Mr. Houdyshell says Uncle Sam repealed in 2003. South Dakota thus has not collected any estate tax since then.

Repealing South Dakota's "death taxes" should make every conservative giddy, but House Bill 1057 simply punctuates a change in our taxes that voters approved long ago and will not impact our FY2015 budget.

*Update 2014.01.15 11:58 CST: I originally put Mr. Houdyshell in the Bureau of Finance and Management. I regret and have corrected that error!


What, did Mike Rounds buy a new plane and forget to pay his taxes?

South Dakota charges aircraft owners a 4% tax on the purchase price of an aircraft for first-time registration of the craft (only 3% for planes used exclusively for agriculture). House Bill 1042, proposed by the Department of Transportation, would reduce the penalties for late payment of that tax:

  • HB 1042 drops the penalty for failure to pay the registration tax within 30 days of operation in South Dakota from a Class 1 to a Class 2 misdemeanor.
  • HB 1042 reduces the civil penalty for late payment (later than 90 days after the due date) from ten percent to one percent.
  • HB 1042 reduces the maximum penalty from two times the tax due to ten percent of the tax due.
  • Worst of all, HB 1042 removes the word thereof from current statute.

One would think folks who can afford a plane would be rich and organized enough to pay their taxes on time. Of all the tax breaks the state could propose to boost the economy, HB 1042 smells like another lazy rich man's break that won't do much for the general welfare.


Here's #3 from reader suggestions for bills to send to the South Dakota Legislature. Your conversation addressed a number of taxation issues relating to food, alcohol, and other products. P&R Miscellany's mention today of his desire to repeal the ban on mail-order wine in South Dakota almost got me to incorporate elements of last year's Senate Bill 100... but there's only so much one should try to do with one piece of legislation, especially you're trying convince South Dakota legislators to sponsor a grassroots proposal.

So, in a few short lines (and yes, our friends at the LRC would likely need to track down some conflicting legislation for us to strike in additional sections), let's lower the food tax, raise the alcohol tax, and give local food and hooch a tax break!

Madville Times Bill 103

FOR AN ACT ENTITLED, An Act to revise sales tax rates for food and alcoholic beverages.


Section 1: The state shall tax retail sales of food eligible for purchase under Supplemental Nutrition Assistance Program Guidelines at a rate of 1%.

Section 2: Municipalities may tax retail sales of food eligible for purchase under Supplemental Nutrition Assistance Program Guidelines at a rate no higher than 0.5%.

Section 3: The state shall tax retail sales of alcoholic beverages at a rate of 20%.

Section 4: Municipalities may tax retail sales of alcoholic beverages at a rate no higher than 5%.

Section 5: Sales of food and alcoholic beverages produced in South Dakota and sold directly by their producers to consumers in South Dakota shall be taxed at half the rates established by state statute and municipal ordinance.

The floor is open for debate, amendment, and parliamentary shenanigans.


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