Once upon a time, the United States amended its Constitution so as to allow Congress to implement an income tax. This bill of goods was sold with the understanding that such income taxes would only be applied to the rich. It only took a few years for Congress to use the 16th Amendment to go from taxing the rich to taxing every working American. The same is true when the state of Minnesota changed its own state Constitution to allow for its own income tax plan.
Now, in the state of Minnesota, which has realized some $2 BILLION in tax surpluses, that's where the amount of revenues received exceeds the budget, the Leftists now in control of both legislative houses are planning to not only spend the extra $2 Billion, but also increase taxes so as to justify spending an additional $800 Million.
Their plan to pay for it all includes another "soak the rich" scheme, claiming that the new upper bracket income tax would only impact people above a certain income threshold.
Welcome to Minnesota! Warning: Liberal Leadership at Work!
According the Red Star Tribune's editorial on the matter, this really isn't soaking the rich, merely demanding, I mean asking, that the rich pay their fair share of taxes. Sales taxes, are, in their opinion, not "progressive" enough.
Among the state's major taxes, Stinson says, the personal income tax isn't the underperformer. The sales tax, corporate income tax and business property tax are the slow-growers, relative to growth in the economy. They're regressive to boot. They fall harder on low- and middle-earners than on the wealthy.
First, sales taxes are not regressive, nor do they unfairly hit low- and middle-income earners more than the wealthy. Sales taxes (and their sibling, excise taxes) hits all consumers at the same rate. In Minnesota, food and clothing are not subject to sales taxes, which is where most low- and middle-income earners spend their money. It is, as it should be, neutral in how it is applied to whom. Wealthy people may spend more on consumer goods, even buying more expensive cars (like Mercedes-Benz) than the rest of us, and pay more sales taxes. There is a serious problem with sales taxes, and that is using it, as is being done in Hennepin county, to provide welfare to billionaires who own professional sports teams, and provide these super-rich athletes a place to earn their living at taxpayer expense. Sales taxes are not regressive as the Red Star Tribune would have you believe, but are flat tax rates, and based on how much is spent on taxable consumer goods.
As for property taxes, those are also not regressive. Relaitviley flat in nature, everyone in a given community is taxed on their property at the same tax rate, whether it is 1% of valuation or some other fraction. Nothing regressive about that.
Now, if we were to say that everyone pays the same amount in actual dollars, say $10,000 per person, regardless of their personal income, then that would be a regressive tax. A flat tax rate, say 5% of income (or a 6% sales tax rate on what you consume), would mean that the more you earn (or spend) compared to other people means the more in taxes you will pay. In other words, using the income tax example, if everyone paid a 5% income tax rate, regardless of income, a person making $100,000 per year would pay $5,000 in income taxes whereas a person earning $20,000 per year would pay $1,000 in income taxes. Same principle holds true with sales taxes and property taxes; the more you spend (or higher your property valuation), the more you will pay.
Increasing income taxes will not solve Minnesota's budget woes (as if, with a $2 Billion dollar surplus, there could be any woes). All it succeeds in doing is taking money from hard working Minnesotans, reducing their standard of living and enjoy the fruits of their labor. It will also reduce the amount of money available for investment that will spur economic growth with all of its additional benefits, including greater tax revenues.
Although taxation is necessary to provide for the common good (law enforcement, judicial systems and a few other state/local functions), it should never be so excessive so as to violate our rights to Life, Liberty and the Pursuit of Happiness, and a $3 Billion increase in spending, with its accompanying increases in taxes, will do just that. If anything, the Minnesota State Senate and House should be devising plans to return the $2 Billion dollar surplus to the working Minnesotans that made that abundance possible, and work towards being responsible custodians of the public trust, reducing, not increasing, taxes.
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Star Tribune Taxes Minnesota
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