OPINION: A session of lies, legislation and taxes
Tuesday, July 16, 2013 9:43 AM
For years, Gov. Dayton has been pontificating about taxing the rich. Ironically, the governor has lived off a South Dakota trust fund that pays little or no taxes on its earnings.
Six weeks ago, Gov. Dayton's wish came true, when DFL legislators passed $2.1 billion in tax increases. But the big lie about the Democrat's tax bill that Gov. Dayton so eagerly signed into law on May 23 is that it raises taxes on all Minnesotans, not just the rich.
In an analysis of the recently enacted tax legislation by the Minnesota Department of Revenue, households of all income ranges will see their tax burden increase as a percentage of their income.
According to the department's study, households with the lowest incomes, less than $11,000 a year, will see the greatest change in the percentage of state and local tax burden.
These low-income earners will see a 1.56 percent increase in total tax burden, moving from their current 29.9 percent of income paid in taxes to a tax burden of 31.5 percent of income.
This compares to a .67 percent increase in taxes for Minnesota's top earners with annual incomes over $146,400, going up from 10.3 percent to 11.0 percent state and local taxes as a percent of total income.
While Democrats "achieved" their goal of making Minnesota's tax system hyper-progressive, they failed at reducing taxes for the poorest of households in Minnesota, those with earnings of less than $20,000 annually.
One of the more regressive taxes enacted by legislators this year was the $1.60 per pack increase in the cigarette tax. Under the pretense that smokers will quit, naïve lawmakers increased the tax above the level of all of Minnesota's surrounding states.
The tax in North Dakota is 44 cents per pack compared to Minnesota's new $2.83 per pack. The net result is likely to be less revenue than anticipated for Minnesota and more cross border sales for smokers.
This study by the Department of Revenue also highlights that despite an increase of $120 million in aid to cities and counties, the total state and local tax burden will increase across all income levels.
If the taxes weren't increased enough as a result of the provisions in the DFL's Tax Bill, Democrat legislators approved more taxes in the Transportation bill.
While not passing a gasoline tax increase this year, they did expand statewide the option for counties to adopt a $10 per vehicle wheelage tax.
They also passed legislation permitting any county outside the seven-county metro area to increase the sales tax by a half percent without voter approval, plus impose a $20 motor vehicle excise tax for any transit or transportation project.
The net result of Gov. Dayton's "tax the rich" scheme is you will pay more in taxes if you...drive a car, renew your driver's license, download a song or a movie, rent a car, smoke cigarettes, give a large gift, have a cell phone, subscribe to satellite television, are subject to the alternative minimum tax or earn more than $150,000 in 2013.
Minnesota's tax policy now reflects Governor Dayton's wish; to move Minnesotan's back into the category of the "highest taxed" people in the country. He may have desired to tax only the rich, but the result is he ended up taxing everyone. Dayton's "tax the rich" rhetoric is a big tax lie.
Phil Krinkie, a former eight-term Republican State Representative from Shoreview is president of the Taxpayers League of Minnesota. Contact him at email@example.com.