Last updated on 2016.01.11
Oh my: somebody at the Department of Revenue had the same bright idea I did!
Last summer I noted that South Dakota's bank franchise tax, the income tax we charge banks which somehow doesn't kill our banking industry, follows a regressive scale that taxes banks 6% on the first $400 million they make each year, then imposes decreasing rates on higher income, to a miniscule 0.25% on bank income above $1.2 billion. The back of my envelope told me that a flat bank franchise tax of 6% on every dollar banks make would generate nearly $300 million more in revenue for state and local governments.
Comes now House Bill 1045, which proposes exactly that: repealing the lower rates, setting a flat bank franchise tax of 6% on every dollar of bank income. As I noted last summer, banking constitutes a higher-than-normal proportion of our state's economy. Banks generate a lot of wealth that we aren't tapping. Pass HB 1045, and you give the Legislature a lot of wiggle room to either cut other taxes or raise a lot of teacher pay and patch a lot of potholes. Bankers, are you game?