Today, I'm wondering if SDEA isn't making an equally unwise decision by beginning an initiative drive to increase South Dakota's sales tax by one percent.
This Nathan Johnson post makes a strong case that South Dakota's tax system is unfair and that the proposed sales tax increase to fund K-12 education and Medicaid is a bad idea.
South Dakota’s tax system is currently structured so that is not even close to the reality. In fact, South Dakota turns that expectation on its head.
According to a 2009 study by the Institute on Taxation and Economic Policy (ITEP), the poorest 20 percent of non-elderly taxpayers in the state contributed 11 percent of their income to the state’s sales, excise and property taxes in 2007. The top 1 percent of that same category of taxpayers — those making $423,000 or more — contributed 1.9 percent.Today, Bob Mercer adds another reason to doubt that the proposal's wisdom.
If the initiative does pass, the Legislature isn’t bound to follow any of the directives within the new law. The Legislature can change any of it. So there is absolutely no guarantee that the $175 million will go solely to Medicaid and K-12 schools.Today's Argus Leader implies that the Legislature's ability to appropriate the sales tax increase will have a few limits.
However, it would not completely tie the Legislature's hands when the state is struggling. Each of the past two years, the Legislature has changed state law so that lawmakers did not have to increase per-student funding at the same rate as inflation.
The measure would not prohibit the Legislature from doing that again if revenues either shrink or grow more slowly than inflation. However, the relief would be temporary, as the measure would require lawmakers in subsequent years to make back payments for education when state revenues bounce back faster than inflation.There's nothing in the article that indicates that the Legislature can't change the payback provision at its pleasure.
The notion that one can trick out-of-state pheasant hunters, Wall Drug visitors, and Mt. Rushmore gawkers to fund necessary programs by charging them an extra penny sales tax is tempting. Unfortunately, yielding to temptation usually provides temporary pleasure and long lasting negative consequences. We all have our favorite examples: that fruit in the garden, the handful of Cheetos that turned into a meal of two family sized bags, and that little credit card spree that took six years to pay off. In this case, the damage done to those least able to pay, the furthering a terrible tax structure, and the uncertainty that the funds will actually be used for the indicated purpose make this temptation's consequences more onerous than most.