This editorial appeared on the Rapid City Journal's "Forum" page on 6 December 1997. Tax Solutions with Just One Tax by Bob Newland and Nathan Barton Newland, a Hermosa publisher, is a Libertarian candidate for governor. Barton, a Rapid City engineer, was the Libertarian nominee for governor in 1994. On the same "Forum" (Nov. 22) page with Sen. Jerry Shoener's "Let's study tax system" were three other essays, each addressing a different question of taxation. Shoener urges a "comprehensive study" for "tax reform through bipartisan cooperation" (which, incidentally, is what got us where we are). Harvey Jewett wants more pay for folks at the state universities. Ann Rinke wants a swimming pool. And Dennis Hanson says Pierre's state-ordered mandates are largely to blame for escalating county budgets. Except for Hanson's anti-county-consolidation piece, each recommended something needing funding--in addition to everything we already fund--from taxes. They show why governments always clamor for more money, and why politicians will always concoct nefarious schemes for extracting more from those they "serve". The feds clip 25 to 40 per cent off the top, keep part of it, and give part of it to Tim Johnson to buy a bridge across the river at Vermillion. 15 to 20 per cent of the price of most stuff we buy is corporate income tax hidden in the sticker, making the income tax regressive to a degree sales taxes only pretend to be. Repairing street signs, putting people in jail, keeping bulbs in traffic lights, painting lane lines, scooping snow, and putting up Christmas decorations suck up another 20-30 per cent of our paychecks. Throw in a "Journey" and a concrete trout, and it starts to add up to real money. That "Forum" page demonstrated that the usual ways of thinking just won't work anymore. It also showed that many people in the state--mostly the "movers and shakers"--don't want to change. An income tax in about 40 states has already proven to be bitter-and false-medicine. But there is an alternative that would be both comprehensive and non-partisan: a fairER tax system, a simplER tax system. This proposal was developed several years ago and was recently again sent out to the South Dakota Legislative Leadership. * First, abolish the entire current system of South Dakota government revenue extraction--all taxes, fees, franchise fees, fees-for-service, etc. (there are about a hundred of 'em). Immediately reinstate necessary fees for services (e.g., Register of Deeds expenses, etc.), user fees (e.g., fuel taxes dedicated to road maintenance), and other necessary and self-supporting government services. * Essential government functions such as fire and police protection and other (often federally-mandated) services such as public schooling would be funded by the collection of a 1.75 per cent tax on the sale of any goods or services in the state. Think of it as an extremely broad-based, low-impact, sales tax. Your only South Dakota tax. Based on the Legislative Research Council's own figures, the proposal,"Just One Tax", at 1.75 per cent, would replace all other forms of governmental extraction of our money. Not only would no essential service be disrupted, Just One Tax would fund everything currently funded! Gone would be property taxes (currently incorporated into the price of everything we buy), inheritance taxes, bank franchise fees (hidden in their charges), insurance company license fees (hidden in premiums), contractors' excise tax, wheel taxes, bed and booze taxes, and the 4, 5, 6, or 7 per cent sales taxes we now pay. We don't have space to analyze the budget here. But assuming we're not blowing smoke, try this: Start by adding up the taxes you pay that you know about (property tax, wheel tax, etc.). Add to that 6 per cent of half of your annual net paycheck (about what you pay in sales tax). Add to that 10 per cent of all the money you spent this year (hidden taxes which would fall out of the prices of things under Just One Tax). This should roughly total your current state tax burden. Now, take 60 per cent of your annual income (about 40% gets taken by federal taxes). Take 1.75 per cent of that figure (most of us spend our entire take-home in South Dakota, so our total purchases subject to Just One Tax would roughly equal our paychecks). No, to make sure we aren't pulling the wool over your eyes, double that to 3.5 per cent for a margin of safety to account for wholesale transactions, double taxation, and favoritism exemptions (and new swimming pools and more concrete trout) which we can expect the politicians to continue to enact. That should be somewhere close to your state tax burden under the proposed Just One Tax. It's unlikely you're worse off with Just One Tax in the above exercise. It's likely you're better off. There are continuing bonuses with Just One Tax. It's simple. It's fair--everybody pays proportionally. It's visible--the cost of government is shown on every receipt. It's comprehensive--a true reform of the system. It's broad-based and draws from all parts of our economy, and therefore from the strengths of South Dakota. It even automatically adjusts to changes in the economy. The proposal includes a system of allocation to cities, counties, schools and the state which is workable and requires only legislative approval after Just One Tax is approved by the people. Administration costs will drop. In no case will a governmental entity be shorted according to current budgets. Businesses looking to locate in South Dakota will be able to analyze potential tax burdens easily. Local governments will no longer have to engage in destructive tax-abatement bidding wars to attract businesses. The concerns of all four of the November 22nd's "Forum" contributors are at least addressed, if not solved, by Just One Tax. We don't suggest county consolidation, except where counties themselves decide to share services. Higher pay for teachers and more money for swimming pools will still be subjects discussed when governments allocate the money available. Most importantly, we have a workable, fair, non-partisan tax proposal for the legislature to present to the people. Is more study needed, as Sen. Shoener says? The Legislative Research Council prepared a study of the proposal in 1995. Issues raised in that were reviewed and answered in the 1997 package to the legislative leadership (copies available, see end of editorial). Adopting this proposal is a "no-brainer", and time is running out. The legislature is going to lose two-thirds of property tax receipts next fall. For three years, it has passed butterfly knife and agricultural disparagement laws and discussed restricting a merchant's ability to set a price on his own services when it should have been enacting government-reducing measures. There is no time for the Legislature to wring its hands and urge more "comprehensive" studies. We submit that the study is done and it's available for debate. Inform yourself. Obtain a copy of the proposal. Then, contact your legislators and urge them to adopt Just One Tax. Why haven't they? Why don't they want to? First, it's fun to play god with other people's money. Second, it's different (who wants to be first?). Third, the proposal was made by those radical rascals, members of the South Dakota Libertarian Party. Libertarians hold that the primary function of government is to insure domestic tranquility by comporting itself in a manner conducive to the magical function of the free market. That involves protection from crime and may include certain collective services like road maintenance, fire protection, and education. Just One Tax will facilitate these functions by providing funding reflective of the robustness of the free market. This allows government to do its work while we keep our liberty and jobs. We believe this is what most South Dakotans want. TAG IN ITALICS: To obtain copies of the 1995 LRC study and the 1997 SDLP Just One Tax proposal, call 605-255-4032 or email newland@rapidcity.com   sitemap | Govt Wears No Clothes homepage