Raising sales tax by 1/2 cent will raise about $107 million dollars. And decreasing property tax will cost about $40 million dollars. But how much will your agricultural operation pay to support the change? You can figure that out by answering two questions.
Question 1: What is my agricultural land evaluation? (this tax will decrease $10/$100,000 evaluation per year)
Examples for owner occupied residences:
Formula: farm/ranch A farm/ranch B farm/ranch C
+ Property tax decrease $100 $200 $400
– Sales tax increase – $250 – $500 – $1000
Farm/Ranch net tax increase/decrease $150 $300 $600
Farm/ranch A: This farm/ranch has agricultural valuation of $500,000 and equipment purchases of $50,000 per year. Their sales tax increase on ag equipment is $250 and their ag property tax decrease is $100. Their net annual tax increase will be $150.
Farm/ranch B: This farm/ranch has agricultural evaluation of $1,000,000 and equipment purchases of $100,000 per year. Their sales tax increase is $500 and their property tax decrease is 200. Their net annual tax increase will be $300.
Farm/ranch C: This farm/ranch has agricultural evaluation of $2,000,000 and equipment purchases of $200,000 per year. Their sales tax increase is $1,000 and their property tax decrease is $400. Their net annual tax increase will be $600.
Analysis and charts by SD Budget & Policy Institute. Data Sources:
Governor Daugaard’s 12% Tax cut Teacher Pay Proposal presented to Joint Committee on Appropriations, posted 2-5-15