Multiple gubernatorial candidates drumbeating for cutting property taxes need to put the the big picture into perspective

Cut property taxes!!!!

Have you been listening to the chorus talking about reducing South Dakota property tax rates?  Many current officeholders and others seem to have latched on to this issue as a primary point of emphasis going forward. The Republican Party has held meetings and discussions.

Multiple candidates, including men running for governor, have put forward plans to substantially cut or even eliminate property taxes and suggested mysterious schemes to replace the lost revenue. It’s a legitimate issue and the complicated formula in place can always use improvement. However, the general disparagement of property taxation as inherently unfair and as a hot-button target to campaign against lacks perspective.

Each type of tax should not be evaluated as fair or unfair based on its own details and implementation.

Our national, state and local tax structure that funds essential government functions is a mosaic of different taxes, fees, licenses, and other mechanisms. The total amount gleaned from all sources allows governments at all levels to do what the public demands be done.  

Property taxes fall more heavily on some more than others. Farmers, for example, or business property owners.  They pay a much higher percentage of their income with this tax than do salaried workers who may pay none at all. However, those with higher property taxes also have access to income tax incentives — AKA tax breaks — which encourage their enterprises, but also often provide avenues to legally offset what otherwise could be sizable income tax liability.

Sales taxes, federal withholding taxes, capital gains taxes, license fees, gas taxes, building permits, fines, and other revenue sources all also have elements that favor some income groups and penalize others.

It doesn’t all compute to glorious fairness in the totality of all elements, but does result in an overall picture that does not seem unreasonably unfair.

The Institute on Taxation and Economic Policy calculated tax burden percentages by income groups. Excluding the lowest 20% and the top 5% of income earners, the 75% in the middle have a total tax burden of 22% to 28%, gradually rising as wealth rises.

Not equal but not grossly unfair, either.  The bottom one-fifth are at about 18%, so not totally left out. Top 5% pay lots, but not as much as you might think.

Now, with the Republican Party imposing tariff taxation on everyone, there will be additional financial burdens on companies and consumers across the economy.

South Dakotans criticizing property taxes as unfair to specified segments of our economy are being disingenuous if they do so without considering and acknowledging how property taxpayers often legally avoid other liability and land in that 22-28% middle ground.

Reform? Yes, make an effort. Severely cut? Doing that will tilt the system to unfairly transfer that burden to others.

South Dakotans are advised to watch closely as property tax plans are put forward in the 2026 Legislature which may overwhelmingly favor special Interest groups. Or, well-motivated and designed plans may upgrade our formulas and make things better.

The South Dakota property tax structure is complicated and it will be a challenge for many of our legislators to grasp the issue in perspective.

Perhaps it will distract them from their recent obsession with policing our bathroom habits.

Mike Levsen is a former Aberdeen mayor and regular contributor to The South Dakota Standard.

Photo: Gubernatorial candidate Dusty Johnson, public domain, wikimedia commons

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