THINKABOUTIT—TAXES
Free Enterprise Works in SD–#1 Economic Freedom
A “GOOD TAX” is one that someone else pays!! comes to mind as the talk turns to tax increases to solve the State’s structural deficit. And as has been pointed out by the Governor, a structural deficit is a spending issue not a revenue issue. Notwithstanding that government at all levels will expand and grow to meet the tax revenue available, State government is taking the necessary steps to control spending. Administrators are taking salary cuts, state employees are not receiving a salary increase, expenses are being reduced, etc. However, the largest recipient of state taxpayer dollars, education, is the most vocal for increased taxes without any proposals to reduce administrator salaries, reduce administration expenses, improve efficiency, etc.
This is occurring in a State environment of decreased state revenue, mandated federal medicaid and healthcare costs to the state, continued high unemployment and slow economic recovery. So before everyone rushes to increase the state sales tax dedicated to K-12 education, there are some facts and information that are important to the debate which impact state and education tax revenue.
The SD Constitution exempts certain entities and facilities from certain taxation and limits imposition of others.
There are a large number of sales tax breaks that have grown over the years. A 2003 Issue Memorandum by the Legislative Research Council. on Taxation lists some One Hundred Seventy (170) SDCL tax exemptions from sales and use taxes. (the number probably has not decreased since 2003) There are estimates that the State loses from $50 MILLION to $500 MILLION annually from these tax breaks.
A February 15, 2011 report by the SD Chamber of Commerce & Industry lists the percentage by category of industries as to where the state receives the sales tax revenue:
Retail, 53.02%; Trans and Public Utilities, 16.6%; Services, 16.2%; Wholesale Trade, 6.9%; Manufacturing, 3.6%; Financial Services, 2%; Agriculture, 1.2%.
The 2003 LRC Memo (for which there may be more recent numbers) also outlines by percentage the total statewide property taxes that were levied on each classification of property:
The three major categories are; Owner-occupied Property, 36.4%; Other Property, 31.5%; Agricultural Property, 24.6%.
Hopefully this type of information and data along with other issues will be understood and considered before a “short term” tax increase with long term impact on the taxpayers is considered.
THINKABOUTIT
