Receipt Tax vs. Fair Tax

February 27, 2025
Seal SD Liberty

📊 Flat Tax System vs. Core GRT Plan: A Battle for South Dakota’s Tax Freedom

🏛️ Comparing Tax Systems for South Dakotans – April 20, 2025

South Dakota deserves a tax system that maximizes freedom and fairness. On one side, we have a flat tax system—a single income tax rate applied to all earners. On the other, the Core GRT Plan—part of the Maximum Liberty Plan (Plan 2)—replaces all taxes with a 5% Gross Receipts Tax (GRT). Let’s break down both systems, see how they impact South Dakotans, and decide which one truly delivers liberty and freedom for the people.

🔍 Digging Into the Systems

Flat Tax System: A Single Income Tax Rate

A flat tax system applies a single income tax rate to all earners, replacing South Dakota’s current tax structure (no state income tax, reliance on sales and property taxes). For this comparison, we’ll model a flat tax at 5% on all personal income, a common rate in flat tax proposals, to align with the Core GRT Plan’s 5% rate:

  • 📈 5% Flat Income Tax: Taxes all personal income at 5%, regardless of income level, generating revenue based on South Dakota’s personal income.
  • 🏠 Retains Other Taxes: Keeps property taxes ($1.6 billion), sales taxes ($2.097 billion), and other fees ($628.2 million), adding the flat tax as a new revenue source.
  • 🎯 Intent: Simplify income taxation with a single rate, often promoted as fairer than progressive taxes, but in South Dakota’s context, it adds a new tax burden.

South Dakota’s total personal income in 2023 was ~$53.7 billion (U.S. Bureau of Economic Analysis data, adjusted for 2025). A 5% flat tax would raise $2.685 billion annually. Combined with existing taxes, total revenue would be $3.5042 billion (current taxes) + $2.685 billion = $6.1892 billion. In Custer County, a median household income of ~$67,000 (2023 estimate) would owe $3,350 in flat tax, plus ~$2,607 in property taxes (1.26% on a $206,902 home), totaling $5,957 in taxes.

Analogy for Clarity: A flat tax is like adding a new $5 picnic fee for everyone based on how much lemonade they earn—it sounds simple, but you still have to pay all the other picnic fees, like property taxes, making your picnic bill bigger.

Core GRT Plan: Total Tax Freedom

The Core GRT Plan replaces all taxes with a single 5% GRT, raising $3.6 billion with a $95.8 million surplus, focusing on statewide relief:

  • 💥 Eliminate All Taxes: Removes $1.6 billion in property taxes, $2.097 billion in sales taxes, and $628.2 million in other fees, replacing them with a 5% GRT on $72 billion in business revenue.
  • ⏳ Duration: Permanent, with no expiration.
  • 🏡 Scope: Universal—covers all properties and transactions, ensuring fairness for all South Dakotans.
  • 🎯 Intent: Deliver maximum tax freedom by consolidating all taxes into one fair GRT, simplifying the system.

In Custer County, a $206,902 home currently pays ~$2,607 in property taxes (1.26% rate). Under the Core GRT Plan, this drops to $0—a $2,607 annual saving per household. The 5% GRT is paid by businesses, not individuals, so households face no direct tax burden, only indirect costs through business pricing (e.g., $1.00 on a $40 purchase).

Analogy for Clarity: The Core GRT Plan clears all picnic fees with one $5 cake businesses share—it wipes out property taxes and other fees for every South Dakotan, making the picnic free for you while businesses chip in.

⚖️ Long-Term Analysis: Flat Tax System vs. Core GRT Plan

Let’s compare these systems over a 10-year horizon (2025–2034), focusing on tax relief, equity, simplicity, and Custer County impacts, to see which delivers more liberty and freedom for South Dakotans.

1. Tax Relief Magnitude

  • Flat Tax System: Adds a 5% income tax, increasing the tax burden. A Custer County household with $67,000 income pays $3,350 annually in flat tax, plus $2,607 in property taxes, totaling $5,957/year. Over 10 years, assuming stable income and property values, that’s $59,570 in taxes. Property taxes may rise with value increases (e.g., 3% annually to $277,194, adding ~$885 by 2034), pushing the total to ~$63,000.
  • Core GRT Plan: Eliminates property taxes entirely, reducing the household tax bill to $0 (direct taxes). Indirect costs via GRT (e.g., $1.00 on a $40 purchase) are minimal—estimated at ~$500/year for a typical household (based on average spending). Over 10 years, that’s ~$5,000, a ~$58,000 savings compared to the flat tax system.

Edge: Core GRT Plan. It delivers massive relief by removing direct taxes, saving South Dakotans ~$5,000–$6,000 annually compared to the flat tax’s added burden.

2. Scope and Equity

  • Flat Tax System: Adds a new tax on income, disproportionately impacting lower-income households who already face sales and property taxes. In Custer County, where tourism drives commercial and second-home values, businesses and non-residents continue paying uncapped property taxes, creating inequity [web:0⁊][web:6⁊].
  • Core GRT Plan: Universal relief—no property taxes for any property type, and no direct income tax. The GRT is paid by businesses, ensuring fairness for all South Dakotans, including in Custer County where tourism benefits from tax relief for all properties.

Edge: Core GRT Plan. Its universal scope prevents inequity, promoting liberty for all by removing direct taxes on individuals, unlike the flat tax’s added burden.

3. Simplicity and Stability

  • Flat Tax System: Adds complexity by introducing a new income tax while retaining existing taxes, requiring South Dakotans to navigate multiple tax types. Future adjustments to the flat rate or other taxes create uncertainty, undermining long-term stability.
  • Core GRT Plan: Simplifies the system to one 5% GRT, permanently eliminating all other taxes. This offers predictability and stability, allowing South Dakotans to plan their finances without fear of new tax burdens.

Edge: Core GRT Plan. One tax replaces all, ensuring simplicity and stability, aligning with the principle of liberty through a predictable system.

4. Revenue Sustainability

  • Flat Tax System: Generates $2.685 billion from the flat tax, plus $3.5042 billion from existing taxes, totaling $6.1892 billion. This overfunds current needs ($3.5042 billion), risking government bloat while burdening taxpayers with new taxes.
  • Core GRT Plan: Raises $3.6 billion, matching current needs with a $95.8 million surplus for benefits. It redistributes funds to local governments ($1.5 billion), but requires careful allocation to avoid service cuts, though the surplus provides flexibility.

Edge: Flat Tax System. It generates more revenue, reducing risk to local budgets, but at the cost of higher taxes on individuals, which conflicts with liberty. The Core GRT Plan balances revenue with freedom, requiring careful management.

5. Custer County Impact

  • Flat Tax System: Adds $3,350 in income tax to a Custer County household, plus $2,607 in property taxes (rising to $3,492 by 2034), totaling $6,000–$7,000 annually by 2034. Businesses face unchanged property taxes, impacting tourism [web:6⁊].
  • Core GRT Plan: Eliminates property taxes, saving $2,607 per household annually in 2025, holding at $0 through 2034 (direct taxes). Indirect GRT costs (~$500/year) keep the burden low, supporting tourism and rural stability in Custer County.

Edge: Core GRT Plan. It saves Custer County households ~$5,500–$6,500 annually compared to the flat tax system, and supports the local economy by relieving all property types.

🏆 Who Wins? What’s Better for Liberty and South Dakotans?

The Core GRT Plan is the clear winner for liberty and the people of South Dakota. It eliminates property taxes entirely, saving households $3,000–$5,000 annually—a $5,500–$6,500 better outcome than the flat tax system’s added burden (e.g., $6,000–$7,000 by 2034 in Custer County). Its universal scope ensures fairness, removing direct taxes for all South Dakotans, while the flat tax system adds a new income tax, disproportionately impacting lower-income families and undermining liberty. The Core GRT Plan’s simplicity—one tax replaces all—offers stability and predictability, aligning with the principle of liberty by minimizing government intrusion into your finances.

The flat tax system, while generating more revenue ($6.1892 billion vs. $3.6 billion), does so at the expense of South Dakotans, adding a $2,685 billion tax burden that conflicts with the goal of tax freedom. It retains complex layers of taxation, creating uncertainty and inequity, especially in tourism-driven areas like Custer County where businesses face unchanged property taxes. The Core GRT Plan’s approach—consolidating all taxes into a single GRT—better embodies liberty, ensuring every resident benefits and can thrive without the weight of multiple taxes.

Join the Fight for Liberty: The Core GRT Plan is our path to true tax freedom. Visit sealSD.com to join our next Facebook Live Q&A on May 3, 2025, at 2:00 PM, or our weekly streams every Wednesday in April at 7 PM MDT to learn more and help shape this plan for all South Dakotans!

Visit sealSD.com | SEAL Strength and Elevate American Liberty | #KeepYourHome