South Dakota teachers are ridiculously underpaid, and that goes on the basis of both national and regional comparisons. A nice graphic put out last Winter by the Washington Post shows the embarrassing news for all to see. Forgetting about comparisons with far-flung states, just look at South Dakota teacher salaries compared to those of our surrounding states. How on earth we get any of our outstanding and dedicated teachers to work here is amazing to me. The old canard that it's okay because living costs in SD are cheaper than elsewhere has long since been worn away by facts and data that I have yet to see challenged, much less refuted. Fact is, our teachers are undervalued.
Given the results of some recent polling on how residents feel about this, I'd say most South Dakotans get it. In fact, South Dakotans get it so acutely that by a 2-to-1 margin, they favor increasing sales taxes during the Summer months in order to raise the cash needed to boost teacher salaries. I can't recall ever seeing a majority of that magnitude willing to increase taxes for anything. You'd have to conclude from this poll that a lot of South Dakotans are fed up with our status as collective cheapskates when it comes to paying our teachers.
You can count me among them, but before we go jacking up tax rates let's pause and consider our sales tax system itself. First off, per this graphic from the Tax Foundation, South Dakota ranks 40th in combined state and local tax rates. We've definitely got some room to the upside compared to the rest of the country. But even at that, there's a hidden trove of sales tax revenues that could be uncovered: I think there's money to be derived from reviewing the state's unbelievably long list of sales tax exemptions that totalled $582 million in 2013. Some of them are just plain ridiculous. For example, why should advertising services be exempted, to the tune of $7 million a year? Railroads get $10 million worth of exemptions. Credit card processors another $3 million, The list goes on. Financial services like brokerage and insurance agencies are exempt from $10 million. The ag industry gets $222 million a year worth of exemptions, which make for a long list, probably much of it justified, but given this era of $3.00 calves and $10.00 soybeans, I suspect that list could be compressed a bit without causing much pain to the ag sector. For example when my business needs equipment to be repaired, I pay sales tax just like everybody else. Why do farmers get $13 million dollars of exemptions when they get their stuff fixed? Nothing against farmers, but the bottom line here is that we're all in this together.
By all means, let's look at sales taxes as a way of raising money for teacher salaries. But before we ding ourselves en masse, let's take a look at some of the special interests and their customers that could reasonably be expected to pay a little something for their goods and services just like the rest of us.