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Tuesday Talk: What’s the best tax reform?

November 27, 2012 By Joe Sheeran, Communications Director

Cyber Monday reminds us that online businesses enjoy a sales tax loophole, putting traditional Minnesota bricks-and-mortar stores at a disadvantage. Tax fairness means fairly sharing the tax burden. As our purchasing habits change, sales tax policy needs to catch up. We’re hurting ourselves when we ask traditional Minnesota businesses to do more than we ask of online, non-Minnesota businesses.

What’s the best sales tax reform for Minnesota?

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27 Comments:

  • John Crampton says:

    November 27, 2012 at 8:53 am

    Make people pay sales tax on online purchases.  Why should these retailers get an exemption from charging sales tax when other retailers have to charge it?

  • Ron Leurquin says:

    November 27, 2012 at 9:07 am

    Whats wrong with MN charging sales taxes on internet purchases?  I know there are some logistics involved, but its been going on for a long time now.

    I can remember as I was growing up seeing various taxes that had to be added to a catalog purchase based on what state you lived in. If its fesable to be done with catalogs (yeah, Iknow, the dark ages) why cant it be done now with internet purchases?

    I wonder tow things in this matter:
    1. What could our sales tax rate actually be if taxes were collected on all internet purchases?  More taxes COULD mean a reduction in the rate.
    2. What would some other tax rate need to be rased to for us to get rid of the sales tax, and what tax or taxes might we raise to do that?  This based on the idea of being revenue neutral for the state.

    Looking forward to the comments on this thread.  Its a great question, and one weve put off dealing with for a long time now.

  • Rob says:

    November 27, 2012 at 9:23 am

    I have chimed in to MN 2020 for years with the same message - raise taxes a lot on the rich. Nice to see the conversation coming around. We should raise taxes on the top few percent to around 50 percent. If raising taxes to 39 percent will raise 2 billion over ten years, quadruping the increase should raise around 8 billion. This would solve all of our revenue problems, while keeping taxes low by historical standards. The mega-rich will just have to find a way to scratch out three meals a day.

  • W. D. (Bill) Hamm says:

    November 27, 2012 at 10:42 am

    The answer to our budget problems is simpler than it seems. Minnesota no incarcerates the highest percentage of non violent drug users of any state in the nation, in a nation that incarcerates the highest percent of it’s population of any so called civilized nation on the planet. Proffesor Angela Davis of the Calfornia University system has carefully documented how this has stolen vast amounts of funding away from education and healthcare. To make this a lot clearer, the cost of persecution, prosecution, and incarceration are sucking one half billion dollars a year out of our economy. The taxes, license fees, and sales tax we are losing is approximately anouther half billion dollars. Ending the profiteering partnership between drug dealers and public employee’s unions is all we need to do the balance the budget without sckrewing up our economic base.

  • Bernice Vetsch says:

    November 27, 2012 at 10:42 am

    I agree that taxes need to be raised on the rich, both nationally and in states like ours who have been victims of the Grover Norquist inanity.  In Minnesota, it has severely distorted a workable and fair system of revenue by transferring so much of the burden of taxation to property taxes.  It’s time to recover.

    In Minnesota, we have to return to a truly progressive income tax; to fully restore LGA so cities, towns and counties can provide both services and infrastructure without having to raise property taxes; to then lower property taxes; and, yes, to lower the rate of sales tax and make internet purchases (and possibly services) subject to the tax.

  • carl brookins says:

    November 27, 2012 at 10:46 am

    Perhaps by instituting sales taxes on Internet sales, Minnesota could reduce the overall tax rate. Somebody in state government should look at that. All tax questions should be examined. Too many politicians fragment their comments in order to play to their perceived galleries.
    Payroll and property taxes are part of the total picture, as are the numerous levies charged for schools and similar needs. 
    The state should pass a law making it illegal for state and federal legislators to sign anti-tax or other pledges in return for support or non-opposition.

  • ChristeenStone says:

    November 27, 2012 at 11:34 am

    I agree the on line purchases should pay the same state tax as for other businesses.
    I also think we should have a luxury tax on big items that are are for the rich
    such as luxury cars, boats etc. I still firmly agree that the Rich got there by
    their ability to not be forced to pay living wages to those who made it possible for them to accumulate their wealth. Walmart is just one good example of that greed. Workers who are so under paid they have to get their health coverage through medicaid and we the tax payers are paying the bill. I know there are others, but part of my family still live in Arkansas and many of the younger ones can only find work there at Walmart and Tyson Chicken Farms for very low wages and benefits. We the Tax payers are picking up the tab.
    I am thankful for our Unions who have fought so hard to get FAIR PAY and Benefits for the working class. Where would America be with out their struggle for FAIRNESS??

  • Ron Leurquin says:

    November 27, 2012 at 11:45 am

    Wow, not much chatter on this issue.  Really thought there would be more.

    While its easy to get on the tax the rich more bandwagon, and I do beleive thier taxes need to go up; i dont think that alone is the solution.

    We need a better tax structure with no loopholes to avoid taxes.  Deductions should only be allowed for those things we truely want to promote.  So maybe its taxes and interst paid on your primary residence, and maybe on some sort of sliding scale so higher income people gain less from morgaging thier homes.  Do we want to promote higher education?  Then allow some or all tuition to be deductable to a certain level.  Do we want people to have savings? Then allow some form of interest deduction up to a certain level of savings.  Should capitol gains from stock sales be treated with the kid gloves we now do?  Personally I think no, its not the person recieving that gain that actually worked for it.  Do we think eeryone should pay income taxes?  Or maybe not pay income taxes untill you at least reach the poverty level?

    Just taxing the rich more will not solve our problems long term, but it will help a lot.  There are other tax issues that need to be fixed as well, perhaps corporate taxes and deductions should be given a major overhaul?

    Just babbling now, so will shut up.  come on people, chime in here.  There are a lot of good thinkers out there that do post on here, where be you all today?

  • Rob says:

    November 27, 2012 at 1:12 pm

    Corporate taxes are much too low. They generate historically low revenues, much like the top two percent of individuals. The average American gets far less bang for the buck than most of Europe. We are getting royally screwed by the rich, with the help of the inept or enabling media - the Star Tribune and KSTPs Tom Hauser are my favorite local failures.

    By raising taxes on the mega-rich and corporate America, we - the richest country on earth - can live as well as much poorer nations in Europe. We are nuts to put up with this.

  • Wayne Thorson says:

    November 28, 2012 at 1:59 am

    If they would put a 1 cent tax on every pull tab and lottery ticket sold they would have the deficate paid for in no time. People in Nevada don’t pay taxes at all due to the gambling taxes from what I understand. The best part I can’t think of anyone that would be against it.

  • Bernice Vetsch says:

    November 28, 2012 at 9:58 am

    I have to disagree with you, Wayne.

    While many people buy lottery tickets or otherwise gamble do it for fun, knowing the odds are a kazillion to one that they will ever win a large amount of money.  The poor, however, often gamble every week, betting against those same odds, in the vain hope that they will be one of the infinitesimal number of betters who will actually win more than a small amount.

    The State is already the beneficiary of much of the proceeds from gambling.  Adding a tax to what might already be considered a voluntary tax would add to the burden of the poor.

  • Wayne Thorson says:

    November 28, 2012 at 12:40 pm

    Bernice,  I fail to see your point.  What has a 1 cent tax on pull tabs have to do with the less fortunate people?  The taxes now paid on every lottery ticket and pull tabs is now just going to special interest groops and not the less fortunate.  If you go into any backwoods bar at 10 P.M. at night the floor is full of pull tabs.  Look at the number of lottery tickets sold this week. They are selling over a million an hour.

  • W. D. (Bill) Hamm says:

    November 28, 2012 at 1:10 pm

    Wayne,attacking gamblers with additional taxes is not going to cover the cost of that stadium let alone fix the states budgetary problems. The same is true of sales tax, picking up those sales that don’t charge MN sales tax, while helpfull, is not going to fix our deficiet. Both of these solutions disproportionately attack the poorest of our people which is exactly what the rich and middle class are good at agreeing upon. End the Racist Drug War rednecks and we will again have the moneys we need to fix education. PBS has a very good piece by Angela Davis it has been running for those who won’t believe me. Michelle Alexander’s book, “The New Jim Crow” is a must read for those who refuse to recognise modern Racism in America.

  • Bernice Vetsch says:

    November 28, 2012 at 3:53 pm

    A lot of the money poor people have spent on pull tabs, et cetera, will now go instead into electronic hand-held gambling machines of some type (I don’t recall what kind of game).

    The income from these devices will go to pay the state’s share of the $900 billion football stadium poor people will never be able to afford to buy tickets to.  Not to mention prime-rib-priced beer and a hotdog.

  • Wayne Thorson says:

    November 28, 2012 at 4:54 pm

    Bernice,  I wish you would address my suggestion rather than talk about a whole lot of other things. I never mention a stadium or pull tab machines. My point is to charge a 1% sales tax on every pull tab and every lottery ticket sold.  This could be paid for by lowering the winnings.  They will still sell because people would say I’m trying to pay down the countries deficit.  I would like to hear from someone that can give me a good reason not to do this.

  • Wayne Thorson says:

    November 28, 2012 at 5:00 pm

    Bill,  would you please address my suggestion by finding some fault with taxing every pull tab and lottery ticket sold. A 1% tax was suggested.

  • Bruce Kittilson says:

    November 28, 2012 at 5:02 pm

    We need a complete restructuring of our tax system.  One of the main elements of the change should be the elimination of all sales taxes.  Only income, of all types, should be taxed.  We are smothered in systems we neither understand nor control.

  • Bernice Vetsch says:

    November 28, 2012 at 5:14 pm

    I don’t recall your saying that the tax could come out of the winnings, Wayne.
    That would, of course, be a better way to collect the tax than to have each buyer of a chance at the big win pay a sales tax at the time of purchase, which is what I assumed.

  • W. D. (Bill) Hamm says:

    November 28, 2012 at 6:54 pm

    It’s pretty simple Wayne, your proposal attacks the working poor the most as they are predominantly the ones buying those tickets. What’s next, taxing anything with high fructose corn syrup. Perhaps we should raise the price of cigarrets even futher, (we have already created a multi million dollar black market that brings in no taxes). Oh yes then there are those alcohol drinkers, let’s dig deeper into their pockets. Your willing to go after anyone rather than create an honest and fair tax system. The time for fairness is now.

  • Wayne Thorson says:

    November 29, 2012 at 5:04 am

    Bill, I don’t know how you can twist my words arround like you have.  There is no way the poor people would pay more taxes.  You pay 1 dollar for a pull tab and then a certain per cent goes to the bar, a certain per cent goes to special interest groups,  a certain per cent goes to the govenment and the balance goes to the mafia that is running the operation. Just take 1 per cent from the mafia and give it to the government. Bill if I am still talking way over your head I apologise

  • W. D. (Bill) Hamm says:

    November 29, 2012 at 9:16 am

    What part of gimick don’t you understand Wayne? Gambling is a reggresive tax by itself as others have pointed out to you and you want to dig deeper into their, (the gamblers), pockets still. Every penny you take out of gambling comes out of their pockets not the mafia’s, they are going to make their profit. We need a fair and just tax system not more attacks on the poorest segments of our society to save your middle class or some rich buddies backside. How have I twisted your words again?

  • W. D. (Bill) Hamm says:

    November 29, 2012 at 10:05 am

    If the goal here is to get more money out of the existing sckrewed up tax system than let’s start in traffic court. It is long past time to tie fines to income. All fines should be based on percentage of last years taxable income so the actual pain felt is eqaulized. Right now here in Minnesota those of us below median income level are being consistently gouged deeper than upper incomes because those in upper incomes can afford an attorney and plea bargin fines and punishment down. If for instance the rich guy who gets a DWI is looking at 10% of his last years income instead of a measly $1000 dollar fine, the counties can now afford to prosecute him instead of cutting a deal with his attorney because it’s too costly to prosecute him. Not only will this bring in a great deal more income but it will give those public employee police officers the incentive to equally apply the law to all income levels.

  • Wayne Thorson says:

    November 29, 2012 at 10:46 am

    Bill, Obviously you don’t want to address my suggestion at all. You don’t understand my explanation at all.  If you did you would see it has nothing to do with the have nots and all to do with haves.  If you don’t want to look at the money it would generate to the government and address that I can’t help you understand any more.  It 1 cent out of every dollar spent on pull tabs and lottery tickets went to the government it would pay off the deficit in no time.  Whether you realize it or not gambling is a big business in this country now.  Anyone that’s going to gamble is going to gamble no matter what.  Let’s take some of the profits out of the mafia’s hands and give it to the government. There are millions of tickets sold every day.  This is an untapped resourse .  Let’s try to be a problem solver instead of a problem maker.

  • W. D. (Bill) Hamm says:

    November 29, 2012 at 5:34 pm

    I understand your purpose ver clearly Wayne but much like all Corporaye taxes you seem to miss the point that buisnesses don’t pay those taxes consumers do. In your imaginary world we could dip into the Mafia or Coproations pockets, in the real world I live in we pay that increase not them and until you can find a way to keep them from simply sliding those taxes downhill to the consumer, let’s get real in this discussion. As for not wanting to look at real solutions, you haven’t addressed any of the proposals I put forth but have only concentrated on your obsession with gambling which will never come close to solving our budget crisis.

  • Wayne Thorson says:

    November 30, 2012 at 9:15 am

    Bill, you have been following my thread I haven’t been following yours. I wish you would get off my thread if you don’t have something intelligent to say.  My guess is that you watch fox news too much. Your brain is malfuncioning.  I don’t care to hear any more of your screwed up inuendows. So please get on someone elses thread. Thank you.

  • W. D. (Bill) Hamm says:

    November 30, 2012 at 10:52 am

    That’s quite a tirade there Wayne, guess truth struck a negative cord with you. Your insults amuse me as even they lack substance. I have responded to every detail of your “Pass the Buck” phylosophy to stick the other guy with your share of taxes simply because he or she exhibits poor judgement by gambling. You on the other hand have not. I am sure glad you will not be on the DFL tax committee in either the House or Senate. Come back to the discussion when you have a real “Tax Reform” proposal instead of another distraction that solves nothing but continues to protect your favorite loopholes and deductions.

  • Rachel says:

    December 3, 2012 at 5:02 pm

    Thanks for participating guys! This was a great discussion.

    Swing by tomorrow to share your thoughts on campaign pledges, the fiscal cliff, and no-new-taxes.