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South Dakota’s taxes are among the best for wealthy Americans –– so low that the state nabbed the No. 3 spot in a new tax report released by the Institute on Taxation on Economic Policy.The state’s wealthiest 1 per cent of residents, who earn an average annual salary of $1.1 million, pay out just 2.1% of their income in state and local taxes.
In contrast, the 20% of South Dakotans in the lowest-income bracket, who earn an average annual salary of $11,2000, pay more than five times that ratio –– about 11.2% of their income.
According to U.S. Census Bureau data, South Dakota’s median household income between 2007 and 2011 totaled $48,010, the 28th highest in the country. About 14 per cent of its 833,354 residents live below the poverty line.
Sales & excise taxes: The richest residents pay 1% of their annual income toward sales taxes, while the poorest 20% pay 8.7%. South Dakota’s middle class dishes out about 6% annually in sales taxes.
Property taxes: The top-earning 1% pay 1.6% of their income on property tax bills, and the 20% earning the least give 2.9% to the taxes. Those in the middle pay about 2% on property taxes each year.
Income taxes: South Dakota, like nine other states, doesn’t have one.
Although South Dakota’s tax system may favour the wealthy, it hasn’t been enough to attract big business (and the people who run them) to lay down roots.
No one listed in the Forbes 400 calls South Dakota home and no companies in the Forbes 500 have their headquarters in the state.
Regardless of the lack of banks and billionaires, the state’s largest city — Sioux Falls — was named one of the 100 best places to start a business by CNN, noted for its attractive tax climate and low start-up costs compared to major cities.