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Tuesday Talk: What’s the way forward on revenue?

April 16, 2013 By Joe Sheeran, Communications Director

New tax proposals in Minnesota’s House and Senate expand on some of the tax ideas in Governor Dayton’s revenue revisions. As Minnesota 2020’s string of recent analysis shows, the state must raise new revenue to invest in schools, economic development and property tax relief. The senate bill re-introduces sales tax on goods and some consumer services, while lowering the rate. The house proposes taxes on alcohol and cigarettes and a temporary surtax on households making more than $500,000 to pay back the school shift.

What’s our way forward on revenue? What do you think of the lower rate, broader base for the sales tax? 

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6 Comments:

  • Herbert Davis says:

    April 16, 2013 at 7:02 am

    Please stop with the regressive taxes that hurt the poor and free the rich from being tax in proportion to their income. We need to rely on a progressive system similar to that which built the freeways and infrastructure that we now have too little to maintain. A progressive tax is the only fair way to solve our problems….those who want to “starve the beast” are doing very well and we are dismantling rural education and “bridges are falling down”!

  • Sandi Karnowski says:

    April 16, 2013 at 10:03 am

    I agree that we need a tax that is not regressive.  My understanding is that sales tax is the most regressive of taxes.  The well to do are not encumbered by an increase in sales tax, as a few cents on a dollar does not prohibit them from purchasing items.  Many of our low income and middle class families will feel the pinch from increasing the sales tax base.

    I strongly think that raising the income tax on families that make over $500,000 is not asking too much of them.  They enjoy that income because their business is doing well in this state.  My husband and I do not make even half of that amount, yet feel an obligation to contribute to our state so that our bridges don’t fall down, or our tires fall off from the huge potholes already forming on our roads and freeways.

    What has happened to the Eisenhower Republicans, or even the Reagan Republicans, who paid their taxes at a much higher rate and still enjoyed a very nice lifestyle? They also felt a sense of obligation because they had reached such a successful income they could contribute more.  Now those who make $500,000+ feel they should keep everything they make and the poor should be taxed more, as they would with a sales tax on goods and services.

  • Frank Hawthorne says:

    April 16, 2013 at 10:24 am

    I agree. The time for an adult conversation on progressive tax revenues is long overdue. I almost choked when I heard in the recent news cycle how some Mn Republicans are now (mis)labeling their demand for regressive rates as real, flat-taxed “progressivity.” It is not “punishing success” to ask those with the greatest means to pay more for the quality life we all share.

  • cathy says:

    April 16, 2013 at 10:33 am

    I agree with Sandi.  The tax rate when I started my career in 1972 was much higher than now. Our state was able to pay the bills, help those in need and keep our infrastructure healthy. Then, Ventura took office, cut tax rates, especially on big business and the wealthy, cut education funding and also gave away the state’s surplus. T. Paw did the same for 8 years. We can’t reverse all of it at once. We could start with increasing taxes on those who can afford it the most. Corporations and the wealthy. It is a fact that two-thirds of corporations pay NO TAXES at all. Closing loop-holes for corporations and the wealthy is only fair and the right thing to do.

  • Lois Braun says:

    April 16, 2013 at 11:16 pm

    I agree that we need to raise taxes on those earning high incomes.  Here’s my rebuttal to those who assert that those earning more that $500,000 shouldn’t pay more taxes because they “deserve” it for their hard work:  I work hard too.  I have a PhD and a challenging research job, and yet I earn only 1/14 of that.  If pay was proportional to effort, then I would have to work nearly 14 times harder than I do to match $500,000.  I might be able to work twice as hard as I do, at the cost of my personal life, but it would be physically impossible to work 14 times harder.  I’m not complaining though, because I love what I do, and I am also motivated by the belief that my work will make the world a better place.  Thus I also reject the argument that if we tax high income earners more they will not be motivated to work as hard, because truly creative people are motivated by the intrinsic value of their work. 

    I also reject the argument that we mustn’t tax the “job creators” more because then they won’t have enough money with which to hire people.  Nonsense!  Employers hire people because they need more people to get the job done, when demand for their products increases.  And by the way, demand is likely to increase when there are more people who can afford whatever it is.  In other words, income redistribution benefits the people at the top too.

    That said, I am also in favor of broadening the base of the sales tax to include clothing that costs over $100.  Taxing clothing that costs more than $100 should not burden the poor because there is hardly any item of clothing a person really has to have that costs more than $100.  (One exception might be for specialized outer wear needed by people who work outside in extreme weather, but I’d think we could work out some kind of voucher program by which those people can buy their work clothes tax free.)

    However, the tax that I really think ought to be raised is the gas tax.  Gasoline and every form of fossil fuel should be taxed, with the taxes set to rise on a schedule to drive home the point that we cannot continue to burn fossil fuels as mindlessly as we do.  Raising the price of fossil energy would give people the incentive to adopt more efficient technologies and lifestyles. The argument is often made that raising the gas tax would disproportionately hurt poor people, because they are the ones who drive older inefficient cars, and they are the ones who live a long way from work.  This may be true, but if you want to help poor people, do it in a way that does not also benefit the wasteful habits of rich people, such as driving to vacation cabins every weekend, or having oversized houses.  Use the revenues generated by fossil fuel taxes to do things that help poor people more directly, like improving mass transit, or subsidizing loans for energy efficiency, or even for them to buy homes near where they work.

  • Bernice Vetsch says:

    April 17, 2013 at 9:40 am

    I agree, too.  The right-wing arguments for making the poor pay more so the rich can “create jobs” are nonsense.  Employers will hire when they need help, not just because they/their shareholders have extra money. 

    In England, the Cameron government is calling their brutal reductions of all social programs while benefiting the rich with tax breaks “expansionary austerity,” a truly marvelous example of using language to make something appear to be the opposite of what it is.

    I like temporary surtaxes much better than taxes on liquor or cigarettes (more poor people smoke), although they would be permanent and therefore more reliable.  Progressivity is the best answer and I am delighted to have a governor and legislature who understand the concept of fairness in taxation and are willing to enact it.