Commentary; Posted: 5/9/07
Target state taxes on ability to pay
As the legislative session nears its end and the budget battle intensifies, compromises between the DFL-majority in the Minnesota Legislature and Gov.Tim Pawlenty are a must.
The majority of the strife centers around the Legislature’s proposed tax increases to fund a budget that Democrats say will get the state back on track. The governor counters that the budget figure is bloated.
The rallying on both sides continues.
Individual legislators used the Easter break as a time to stump for increased funding for programs via tax increases. The governor meanwhile took to the radio waves urging Minnesotans to call their local representatives and urge them to vote against any new taxes.
Included among the proposed tax increases are a gas tax increase, an alcohol tax increase and an income tax increase for the wealthiest Minnesotans.
While not all of these taxes are likely to pass, the income tax increase must go through. Simply put, it is an important step toward fair taxation and easing the burden on local funds.
Perhaps most important, the increase would provide badly needed special education funding for school districts which are currently spending millions of dollars to finance the program. The increase would also keep existing programs at their current level.
According to the Minnesota Department of Revenue, households earning between $45,000 and $105,000 pay 12.3 percent of their income in state and local taxes. But as the income figure raises, the percentage paid in taxes drops.
Minnesotans who earn over $105,000 pay 10.9 percent and for the wealthiest Minnesotans, those earning over $335,000, the number dips again, down to nine percent. If income tax is regarded as one of the most fair taxes, why isn’t it being treated as such? Why aren’t we funding statewide expenses through fair taxation practices? Why can’t that money be used to aid special education programs?
Opponents of the plan will argue that the rich already pay the majority of the taxes. But they also earn the majority of the money and pay less percentage-wise on what they do earn than their fellow citizens.
Instead of asking wealthy Minnesotans to pay their fair share, special education costs and other financial burdens are being placed too heavily on local taxes, particularly property taxes.
The Minnesota Citizens for Tax Justice states that residential property taxes have increased $1.4 billion since Pawlenty took office. That is $866 per household.
Democrats point out that the income tax increase would strongly link taxes with the ability to pay, all while providing property tax relief. “Anyone who pays more than two percent of their income in property tax would get a refund from the state,” Rep. Paul Marquart, DFL-Dilworth, said.
Marquart added that the changes to the income tax system would allow most homeowners to see their 2008 property taxes reduced to below 2007 levels and that’s something everyone could appreciate.
Taxing wealthier Minnesotans on a par with those in the middle class would raise $452 million over the next two years with funds providing additional revenue for roads, education, particularly special education and property tax relief. Experts estimate 90 percent of all Minnesotans would feel property tax relief from the increase.
As we look to the future for ways to continue to fund our roads, our schools and our communities, doing so with a tax structure based on one’s ability to pay provides the best compromise for all Minnesotans. — An opinion from the ECM Editorial Board. The Forest Lake Times is part of ECM Publishers, Inc.
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