South Dakota waits to see if Governor Dennis Daugaard’s plan to address compensation for the state’s teachers will continue on its course.

The corresponding tax increase would affect all residents of the state and all visitors who choose to do commerce in South Dakota. Data analysis from Joy Smolnisky of the South Dakota Budget and Policy Institute sets aside the feelings associated with the law and gives the raw numbers.

“To be able to make good decisions on policy, we have to get some kind of sense of what things are going to cost and what (taxes we need) to pay for it. That way we can decide if the proposal is a good investment for us as individual South Dakotans and the state as a whole.”

Not all of the money from the proposed tax would go to teacher’s salaries or schools. Some of the money raised would reduce property taxes. Smolnisky says under the Governor’s plan an average South Dakotan who makes $59,000 a year and owns a home worth $100,000 would end up paying about $13 extra dollars a month in taxes. The extra half-penny in sales tax would generate $212 per household with $45 in property tax relief for a net cost of $167 for the year.

“You would probably notice the $45 decrease in your property taxes. That half-cent getting added on every time you spent a dollar in the grocery store is likely not as noticeable.”

Smolnisky also considers the factor of sales tax paid by people from out-of-state.

“Thirty-three percent of that $107 million that we collect comes from outside residents. That gets divided between the tourists who travel through our state and the business people in our state.”

HB1182 was deferred on Wednesday February 10 when Rule 5-17 was invoked to allow time to review amendments to the Bill. The South Dakota House could resume activity on the measure Tuesday.

A less-known option could amend the tax to a full penny for most items and removes the tax on food completely. Images below courtesy of South Dakota Budget and Policy Institute.

Teacher Pay Impact 1
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Teacher Pay Impact 2
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