We are Better Than That

May 24, 2011 By John Wayne Barker, Guest Commentary

Sitting in a policy stalemate that could shut down Minnesota’s government reminds me of former Vice President Walter Mondale’s admonition in a recent Washington Post Op-Ed. He said:

“I am troubled by cuts in infrastructure investments, which enjoy the support from business and labor as a source of jobs and future economic prosperity. I am ashamed that America leads affluent democracies in the number of people (including children) who live in poverty. I am perplexed by the shortsightedness of reducing support for smart, hard-working college students. And where is our decency when we cut back on medical care for the ill? ... We are better than that.”

That got me thinking about ways to, as Mondale said, find a fiscally responsible solution “while showing mercy and justice for the most vulnerable.” Is Governor Dayton’s approach the right one? Should we raise taxes on the richest two percent of Minnesotans to help pay for vital state services like education, infrastructure and medical resources for the poor and disabled?

On the same day the Post ran Mondale’s Op-Ed, the Pioneer Press ran the results of a national McClatchy-Maris poll, which found: “Americans clearly don’t want the government to cut Medicare.”

A few days earlier, an AP poll found “54 percent of taxpayers believe their tax bills are fair.” It went on to say that “…voters by a margin of 2-1, support raising taxes on incomes above $250,000, with 64 percent in favor and 33 percent opposed.”

Yet, a vocal segment of Minnesotans take every opportunity to say: “Don’t raise my taxes, I already pay too much.” Many of the newest elected policymakers seem to feel they were elected specifically to prevent any tax hike.

So what is the fair way to raise revenue for these services?

Having just completed my 2010 income taxes, I decided to examine my own situation for any insights on this issue. To compute my cost of living in Dakota County and the State of Minnesota, I added my county and state taxes before dividing the total by 2 (my wife and I), then by 365 days, and finally by 24 to get to an hourly cost. I pay 48 cents an hour in taxes. Unfortunately, this does not answer the question: I am paying too much?

I then considered what I have access to as a Minnesota citizen and came up with a quick list of public services that included: roadways, railways, mass transit, and river transportation; education; beautiful parks and trails; social, human, and long-term care services; police and fire protection; local jails and state prisons; and local and state courts, just to name the those most widely known.

It seemed like a “good deal,” but is it?

I then identified my top nondiscretionary living expenses: my home, healthcare, and transportation and ran these totals through the same calculation. I pay 94 cents an hour for my home mortgage and insurance, 63 cents an hour for my health care copayments and deductible expenses, and 26 cents an hour for my car payment and insurance. Comparing my hourly tax expense against these other three hourly expenses answered my question: I am not paying too much in taxes.

A May 5th McClatchy News story, citing nonpartisan Congressional Budget Office (CBO) data, confirmed my tax conclusion. What a relief! Here it goes:

  • “all income classes paid lower effective tax rates in 2007, the last year of complete IRS data, than they did in 2000;”
  • “the highest 20 percent of tax filers saw their total average federal effective tax rate fall from 28 percent in 2000 to 25.1 percent in 2007;” and
  • “for the wealthiest 1 percent of filers, the effective tax rate fell from 33 percent in 2000 to 29.5 percent in 2007.”

The article provides another perspective from the Commerce Department's Bureau of Economic Analysis that goes back to 1929. Under this calculation “Americans on average saw 17.3 percent of their income go to federal taxes in 2009 and 2010. The last time the percentage was this low was 1975, and during the late 1960s. If you exclude social insurance taxes on wages—for Medicare and Social Security—the share of taxes as a percentage of income drops to 9.4 percent in 2009 and 9.3 percent in 2010, the lowest since 1950.”

Governor Dayton’s proposed tax increase creates a fourth-tier rate that would apply to about 42,000 tax returns (two percent). Because the wealthy can buy anything they need or want, isn’t it time we focus on the other five million citizens that live in the state and stop making them do with less?

It seems most of my fellow citizens agree. In a Star Tribune poll and accompanying reports by Baird Helegson, 63 percent of the respondents favored a blend of higher taxes and service reductions to tackle the budget deficit with only 27 percent wanting the budget balanced solely through cuts.

Governor Dayton’s budget counts on approximately $1.8 billion from the new fourth-tier tax rate and the data earlier in this editorial validates this is clearly warranted. To this, I would be happy to kick-in an additional two cents an hour ($175 a year), bringing me to an even 50 cents an hour for being a citizen of this great state. If every Minnesotan 18 – 65 years old did the same, we could raise another $585 million and, together with Dayton’s plan, account for nearly $2.4 billion of the budget gap, leaving $1.2 billion to come from budget cuts.

Seems like an appropriately balanced solution to me.

It is time for the legislature to listen to the citizens and fairly consider the facts so that a balanced solution can be negotiated and the budget passed without an extended special session and/or government shutdown. I believe that a safe home, sufficient food, adequate health care, and a decent education or meaningful work are essential aspects in people’s lives that no one would voluntarily give up and should not be denied to others. As Mondale said—“We are better than that”—and we have a choice to either make those who are most disenfranchised pay the price or consider this a moment of grace in considering the needs of fellow human beings that live in our state.

John Wayne Barker is executive director at Merrick, Inc, a private, nonprofit service provider empowering adults with disabilities through vocational and social opportunities. This is a revised version of Barker’s full editorial, which appeared on Merrick’s website.

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