It’s nothing new. Governor Dayton hasn’t been shy about his desire for more state spending and higher taxes – even if neither is necessary. It almost seems like a programmed response, where higher taxes and more spending aren’t desired for any particular outcome, but rather, just for the sake of more spending and more taxes.
Just over a year ago, Minnesota Majority produced an ad to demonstrate the governor’s mechanical drive towards “More Spending, More Taxes,” even when economic and political realities flew in the face of that unjustified idea. If we lived in a perfect utopia where every family was prosperous and secure, and the insatiable state government was somehow content for a moment, Governor Dayton would likely still call for “More Spending, More Taxes.”
Flash forward two and a half years to some key items in the governor’s latest budget proposal:
Governor Dayton has proposed to “reduce” the sales tax rate to 5.5%, but extend the sales tax to clothing and numerous services that aren’t currently taxed, including business-to-business services.
The (perhaps) unintended consequences will be:
Everyone will pay more sales tax, even though the rate is reduced. The sales tax “restructuring” scheme will actually increase sales tax revenues by $2 billion dollars. That’s not a tax cut! The proposed lower rate is an illusion designed to make taxpayers think they’re getting a break, when in reality, we’ll all be paying more. The lowest income families will be hardest hit by this measure. Home owners get a $500 per year tax credit, though.
A tax on clothes could wind up backfiring. The Mall of America is an international tourist destination that attracts significant, taxable revenue from around the world. A lot of people come to Minnesota and spend a lot of money here, specifically because the mega-mall offers high-end retail clothing without sales tax. Taxing clothes will almost definately reduce corporate income tax returns, lead to more laid-off workers who are collecting unemployment instead of paying income taxes and reduce taxable revenues in other sectors – hotels, transportation, bars and restaurants and more.
Taxing business-to-business services is a stealth tax that most people won’t notice directly. When businesses raise their prices to cover the hike, the business will be blamed, but the real reason will be new, higher taxes that get built into the cost of goods and services.
Governor Dayton has proposed nearly a $1 per-pack tax hike for cigarettes – something he’d previously promised not to do, because it’s “regressive” and falls hardest on families with low incomes. On the campaign trail, Dayton said, “You raise the price of a pack of cigarettes…that’s money out of the pockets of working people and poorer people, and that means kids don’t have as much to eat or have the same quality of food.”
Dayton has been on a crusade to make the “rich pay their fair share,” but apparently governor Dayton thinks anyone who earns any money at all is rich. With cost and wage inflation, his proposal to tax individuals earning $150,000 a year or more at the highest rate in the nation, at 9.85%, he’s striking awful close to the middle class, and setting the stage for an exodus of both wealth and job-creators, to other states with lower income tax rates.
When the producers flee to more advantageous (and likely warmer) states, state government will have no choice to but to raise the tax burdens on lower-income, less mobile workers to keep funding the ever-expanding state budget. To see the results of these tried-and-failed policies, look to the bankrupt, hollow shell that Detroit has become. Do we want to import poverty and broken cities to Minnesota?
To make matters worse, the governor’s budget increases state spending by $5 billion, but only raises a little over $2 billion in revenue, setting the stage for continuous deficits, and government shut-downs.
Contact the governor and your legislators and tell them what you think of Governor Dayton’s irresponsible budget plan. Minnesota must live within its means. Deterring business, taxing basic services and hitting the poor is not a plan to improve Minnesota’s future. Raising government revenue without taking a serious look at cutting out waste and fraud during our current economic downturn is irresponsible and needless. Click here to quickly and easily send your messages.