|Why Is This Man Laughing?|
We're Way Short Of Cash
A lot of this has to do with the big drop in agricultural commodity prices during the past couple of years. USD business prof Ralph Brown told the RCJ that the falloff in farm revenues in South Dakota amounted to more than $3 billion, which reduced the ripple effect to something barely noticeable this year. Our economy just isn't diverse enough to absorb that much of a shock. BHKN also notes that growing e-commerce sales, which are sales tax exempt, probably had something to do with it. I'm having trouble getting information on how much those sales amount to in South Dakota, but I have no doubt that they're a factor.
Consider this: swings in commodity prices make farm state revenues subject to the vagaries of global markets. By now we should have reached a point where
|The Current Set-Up|
Unfair As All Get-Out, Anyway
We really need to think about another source of state revenues, which in this case is income. Even as our sales taxes have turned into a serious floppola this year, median income in South Dakota has been rising. Though hovering slightly behind the national growth rate during the last 5 years, South Dakota median household income (per BHKN) has nevertheless risen steadily during that period. Taxes raised from income would have avoided the sudden lurch we're currently experiencing.
Politically difficult as the prospect of instituting an income tax may be, the sensibility of it seems self-evident. It's long past time for us to start the conversation about this.