Last updated on 2012.06.19
Senator Stanford Adelstein has proposed Senate Bill 174, which would create an extra-penny sales tax for the next four summers to save K-12 education and other vital public services from destructive budget cuts. Senator Adelstein said on Dakota Midday this week and in previous press that South Dakotans support raising the sales tax to fix the budget by a two-to-one margin.
District 8 Senator Russell Olson simply sticks his head in his sandy talking points and ignores data on public support for raising taxes to support education. Representative Patricia Stricherz at least expresses some curioisty as to whether that support for taxes is really there. On her legislative blog, she posts a poll asking whether the state should "consider a penny tax increase to help off-set the budget deficit."
Give Rep. Stricherz what she wants: head to her blog and vote in her poll! (Hint: the correct answer is Yes!)
Senator Adelstein brings SB 174 to his Senate State Affairs colleagues on Monday, February 14. After logging into to Rep. Stricherz's poll, you might want to send some fiscal Valentines to committee chariman Senator Rhoden, vice-chair Senator Olson, and the other members of Senate State Affairs.
My hope is that the legislature will give some consideration to the BEEF program that I spoke to earlier on a guest post. A gross revenue levy(GRL) would be much broader in scope, fairer, and would reward those individuals who maximize the most of amount of net income with the least amount of gross. Plus BEEF would be 100% dedicated to k-12 education. Also every dollar obtained through BEEF would replace local real estate taxes for education and state funding for the school aid formula. By doing so property tax payers get some relief plus there would be more wiggle room to support capital improvements in schools and county/city government to maintain better roads. State funding no longer needed for school aid formula could be better directed toward other areas like medicaid.
The Governor promised he would veto any tax increases.
You plan sounds like a flat tax that might be fair. How much more bureaucracy would it take at the state revenue department to implement and oversee a such a tax?
As I understand it, a gross receipts tax could cause pyramiding, a form of multiple taxation.
You buy a box of cereal at retail for $5.00 and pay 5 cents to the grocer (1 percent gross receipts tax).
The grocer bought the cereal from the wholesaler at, say, $3.00 and had to pay the wholesaler 3 cents to cover the gross receipts tax.
The wholesaler bought the grain and other stuff from the original suppliers at, say, $2.00 total for everything, laying out 2 cents total gross receipts tax in the process.
Ultimate grand total gross receipts taxes = 5 cents plus 3 cents plus 2 cents = 10 cents, or 2 percent (not 1 percent) of the retail price.
The pyramiding problem constitutes a big reason why states have been reluctant to impose this sort of tax; it comes off as the "worst of both worlds" relative to the income and sales taxes.
My recommendations, if we need more revenue:
(1) Raise the sales tax by a penny for the whole year, indefinitely.
(2) Exempt groceries and essential items such as children's clothing.
(3) Put a lid on spending by enacting a law with some teeth to keep government from simply growing to gobble the available revenue.
(4) Enact a voluntary program to collect use tax, and put all of the resulting proceeds straight into K-12 education. Our Governor could make this appeal himself, directly to the people.
Thursday (Feb. 10) I happened to see the "Rapid City Journal." I'm not sure what date the actual paper had on it, but it contained an article concerning the long-term budget problems we face, and possible elimination of sales-tax exemptions to deal with it.
While none of these measures are "on the table" right now, they are "on the long-term table" in some legislators' minds. Examples: Get rid of the exemption on long-term apartment rentals and essential medical supplies. In general: Pretty much get rid of all the exemptions, period.
It would seem that if we go in any direction, it will be towards an even more regressive tax stucture than the one we have now.
I'm not in favor of such regressivity, but such appears to be the prevailing mentality.
As an aside, where does Stan Adelstein get his 74 percent approval figure for the temporary summer sales tax? I'm skeptical!
In a cracker-barrel in Pierre today 80% of the people raised their hands to increase sales tax by 1%. But the legislators said there's not enough support and that the people of SD will have to wait to do a referendum. We really need make our voices heard. We need some additional polls!