As the state's political leaders stare down a government shutdown, Democratic Gov. Mark Dayton is repeating that his plan to raise taxes - a cornerstone of his budget proposal - would affect very few Minnesotans.
"[My plan] only raises taxes on the wealthiest 2 percent of Minnesotans and does not raise a single dollar of income taxes or any property taxes on the other 98 percent of Minnesotans," he said during a press conference in response to a new GOP plan.
Dayton's right that few people will feel the brunt of his tax plan.
Dayton's proposal would create a new 4th income tax bracket that would impose a 10.95 percent rate on single Minnesotans making more than $150,000, heads of household making more than $200,000, and joint filers making more than $250,000 annually - all after deductions.
According to the state revenue department, about 2 percent - or 45,440 of the state's roughly 2.4 million filers - would pay Dayton's new higher income tax rate.
Everyone else would see no change in their income taxes. And at this point, Dayton's plan doesn't alter state property taxes, nor does it cut city and county aid, which can lead to local property tax increases, so he can claim that his proposal won't increase property taxes, either.
But here's the part Dayton leaves out: his plan also expands and increases the sales tax on some products and services, including box seats and suites at sports stadiums, admissions to events such as car and home shows, and charges for digital video recording and satellite TV, among other things.
Dayton's plan also proposes increasing corporate taxes, which the revenue department predicts will trickle down to Minnesota residents.
All together, these new taxes would affect everyone, rich and poor. But the impact would be very small - less than a 1 percent increase for most consumers. For instance, if you make $85,000 annually, you're probably paying in the range of $1,300 in sales taxes every year. Dayton's plan would add an additional $8.50 to that.
For the most part, Dayton's plan doesn't weigh much on most Minnesotans. And while he doesn't mention that everyone will see a slight uptick in sales and corporate taxes under his plan, he is right that most Minnesotans would not see a property tax increase or an income tax increase as a result of his budget plan.
Dayton's claim gets an accurate.
Gov. Mark Dayton, June 16, 2011, press conference
The Minnesota Revenue Department, Tax Incidence Study of the Governor's Tax Proposals, June 8, 2011
Minnesota Management and Budget, Supplemental Budget Update #1, March 21, 2011
Wow, truth from a politician, how refreshing. What is the rating on the Gop's rhetoric?
Health Care providers were assessed a 2% gross tax to provide for MN Care a number of years ago. It is a designated fund. When Gov. Pawlenty was in office he raided the fund for other things.
The GOP didn't get negative about this tax. And Health Care Providers did not leave MN. Do people who earn in the top 2% in MN have a different world view?
Dayton's quote on who will initially pay his proposed taxes might be accurate. However, Catharine Richert is wrong to conclude that "few people will feel the brunt of his tax plan." If an economist were to polygraph the PolyGraph, Richert's statement would at best be labeled misleading. I would go so far as to label it false. Just because the rich are paying the tax doesn't mean they shoulder the burden. Burdens have an unfortunate way of shifting to the least fortunate. Last week, I explained how the burden of Dayton's tax plan will shift to low- to middle-income Minnesotans in a column at MinnPost (http://tinyurl.com/3nfvgjm). I co-wrote the column with John Spry, a professor in the department of finance at St. Thomas University.
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