OPINION: Initiative 15 would hurt middle- and low-income families
As a former public school teacher with a husband who works in facilities receiving Medicaid, I understand it is hard for people to vote against money for education and Medicaid.
However, the permanent sales tax increase in Initiative 15 would raise the cost of living for everyone, with a continuing unfair burden on South Dakota's many low-income families.
It's not "just a penny." This is a 25 percent increase in the state's portion of the sales tax, from 4 percent to 5 percent.
To consumers, it's a 16.7 percent tax increase, from 6 to 7 percent.
People will feel this. Next year, middle-income families would pay an estimated average of $334 more in taxes. On basic baby formula, total tax would go over $1 a can. For allergic babies, the tax, already over $2 a can, would go even higher.
Some information you won't see on the ballot:
Unlike most states, South Dakota's sales tax is on food. It's on most utility bills. That contributes to South Dakota's ranking among the "Terrible Ten" states for regressive taxes, meaning lower-income people pay a higher proportion of income, while the more well-off pay a lower portion.
Half the hourly wages of South Dakota's workers are lower than about $14.50. South Dakota's median hourly wage is among the very lowest in the nation.
Is it fair to raise taxes when people cannot afford it? Independent estimates are that Initiative 15 would cost the poorest 20 percent of South Dakota households an average $113 more each year. Where can low-income elderly on fixed incomes come up with $113 for the new tax? Their fixed incomes don't adjust for a higher tax rate. Minimum wage doesn't, either. Already one in seven seniors is at risk of hunger, and 12.7 percent of South Dakota households are food insecure.
Hunger lurks in this tax increase. Higher tax on top of higher prices for food and other essentials means some households will buy less food or less healthy food. The health effects are not good. Hunger among children has both health and education consequences.
Is it fair to ask more of charities? An important South Dakota charity says they would need more money to help people. "More tax just adds to the problem. We estimate that charities and churches would need to raise an additional $6.8 million to cover the increase in the requests for help with food and utility bills, if this tax goes up."
Is it fair to have no tax increase on jet skis, but more tax on food? No tax increase on hot air balloons, but more on home heating bills? RV's -- no new tax, but higher tax on car repairs? No increase on personal aircraft, but more tax on toilet paper? Gold -- no tax, but even higher tax on phone bills?
In addition to the unfairness:
Children from the bottom 40 percent of the socioeconomic spectrum have the most difficulty succeeding in school, yet this initiative worsens their stresses and deprivations.
Since the initiative was written, the state revenue picture is not as dire.
Despite the initiative's wording, future legislatures are allowed to re-direct the funds.
There is no end date. The higher tax will take even more in the all-too-likely scenario that prices rise for food, utilities and other basic necessities.
While education and Medicaid are important, higher sales tax would raise the cost of living permanently for everyone, hitting struggling households the hardest, to the detriment of both education and health. Please consider voting no on Initiative 15. Help prevent an unfair tax increase.