
Backers Push $1.50 Flat Tax to Replace S.D.’s Local Property Taxes
By Scott Sundberg, Hub City Radio, and Todd Epp, Northern Plains News
ABERDEEN, S.D. (Hub City Radio/NPN) — A group wants to kill property taxes in South Dakota.
They’ve filed a proposed constitutional amendment with the state Attorney General’s Office.
Former State Senator Julie Frye-Mueller, one of the measure’s backers, said the proposal would fund county governments through a flat transaction tax applied to most goods and services.
“We’re not trying to take money away from schools or counties,” Frye-Mueller said. “We’re offering an alternative that doesn’t punish property owners.”
Her husband, Mike Mueller, argued the transaction tax would be more equitable and less invasive than property assessments.
“This tax follows your choice to spend, not your right to own,” Mueller said.
Under the plan, South Dakota’s $1.8 billion in property tax revenue would be replaced with a $1.50 charge on most retail transactions. Not a percentage—a flat fee. Buy a candy bar, pay $1.50. Buy a car, same thing.
Matt Smith, a podcaster helping with the campaign, says that makes the system simple and predictable.
“People will know exactly what they’re paying,” Smith said. “It keeps legislators from playing shell games with property values.”
Critics say it does the opposite: it makes taxes less fair and more erratic. A $1.50 charge hits poor people harder than rich ones. And it doesn’t scale with what you buy.
The amendment allows lawmakers to raise the fee—up to $5—if the budget demands it.
“We added that language so they don’t try to open it later and turn it into something worse,” Frye-Mueller said.
The state doesn’t collect property taxes. That’s done by counties, schools, and other local governments. Supporters claim the new tax will cover those costs. They haven’t shown how, at least yet.
Mueller says the details will come later.
“Who’s going to pay for the schools? This will,” he said. “Who’s going to pay for the counties? This will.”
Frye-Mueller says the Legislature could put the measure on the ballot, but she doesn’t trust them to do it.
She was censured by the South Dakota Senate in 2023 for harassing a legislative staffer. That hasn’t stopped her from making the rounds at Republican events.
The state GOP isn’t backing the plan.
“We’re just giving them a venue,” said party chair Jim Eschenbaum. “We’re not taking any official position.”
The group’s website is www.abolishpropertytaxessd.com.
A state property tax task force will meet in Aberdeen on Wednesday, August 13. Time and place are still TBD.
The amendment would scrap South Dakota’s $1.8 billion property tax system and replace it with a flat $1.50 fee on most purchases. Backers call it fair and simple. Critics say it hits low-income buyers hardest and hasn’t been tested. The plan allows lawmakers to raise the fee to $5 if future budgets require it.