When is proposing an income tax, not proposing an income tax? When Tom Katus tries to do it.

The story in today's Rapid City Journal was laughable.

One of Democrat Tom Katus' first acts as he approaches taking office next month? Trying to stir up interest in a state income tax. Except he's adamant that he's not proposing an income tax. Really. He just wants a non-politicized commission who wouldn't start with it.

"Start" being the operative word. And he says nothing about what they'd end up with.

Democratic state senator-elect Tom Katus of Rapid City will start his legislative career with a bold proposal to totally revamp South Dakota’s tax system.

“It would be a type of BRAC process,” Katus said, referring to the Base Realignment and Closure commissions that have been created to close military bases.

Katus is calling for a “comprehensive tax reform commission.” He described his proposal during a during an interview Tuesday on the floor of the state House of Representatives, minutes after Gov. Mike Rounds had given his annual budget address.


State education comes from property taxes and a variety of other sources, but not an income tax. South Dakota doesn’t have one, and Katus, the first Democratic legislator elected in years from the Black Hills area, is sensitive about raising the issue.

“You can’t start there,” Katus said. “You can’t politicize the process, and no legislator will ever support an income tax -- personal or corporate.”

But Katus said the current tax system is frustrating for taxpayers, legislators and interest groups alike, as evidenced by the four tax-related measures on the ballot this past fall. Despite that frustration, Katus said, the Legislature was unlikely to improve the system “because so many special interests will always prevent a consensus on rational taxation.”


Katus was adamant that he was not suggesting an income tax, but his proposal likely will be met with some skepticism, even among fellow Democrats.

“I like Tom, but I think it’s really important that we take no steps that could lead to an income tax,” said Sen. Scott Heidepriem of Sioux Falls, who will be Senate minority leader during the next legislative session.
Read all of it here.

So, Tom is talking about something that would revamp the tax system with a "comprehensive tax reform commission." Comprehensive as in "So large in scope or content as to include much."

According to Tom (in not so many words), it seems like his objection is that the current system of the legislature considering taxation is political. So he wants to hand it off to an entity that's 'not political.'

Why? Well, when it's handled 'politically', per Tom, the system is unlikely to improve because special interests will prevent 'rationality' from occurring (in his view).

Err.... So what form of tax is 'rational'? And why does everything in this gobbledygook of a proposal seem to come back to infer that we need an income tax?

Who is saying that? Well, Tom for one.

Look at his statement when it was brought up? "You can’t start there",(my emphasis -pp) Katus said. “You can’t politicize the process, and no legislator will ever support an income tax -- personal or corporate."

SO, if the process is politicized (i.e. heard in the legislature) an income tax would never be supported. And no legislator would ever support it. So should we assume by his proposal (to have a non-politicized panel) that the likely outcome he's hoping for is to pass the buck off onto someone who might think we need an income tax?

For a legislator who supposedly wanted to come to Pierre to get things done, he seems to want to avoid the tough positions. It's as if he wants to come out and say "I'm Tom Katus, and I think we need an income tax," but he knows his constituents don't support one, and he won't get elected again. Even before taking office.

In 19 years of watching the South Dakota legislature, his idea ranks up there as one of the truly stupidest things I can recall ever hearing. It's like every bad joke about legislators forming a blue ribbon study commission to avoid having to deal with an issue.

While Tom is at it, why doesn't he also propose an independent BRAC commission on School Funding? Or abortion? Those are tough issues too. Oh yeah... for better or worse, most people actually expect their legislators TO VOTE ON ISSUES. Not to come up with goofy ways to weasel out of it.

Am I being a little harsh? No. Think about it. What do we elect legislators for? To bring forth various proposals and to debate their merits. It's the theatre of ideas in full play, and we hope they discard the bad ideas, and choose the best.

But because Tom knows what he wants to propose doesn't stand a snowball's chance in hades in passing, Tom wants to pass off decisions on our tax structure to an "independent commission." Despite the fact those are the types of decisions he was elected to make.

So Tom, please bring this legislation. Please.

Because it will give editors, columnist and pundits alike ample opportunity to have something to absolutely ridicule this next session, as they point to it and say "If legislators want to pass the buck, why did they run for the job in the first place?"


Bob Ellis said…
I'm not normally a betting man, but I'd be willing to bet that even liberals are soon going to regret electing Katus.

He's one of these over-the-top types that just can't conceal for very long what a Marxist wacko they are.

Some people more in the know that I told me Adelstein was barely able to keep Katus muzzled long enough to get him elected.

It was sad to see such a fine candidate as Elli lose, but on the other hand, it's going to be a hoot watching Katus make a fool of himself and everyone who voted for him.
Anonymous said…
It just proves that the voters were willing to elect anyone but Elli.

The guy is a joke, but yet he beat Elli, that just shows that they would send anyone before a radical extremist like Elli.
Anonymous said…
Katus is a loose cannon.

He'll spout off as often as the press will listen, but at the end of two years, he'll be lucky to have passed even meanless legislation.

It does prove the distaste that voters had for Elli, that they were willing to elect a nut job like Katus over a republican in a very strong republican district.
Anonymous said…
Stop complaining, this is what happens when you run extremists with only one agenda item (well, two if you count her heroic stand against the hordes of gays beating down SD courthouse doors to get married).

If this band of zealots that hijacked the party stay in charge, even Ron Volesky has a shot at winning something.
nonnie said…
This is so good. Form a commission that studies a problem and reports back two years later. So meanwhile nothing gets done on the issue because the "commission is coming up with a plan." Ha! wonder what I'm talking about? The whoop-do-doo commission on school funding that just completed its "work" with no substantive recommendations.

Oh, pardon me, one exception. To do away with the 150% rule. What? Their solution is soak the property taxpayer again. We already inordinately foot the bill for education, and doing away with this will raise many property owners' taxes once again. We should be so proud of this latest commission's findings??!

I spoke to Melman once about school funding, and his answer was just to wait for the study commission's findings. Well, I waited. What a waste of time, effort, and taxpayer money.
Anonymous said…
The article was full of buzzwords and pie-in-the-sky quotes. It was vague. Does this surprise you? The RCJ crowd, especially Harlan, love this guy (and anybody else endorsed by libs and Democracy in Action) and gave him a pass. And about Elli...It is too bad that she was a one-issue candidate. We might not be having this discussion otherwise.
Anonymous said…
“While Tom is at it, why doesn't he also propose an independent BRAC commission on School Funding? Oh yeah... for better or worse, most people actually expect their legislators TO VOTE ON ISSUES. Not to come up with goofy ways to weasel out of it.”

Well PP, you must not have been watching the legislature too closely. This is exactly what the Republicans in Pierre have done for the last 4 years. Where do you think Tom got this idea? I don’t expect Rounds to ever solve the problem facing our schools; he and the Republicans will continue to “come up with goofy ways to weasel out of it.”
Anonymous said…
With term limits and a 40-day session, the institutional memory of the legislature and its ability for comprehensive reform are both weakened. A commission could be helpful to provide a non-partisan outlook for reform.

Of course, not all commissions accomplish something....just like not all legislative sessions accomplish something. But some do (such as the Iraq study commission, which the suggestions of which the President could follow while saving face....but he could never have followed those same suggestions if made by Ted Kennedy).

I, for one, favor having a commission study the issue and come up with a better way of doing things than property taxes (an archaic relic of our agrarian roots) and also better than an income tax (another relic of the "progressive" era). For example....a value-added sales tax like the one championed by Keyes.

Of course, if the commission says, "Let's adopt an income tax", our leaders are free to reject that on principle, and if they pass it, our voters are free to repeal it.

Alternatively, we could just give the commission the directive that we don't want an income tax.....but please find out if we can improve the system, make it fairer, and make our state taxes deductible on our federal returns (the only real advantage of an income tax).

I think it would be interesting to see the answers brought back by the commission. Rarely does an issue get a comprehensive look.....especially one like taxes, where each individual tax is a result of a series of political bargains. It's the old "lose the forest through the trees" problem.
Anonymous said…
Maybe we can get Sutton to use the butt drag on him! Could be funny.
Anonymous said…
Can anyone here remember the "task force" that was formed to study abortion prior to the passage and signing of HB1215?

Now THAT was a swell idea.
Anonymous said…
Why is it that whenever someone talks about making the tax system fair, Republicans all scream about an income tax? Is that the only tax that Republicans consider fair?
Anonymous said…
A state income tax isn't such a bad idea. Any unselfish person can easily recognize that.
Anonymous said…
My concern with an income tax isn't economic. It's out of principle.

Taxing earnings doesn't make sense to me. Taxing consumption does.
Anonymous said…
Is the Katus tax commission any worse than the study done by the Abortion Commission last year?
Or is just because Katus proposed it?
Anonymous said…
Anon. 9:25

Consumption with exemptions no doubt?

As in the things you personally spend money on.

A tax on consumption seems like an unfair tax on the people who can least afford to pay it. It makes the rich more rich and the poor more poor.
Anonymous said…
Yup Another commision, Another study, Just pile it on top of the other tax studies gathering dust in the LRC. Anybody remember Prof Rings study done in 1996, 97. Or all the others done before that. Rounds has ushered in a new time of Commisions and studies,Seems to be quite popular. Go Katus. What a waste of time. ? Just say it, I, Tom Katus want an income tax. Didnt Katus get elected to make those hard votes? Just like Apa Greenfield and yes even Eli would have made. Gotta love those good republicans.
Anonymous said…
Do you really think it would be the rich who pay a state income tax if it ever came to pass?

Of course not, it would be the Average Joe Wage Earner who would see it go right off the top of his check. The wealthy would find exemptions and investments to avoid paying the tax, just like federal income tax.
Anonymous said…
NO, not with exceptions for the things I spend money on. Exceptions only for necessities. Exempt groceries, generic pharmaceuticals, and rent. Tax everything else.

And I mean everything. A broad-based tax on every last service and good. Not riddled with exceptions like our current sales tax.

Eliminate the annual property taxes on residential homes. Replace it with a new transfer tax levied when a home sells...like 4%.

Eliminate the property tax on farms, except for the transfer tax on the residence. The farmers will pay their taxes through their costs of production.

Eliminate the property taxes on business and industry. They will pay their taxes through their costs of production.

Raise the fees for corporations to do business. Right now, it's somewhere around $50 to renew your LLC or corporation. Tennessee charges $800 for the privilege of limiting your liability. (Insurance companies charge premiums for that kind of stuff which are way more than $50 per year.) If it's a privilege the state can grant, the state should receive the benefit.

Could it work? Of course. would it be less regressive? Yes. Would it be a good idea for the legislature to adopt this plan on January 4th after a little floor debate? NO. You can't fundamentally change the entire tax policy of a state based on whether or not you've got the votes. You need to fully understand the economics of it. And there isn't a single legislator in Pierre with the resources to evaluate this proposal. We pay them pennies, and we don't give them a staff. We leave them to their own devices to conjure up what's right for South Dakota.

By and large, they do okay, given the circumstances.

But if we want to change tax policy, it's a terrible idea for 105 ranchers, insurance salesman, and lawyers to do it without some guidance.
Anonymous said…
11:28, you should run for office. I would vote for you, even if you are a Dem. :-)
Anonymous said…
I hope Katus enjoys his two years as a senator. Term limits will definitely not become an issue for him.
Anonymous said…
I would just like to see him do this... bring it on, tom, bring it on...

This is one issue that could be laughed at for years.
Anonymous said…
Fundamentally, how does this differ from the BRAC process?
Anonymous said…
NO INCOME TAX or any other new taxes!

READ MY LIPS No new taxes period. Learn to live in your budget.
Anonymous said…
What I love about our tax system and why SD is rated number in the nation for tax per capita is that everyone pays their fair share. Maybe I am a heartless bastard but I really don't care if you're poor, you are going to pay some taxes for the services you receive. For the most part, the more money you make, the more you spend and the higher your taxes are. I think it's crazy that people in this state complain about their taxes when SD is one of the lowest taxed states in the nation.
Homeowner said…
Weasel Katus should try doing like anyone wanting a change...collect signatures and put it on the ballot. That is the only way this state will ever have an income tax. It has to be voted in by the people by an amendment to the constitution. Go ahead Tom, now that you have been elected or maybe you should ask Stan what to do. I agree with you that there is a problem with taxes in this state, mostly property tax.
Doug Wiken said…
"My concern with an income tax isn't economic. It's out of principle.

Taxing earnings doesn't make sense to me. Taxing consumption does."

What "principle" is that? Tax payments must come out of income or sale of assets whether those earnings or income are used to buy consumables or pay property taxes, exise taxes, park fees, wheel tax, vehicle registration, etc. etc. etc.
Anonymous said…
The difference between "income" tax and "consumption" tax is profound.

Read more about the idea at Alan Keyes' website www.renewamerica.us

Anonymous said…
blogger cut off the link

here it is in two parts:

Anonymous said…
Katus must not realize we already have a "tax commission" it consists of the SD municipal league and the SD association of realtors. All changes to the current property tax system must be approved by them.

"if you change the constitution, and theres a problem, the legislature cant fix it"

"its an unfair tax, and we'd be stuck with it"
Bill Napoli said…
Anon 1128 .You bring up some very interesting points. I wonder what amount of revenue could be raised with your proposals? Since there are more homes than any other kinds of property we would need to be sure we did not simply do another tax shift like we did with the terrible 150% rule. Some of your ideas need much further discussion.
been there said…
As a former legislator, I disagree with the statement that no legislator will ever support an income tax. Several have in the past, including Lange who brought it up almost annually. Even though I am a Repub, I would support a corporate tax. I wish it would have been on the ballot alone in the past. I think it would have passed. Supports always got too greedy and lumped it with the personnal one. We already tax banks and insurance companies,and I don't hear anyone screaming to get rid of those taxes.We as a state rely way too heavily on the property tax, particularly ag land.
nonnie said…
Why not tax advertising???? Think of the money this would bring in, especially during election years. This is a serious question. Anyone got any ideas?
Anonymous said…

Start with the 1st Amendment.

Free speech that is taxed is no longer free speech.

Shoot that one down effectively and we can move on from there.

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