The debate in Pierre over the future of South Dakota property taxes is starting to heat up. HB 1005 is getting the most attention. Unfortunately this bill to wholly inadequate., for reasons pointed out by Al Novstrup:
Rep. Al Novstrup, R-Aberdeen, called the measure a “gross income tax” that favored owners of ag land near residential and commercial developments.
“The winners are not farmers they’re land developers. The losers are farmers out on the prairie,” he said.
My beef is not that the bill functions as a quasi-income tax (which I happen to favor), but that it ends up treating some ag land unfairly. The valuation proposed in HB 1005 only looks at one value of land, its productive value, without looking at any other value. That is biased, as Rep. Novstrup says, toward land that is ripe for development. A land owner on prairie may produce the same as a piece of land near Sioux Falls, thus both pieces of land pay the same tax under HB 1005. But that land near Sioux Falls will sell for far more than the prairie land. Novstrup's bill, which seems to have died, would have included sale value as well. That arrives at a much fairer valuation, or, as Novstrup puts it, a fair and true value.