State Facts
Analysis
South Dakota ranks as the second freest state in the nation, although it does better on economic than personal freedom. In that sense it is the polar opposite of rural, left-liberal states like Maine, New Mexico, and Vermont, which do well on personal freedom but poorly on economic freedom. It conforms to the frequently misleading stereotype that so-called “red states” are economically free but socially conservative. Its overall level of freedom has slipped slightly since the last ranking and it lost the top spot to its northern neighbor.
South Dakota ranks best among the states in terms of fiscal policy owing to its extremely low levels of taxation (which are nearly two standard deviations better than the mean). The state is also prudent in terms of its spending and debt levels. It is a fiscally decentralized state for its size.
The state also scores well on regulatory policy. Labor and health insurance laws are generally very good, with a below-average number of health mandates. South Dakota also performs well on occupational licensing. The state’s liability system is among the best. Residential land-use regulations are a full standard deviation better than average, and planning is largely local. Eminent domain has been reformed extensively but could go further. The state has still not deregulated cable.
South Dakota’s personal freedom score does not match its stellar performance in the economic realm. The state scores well on gun control and alcohol freedom, but relatively poorly in many other areas. Marijuana laws are mediocre, and asset forfeiture is a standard deviation worse than average. The state authorizes sobriety checkpoints but does not mandate helmet use or ban cell phone use while driving. Cigarette taxes are slightly above average, though the state has not increased them while other states around the country have done so. Smoking is banned in private workspaces. The state allows several kinds of gambling but has prohibited Internet gambling and social gambling. Unfortunately, its incarceration rates and victimless crimes arrest rates are extremely high (but falling). Additionally, it is slightly above the national average drug enforcement rate (and its rate has risen since 2007). The police are authorized to take DNA from certain felony arrestees. Home school requirements, particularly on standardized testing and notification procedures, could also be relaxed.
Policy Recommendations
- Reduce government employment and end sales taxes on food.
- Require compensation or an economic assessment before regulatory takings.
- Reduce the relatively high arrest rate for victimless crimes. Lowering this rate to the mean would have raised South Dakota’s personal freedom ranking by eight spots.
