Tax Reform Heads to President Trump with Noem Vote

Pat Powers

Tax Reform Heads to President Trump with Noem Vote

Washington, D.C. – Rep. Kristi Noem today voted to send the Tax Cuts and Jobs Act to President Trump. The legislation has been approved by both the House and Senate. It now awaits the President’s signature.

Noem, who is the first South Dakota representative in history to serve on the House’s tax-reform committee, was one of nine House Republicans to negotiate the final deal. A farmer, rancher, small business owner and mother, Noem fought to double the Child Tax Credit, provide producers with better expensing tools, and lower tax rates across the board.

VIDEO: Noem Discusses Final Tax Reform Deal

“Today is a historic day for the American people,” said Noem. “With today’s vote, we put legislation on President Trump’s desk that will put more money in the hands of hard working South Dakotans. Tax rates have been lowered. The standard deduction and Child Tax Credit are both doubled. Farmers and ranchers have access to enhanced expensing tools and a new small business deduction. And job creators have a new incentive to bring their headquarters, jobs and higher wages back onto American soil. Here is the bottom line: The American people deserve more control over their paychecks. They’ve worked hard for that money, and it’s time for folks in Washington to respect that.”

Can the Legislature Subpeona? The AG Offers an official opinion. It’s up to the Legislature.

Pat Powers

From the Attorney General:

Attorney General Jackley Issues Official Attorney General Opinion on Legislative Committee Subpoena Power 

PIERRE, S.D. – Attorney General Marty J. Jackley announced the issuance of his official Attorney General Opinion to State Senator Troy Heinert regarding legislative committee authority to issue subpoenas. The opinion  recognized  the  important premise that “In order for the Legislature to effectively legislate, it must have the   ability to obtain information regarding the intended effects or possible outcomes of proposed legislation or gather information in furtherance of other constitutional obligations.” The opinion reaffirms the Legislative Government Operation and Audit Committee’s statutory authority to investigate including the ability to issue subpoenas.

The opinion notes that the Legislature must authorize through statute or the Executive Board investigate and subpoena powers. While it has not authorized the Tribal Relations Committee to issue subpoenas at this time, the Legislature certainly can if it is so choses.

http://atg.sd.gov/OurOffice/OfficialOpinions/opinionhtml.aspx?id=1693

_____

December 20, 2017

Honorable Troy Heinert
State Senator
500 E. Capitol Ave.
Pierre, SD  57501

OFFICIAL OPINION NO.  17-06

Re:     The Subpoena Authority of the State-Tribal Relations Committee of the Legislature

Dear Senator Heinert:

In your role as State Senator and Chairman of the State Tribal Relations Committee, you have requested an Official Opinion from the Office of Attorney General based on the following questions:

QUESTIONS:

  1. Does the State-Tribal Relations Committee, established pursuant to SDCL 2-6-20 et. seq., possess subpoena power?
  2. Is the State-Tribal Relations Committee a statutory committee or an interim committee?

ANSWER:

  1. The State-Tribal Relations Committee is a statutory committee without authority to issue subpoenas absent further action from the Legislature.
  2. Based on the analysis below, the answer to question two is part and parcel of question one.

FACTS:

The State-Tribal Relations Committee met on October 23, 2017.  During that meeting, a motion was made to issue subpoenas for various individuals.  As Chairman, you ruled that motion out-of-order because you believed the State‑Tribal Committee was without statutory authority to issue the subpoenas.  In order to clarify this issue, you requested this Official Opinion.

IN RE QUESTION 1:

In order for the Legislature to effectively legislate, it must have the ability to obtain information regarding the intended effects or possible outcomes of proposed legislation or gather information in furtherance of other constitutional obligations.  To this end, courts have generally recognized that a legislative body is inherently “vested with all investigative power necessary to exercise its function properly.”  Chesek v. Jones, 959 A.2d 795, 802-03 (Md. 2008); see also Matter of Shain, 457 A.2d 828, 831 (N.J. 1983) (investigative power of legislature has long been recognized); Morss v. Forbes, 132 A.2d 1, 8 (N.J. 1957) (legislature’s ability to investigate consistently espoused).  In meeting its obligations, it may become necessary for the Legislature to summon and examine witnesses, or require the production of books, records, and papers by compelled process.  Chesek, 959 A.2d at 803.  As a means of effecting these productions, the Legislature may issue subpoenas to the custodians of such records who may then be subject to contempt or criminal charges for non-compliance.  Shain, 457 A.2d at 832; SDCL 2-4-14 and 2-4-15; SDCL 2-6-5 and 2-6-6.

Committees may be created to aid in the legislative function.  As such, committees may be delegated “some portion of the investigatory power which the Legislature enjoys as a whole.” Morss, 132 A.2d at 8.  The committee, however, may not act on mere “whims and caprices” of its members.  Id.  The extent of a committee’s investigative power is limited by “the act or resolution to which it owes its existence.”  Id. (citation omitted).  Because a committee’s power may be limited, the ability of a committee to compel the attendance of witnesses or the production of documents must either be explicitly stated in the act or resolution creating that committee, or the power must be fairly implied as necessary to carry out the committee’s directive.  Shain, A.2d 828 at 832; AGO 76-11, 1976WL352056.

This limitation on committee authority is reflected in the statutory means to compel attendance.  For instance, SDCL 2-6-5 provides the punishment of a Class 2 misdemeanor for any person who, without lawful excuse, fails to comply with a summons to appear “before either house of the Legislature or any committee thereof authorized to summon or subpoena witnesses.” (emphasis added).  The statute assumes the inherent authority of either house to compel production.  At the same time, the statue recognizes that a “committee thereof” must be “authorized” to summon or subpoena witnesses.  See also SDCL 2-6-6 (using similar language).  Accordingly, in order to determine whether a committee possesses the authority to compel the attendance of witness or the production of documents, the grant of authority creating that committee must be examined.

Committees may be created directly by legislative act.  If these committees are codified in state statute, they become known as “statutory committees.”  Other committees may be of limited duration and thus not subject to codification.  For example, the Legislature created the Governmental Accountability Task Force by passage of Senate Bill 171, 92nd Session, 2017.  By the terms of the Bill, the Act creating the Task Force will be repealed on December 31, 2017.  Because the Act creating the committee will be repealed prior the next legislative session, its existence will not be codified and therefore it will not be considered a statutory committee.  Conversely, the South Dakota Retirement Laws Committee – a statutory committee codified in SDCL 2-6-8 et seq. – will continue until the Legislature repeals the statutory authority for its existence.  In either case, however, the authority of a committee created directly by the Legislature will be limited by terms of the legislative act creating that committee.

The Legislature may also grant, to another body, the authority to create committees.  The Legislature, through the passage of SDCL 2-9-2 et seq., created the Executive Board of the Legislative Research Counsel (Executive Board).  The Executive Board was granted authority to appoint and name committees to aid in the legislative function. SDCL 2-9-4(6).  In order to meet its statutory obligations, the Legislature specifically delegated to the Executive Board, and the committees duly appointed thereunder, certain investigative powers including the ability to issue subpoenas.  SDCL 2-9-6.

The Executive Board, in furtherance of its statutory duties, was also given authority to make its own rules and regulations.  These rules implemented by the Executive Board now appear in a document entitled “Interim Committee Rules.”  SDCL 2-9-5.  A board, however, is limited in its authority by the parameters given in state law.  O’Toole v. Bd. of Trustees of S. Dakota Ret. Sys., 2002 S.D. 77, ¶ 15, 648 N.W.2d 342, 346.  The committees created by the Executive Board are likewise limited in purpose and scope to the grant of authority issued by the Executive Board.  Accordingly, an Executive Board committee may only exercise the power granted to it by an official act of the Executive Board and in conformance with the Interim Committee Rules.  The authority of a committee created by the Executive Board will be governed by the Interim Committee rules and as further limited by the motion or resolution creating that committee.

The State-Tribal Relations Committee is a statutory committee established by SDCL 2-6-20 et seq. The State-Tribal Relations Committee was not established by the Executive Board and may not, therefore, utilize the Executive Board’s subpoena powers granted by statute or as provided in the Interim Committee Rules.  As outlined above, the Interim Committee Rules only apply to committees established by the Executive Board.  Rather than granting additional authority, the State-Tribal Relations Committee’s designation as an “Interim Committee” simply means that the committee meets in the interval between regular legislative sessions.  No additional power is granted to the committee by this designation and the committee’s authority to act remains constrained by statute.

In comparing grants of statutory authority, the Government Operations and Audit Committee is clearly provided investigative ability.  This authority specifically includes the ability to “summon witnesses.”  SDCL 2-6-4.  In contrast, the State-Tribal Relations Committee was not so empowered.  Had the Legislature intended to give the State-Tribal Relations Committee similar authority to summon witnesses or secure documentation through compulsory process, it could have. State v. Young, 2001 S.D. 76, ¶12, 630 N.W.2d 85, 89 (The Legislature “knows how to exempt or include items in its statutes”).  The Legislature did not, but it certainly can, if it is so inclined.

Furthermore, a review of the statutes governing the State-Tribal Relations Committee itself indicate that it was established primarily as a forum for the “discussion of issues of mutual concern to the state and the tribes” rather than as an investigative body.  See SDCL 2-6-23.  It cannot, therefore, be fairly implied from the State-Tribal Relations Committee’s statutory authority that subpoena power is necessary to carry out the committee’s function.

CONCLUSION:

State-Tribal Relations Committee is a statutory committee granted only the authority provided to it by statute.  It does not currently possess the power to summon or subpoena witnesses absent further action by the Legislature.

Sincerely,

Marty J. Jackley
ATTORNEY GENERAL

MJJ/RMW

Thune Praises Senate Passage of the Tax Cuts and Jobs Act

Pat Powers

Thune Praises Senate Passage of the Tax Cuts and Jobs Act

“The Tax Cuts and Jobs Act provides Americans with the relief they’ve been waiting for and ensures that America is ready to compete and win in the global marketplace.” 

WASHINGTON — U.S. Sen. John Thune (R-S.D.), a member of both the tax-writing Senate Finance Committee and the conference committee tasked with negotiating the final tax reform bill, issued the following statement today regarding the Senate’s passage of the Tax Cuts and Jobs Act.

“This is a historic moment for our nation. For the first time since 1986, Congress has passed a comprehensive overhaul of the tax code. Our goal with this pro-growth tax reform package was to put more money in the pockets of hardworking Americans and create a tax code that fosters economic growth. The Tax Cuts and Jobs Act achieves that goal. Next year, families across America will see their tax bills drop and take-home pay increase, and businesses will find it easier to grow their operations, hire new workers, and raise wages. This legislation brings America’s tax system into the 21st century — benefiting workers and our economy. The Tax Cuts and Jobs Act provides Americans with the relief they’ve been waiting for and ensures that America is ready to compete and win in the global marketplace.”

Since January 2017, Thune has introduced numerous individual tax reform marker bills that cover multiple portions of the tax code. Thune-authored provisions included in the conference report to the Tax Cuts and Jobs Act are:

  • Faster cost recovery: Modified portions of Thune’s Investment in New Ventures and Economic Success Today (INVEST) Act of 2017 (S. 1144), legislation that would simplify accounting rules and reform key parts of the tax code to help small and medium-sized business owners more quickly recover investment costs and certain other tax deductible business expenses. By accelerating cost recovery on property, equipment, inventory, and other common business investments, these provisions would encourage new business growth and help existing businesses, including farms and ranches, expand their operations, create new jobs, and grow the economy.
  • Modernized tax code for small and medium-sized businesses: Provisions from Thune’s S Corporation Modernization Act of 2017 (S. 711) that would allow foreign individuals to invest in S corporations through Electing Small Business Trusts (ESBTs) and treat ESBTs like S corporation shareholders so both can claim deductions with respect to charitable contributions made by an S corporation. Thune also led efforts during the conference committee to ensure that trusts, including ESBTs, and estates benefit from the new deduction for owners of pass-through businesses like S corporations.

Additional tax reform benefits:

  • Shared goals on agriculture cooperatives and renewable energy tax credits: Through his role as a member of the conference committee, Thune helped a number of other senators to include their shared priorities. Working with Sens. John Hoeven (R-N.D.), Pat Roberts (R-Kan.), and Chuck Grassley (R-Iowa), Thune helped improve the new deduction for pass-through businesses so owners of agricultural cooperatives benefit from the 20 percent deduction. Thune also worked with Sens. Dean Heller (R-Nev.), Cory Gardner (R-Colo.), and Grassley to ensure that tax credits for renewable energy, like wind and solar, are taken into account under the new international tax rules.
  • Protecting more family-run farms and ranches from the death tax: Thune doesn’t believe death should be a taxable event, which is why he introduced the Death Tax Repeal Act in January 2017 and still strongly supports this approach. The conference report to the Tax Cuts and Jobs Act includes his provision from the Senate tax reform bill that would double the exemption level, providing additional relief (compared to current law) to more of South Dakota’s family-run businesses, farms, and ranches that are currently threatened by the death tax, which is important progress and a step toward full repeal.

Click here for legislative text of the Tax Cuts and Jobs Act conference report and here for policy highlights.

###

Rounds Statement on Passage of Tax Reform Conference Report

Pat Powers

Rounds Statement on Passage of Tax Reform Conference Report

WASHINGTON—U.S. Sen. Mike Rounds (R-S.D.) today made the following statement after the Senate voted to pass the tax reform conference committee report:

“Our tax relief bill will create a healthy, more vibrant economy that we can pass onto our kids and grandkids,” said Rounds. “This legislation puts American businesses back on a level playing field with the rest of the world so we can once again be globally competitive. Businesses will be incentivized to remain here in the United States, which will keep good-paying jobs from going overseas.”

“It will greatly improve the quality of life for South Dakota families, especially lower-and middle-income families who haven’t seen a pay raise in nearly a decade. We look forward to seeing it signed into law by the president before Christmas.”

A conference committee is a group of Senate and House negotiators who are tasked with reconciling differences in legislation between the two chambers. Bill text and a summary can be found HERE.

###

With Leadership from Noem, House Passes Comprehensive Tax Reform

Pat Powers

With Leadership from Noem, House Passes Comprehensive Tax Reform


Washington, D.C. – Rep. Kristi Noem today led the U.S. House of Representatives in passing H.R.1, the Tax Cuts and Jobs Act. Noem, who is the first South Dakota representative in history to serve on the House’s tax-reform committee, was one of nine House Republicans to negotiate the final deal. A farmer, rancher, small business owner and mother, Noem fought to double the Child Tax Credit, provide producers with better expensing tools, and lower tax rates across the board. Watch video of Noem’s closing arguments today. Read the conference report here. A summary can be found here.

“The average household income in South Dakota is $54,000, and year after year, these families are seeing their expenses go up. Their healthcare costs are skyrocketing. Their energy costs are double the national average. These are hardworking families, and they deserve a break,” said Noem. “This legislation gives them that break. By lowering tax rates and doubling both the standard deduction and the Child Tax Credit, that family of four making $54,000 will see a $1,600 difference in after-tax income. That’s $1,600 that will go back into our communities, rather than into the greedy hands of Washington.”

Noem, a mother of three, was a champion of the Child Tax Credit and fought to ensure the Child Care Credit was also preserved. South Dakota has one of the highest rates of working moms in the country, making these credits critical for many South Dakota families.

“Additionally, the Tax Cuts and Jobs Act is designed to build a healthier economy,” explained Noem. “The post-tax reform economy is one in which that family making $54,000 could get a raise. It’s an economy in which job creation can boom again.”

In addition to managing her family’s farm and ranch operation, Noem has owned and operated a hunting lodge, run an insurance business alongside her husband, and helped manage her mother’s restaurant. With those experiences in mind, Noem pushed to lift the tax burden on small business. Under the Tax Cuts and Jobs Act, small businesses would receive a first-ever 20 percent tax deduction that applies to the first $315,000 of joint income.

“I have spoken to hundreds of South Dakota farmers and ranchers throughout this process,” said Noem, who served as the only farmer-rancher on the final negotiating team. “Lowering tax rates was critical to them, but providing more robust expensing tools was also a big priority. Under this plan, producers will be able to immediately write off the full cost of new equipment as a means to manage cash flow and continue to deduct interest on loans, a provision critical to a highly leveraged industry like agriculture.”

Noem’s entry into public service came after her family was hit by the Death Tax following a farm accident that took her dad’s life. Noem went on to serve in the South Dakota State Legislature where she was appointed to the House Taxation Committee. Following her election to the U.S. House, Noem served on a series of committees, including the House Agriculture Committee where she successfully negotiated the 2014 Farm Bill as a member of that Conference Committee. In 2015, Noem earned a seat on the powerful House Ways and Means Committee, the first South Dakotan in history to do so. Noem became one of nine House Republicans to serve on the Tax Reform Conference Committee, which negotiated the tax reform deal.