As the debate over property taxes intensifies in South Dakota, some political candidates are considering taxing trusts, particularly those established by non-residents, as a potential solution. While this might seem like a straightforward way to increase revenue without directly impacting South Dakota families, experts caution that such a move could have unintended consequences.

Economic Impact of Trusts

South Dakota’s trust industry is a significant contributor to the state’s economy, providing well-paying jobs and generating substantial economic activity. Unlike a loophole or a free ride, the trust sector operates within a regulated framework that includes fees. Introducing new taxes could drive businesses, talent, and investment to other states, undermining the industry’s success.

The Portability of Trusts

One of the key characteristics of trusts is their portability. This means that if South Dakota were to impose new taxes on trusts, those managing them could easily relocate to states with more favorable tax environments. This potential exodus could result in a loss of economic benefits currently enjoyed by the state.

Balancing Revenue and Economic Growth

While addressing property tax concerns is important, it’s crucial to consider the broader economic implications of taxing trusts. The trust industry not only supports local jobs but also contributes to the state’s overall economic health. Policymakers must weigh these factors carefully to avoid unintended harm to South Dakota’s economy.

Original reporting: The Dakota Scout (Sioux Falls) — read the source article.