Our View: Scrap all tax exemptions and start over
In this world," Benjamin Franklin famously wrote to a friend in 1789, "nothing can be said to be certain, except death and taxes." That is, except in South Dakota, where many groups, organizations and businesses do not have to pay sales taxes, th...
In this world," Benjamin Franklin famously wrote to a friend in 1789, "nothing can be said to be certain, except death and taxes."
That is, except in South Dakota, where many groups, organizations and businesses do not have to pay sales taxes, thanks to a haphazard system that is inconsistent and makes little sense.
Another maddening fact: It's difficult to get a grasp of exactly how many exemptions exist in South Dakota. Department of Revenue and Regulation officials last week said the department has never counted the exemptions, nor could they confirm a number obtained by The Daily Republic when the newspaper examined the lawbooks last week.
As far as we know for sure, there are at least 60 sales-tax exemptions allowed in this state. They run the gamut of inane inconsistency, from rodeo stock contractors (but not sales of concessions at rodeos) to amateur baseball umpires (but not football or basketball referees).
Gov. Mike Rounds has selected a handful of exemptions he wants to repeal. Their repeal would raise an estimated $3.054 million for the state, and that doesn't include another $1.6 million for cities and towns.
Rounds wants to begin repealing some of the state's many sales-tax exemptions, but figures it will be difficult to convince lawmakers who fear disappointing their constituents. In his State of the State address, he said "I know that some people will want to keep their tax exemptions and not pay or collect sales taxes like the rest of us. These people and groups will argue that they are special and should continue to receive special treatment. I hope you resist those arguments."
Good luck on that. When it was brought to the Legislature in 2005, the bill to exempt amateur baseball umpires from paying sales taxes on their paycheck was passed 103-1. In 1996, the vote was 99-2 to exempt rodeo promoters, stock contractors, stock handlers, announcers, judges and clowns.
To be reminded today of such lopsided votes is disappointing, especially as the state struggles to stay financially viable in these tough economic times.
In light of what obviously will be a tough sell, we offer lawmakers this advice: Cut all sales-tax exemptions and start from scratch.
Instead of fighting to cut a few exemptions here and there, remove them all from the books and let each group push to get their exemption back into law.
In South Dakota, we are learning that too many special-interest groups are exempt from paying their share of sales tax on money that they earn in full- and part-time professions.
These exemptions should come under review, and should be re-examined, not only as a way to generate extra income for a cash-strapped state, but to create a fair and consistent system.