And We're Trying To Attract Workers?
Regarding that first dimension of derangement, consider how we stack up on some vital elements of public budgeting compared to our neighbors (ex-Wyoming, which is left out of this discussion because the state uniquely derives about 25% of its revenues from taxes on mineral production) and all but 5 other states in the country. The Council of State Governments in 2011 produced a document that summarizes the contrasts, some of which are pretty stark indeed. On a national scale, individual income taxes generate about a third of total state tax revenues, with slightly less than that share coming from sales taxes. South Dakota is a much different story. Sans income tax revenues, South Dakota in 2013 got an astounding 80% of its total tax revenues from sales and excise taxes. Talk about regressive, good grief. The tax burden in this state falls heaviest on the lower tiers of wage earners, who carve out taxes from a much larger share of their incomes than the well-to-do.
South Dakota is a low tax state, no question. State and local revenues consume just 8% of the state's total income, third lowest in the nation. This is a feature of fiscal life here that is frequently pushed as an advantage of some sort, but I think that's bunk because the "advantage" is belied by our persistent worker shortage. In fact, the shortage is so acute that last May our state government started pushing an ad campaign to lure workers and their families by claiming that South Dakota is a better place to live than the planet Mars. Uh-huh. The tongue-in-cheekishness of the ad notwithstanding, I think it reflects the reality that our worker shortage isn't merely acute . . . it's desperate. That desperation is created by issues that trump low taxes in the minds of people who might be thinking about migrating into South Dakota.
Now that our socialized stinginess has resulted in the manifestation of those serious issues on two fronts--abysmal teacher pay and infrastructure maintenance--our elected leadership is busy configuring ways to squeeze more money out of existing revenue streams. Most notably, the mind-numbing gesticulations regarding property tax reform seem like nothing more than a "strife of interests masquerading as a contest of principles." ** And trying to squeeze more sales tax out of an already overburdened class of ordinary citizens isn't going to happen.
Ergo, the craziness of the status quo. As to the prospect for income taxes, you can count me as one of the crazy ones who think there might be some change in our thinking on them. First off, we
|SD Rich Folks Have It Made|
Working Stiffs Not So Much
(graph from sdbpi.org)
You can forget about the politically impossible latter, but the former might fly. I think enough signatures could be gathered to at least get an income tax initiative on a ballot and that the subsequent public debate could clarify and instruct voters about the possibilities that can accrue to a state that has a progressive tax system. Limiting the tax to businesses that make quite a bit more than a typical mom-and-pop operation would probably be a realistic place to start. If nothing else, it might start moving us out of the realm of states with the "most regressive tax systems in the United States."
** Ambrose Bierce, "The Devil's Dictionary"