Backers Push $1.50 Flat Tax to Replace S.D.'s Local Property Taxes

Abolish Property Taxes SD graphic.

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.

What the Amendment Proposes

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.

Fact Check Notes (FCN)

Claim

Rating

Notes

The $1.50 transaction tax will fully replace $1.8B in property tax revenue

⚖️ Needs Context

No economic modeling or revenue impact statement has been provided. Flat taxes raise questions about fairness and volatility.

Local governments and schools will be fully funded under the amendment

❓ Unverifiable

Proponents say it’s a dollar-for-dollar replacement, but no language or distribution formula has been shared.

Legislators can’t interfere with the tax

⚖️ Needs Context

Proponents say the funds are 'locked,' but Frye-Mueller acknowledges the amendment allows increases up to $5 if justified. The limits of legislative discretion remain unclear.

The amendment would prevent future income taxes

⚖️ Needs Context

No provision barring future income taxes has been confirmed or reviewed. The claim reflects political messaging, not statutory protection.

The amendment is based on SJR 506

⚖️ Needs Context

The proposal echoes SJR 506, which failed 5–2 in committee in early 2025. Backers have not confirmed whether it uses the same language or framework.

Sourcing & Attribution

- Audio quotes transcribed from interviews with Julie Frye-Mueller, Mike Mueller, Matt Smith, and Jim Eschenbaum, recorded July 2025 by Hub City Radio and independently verified by Northern Plains News.

- SJR 506 legislative history: South Dakota Legislature (2025 Session), LegiScan.com, and FastDemocracy.com.

- Property tax figures ($1.8 billion): South Dakota Department of Revenue FY24 aggregate reports.

- Contextual analysis: Northern Plains News editorial review, July 2025.