Archive for the ‘Tom Bakk’ Category
This article is fantastic news for Minnesotans:
DFL legislative leaders say plans to raise the gas tax for road projects and a metrowide sales tax for transit projects are dead for the year. “I would say they’re probably both dead,” said DFL Senate Majority Leader Tom Bakk.
Senate leaders have been pushing to increase the gas tax to pay for additional road and bridge projects. But historically high gas prices and opposition from Governor Dayton has proved too big of an obstacle.
There’s still next year but that’ll be a tricky subject. Will the DFL want to raise more taxes heading into an election year? Speaker Thissen’s statement is interesting:
DFL House Speaker Paul Thissen suggested there was discomfort in raising gas and sales taxes at a time when they’re also raising other taxes to balance the budget and spend more on schools.
That’s an interesting statement considering the fact that the DFL insists that they’re only taxing the rich. If the DFL Tax Bill is only taxing the rich, a gas tax increase wouldn’t be an additional tax on the middle class. Likewise, the metro-wide sales tax wouldn’t be a major addiotional tax.
The bad news is that Gov. Dayton, Speaker Thissen and Senate Majority Leader Bakk have agreed to a new Tax Bill:
Although a new fourth-tier income tax rate on the state’s highest earners has been part of the mix since the start of budget negotiations, it has been unclear until tonight what that rate would be, 9.85 percent. That is higher than the House’s original position of 8.84 percent and lower than the Senate’s proposal of 10.7 percent. The 2 percent surcharge on those taxpayers to pay off the money the state owes the schools has been dropped. Gov. Mark Dayton said that money will be allocated this biennium toward a payment, and he expects to have the debt paid off during the next biennium.
While new taxes on alcohol have been dropped from the bill, cigarette smokers are likely to pay about $1.60 a pack more, a House position. Additionally, smokers could be subject to new taxes announced today to fill any funding shortfall to pay the state’s share of the stadium for the Minnesota Vikings.
Right now, 19% of cigarettes sold to smokers come from the black market, the internet, other states or gaming casinos. When this cigarette tax increase goes into effect, 30% of cigarettes will be sold through the black market, the internet, other states or gaming casinos. Meanwhile, convenience stores will lose customers, which will result in smaller profits and fewer jobs.
Simply put, this cigarette tax will shrink cigarette tax revenue to the state because people will change their buying habits.
Further, the income tax increases will be stifling. In addition to the higher tax rate, small businesses will get hit with fewer deductions and a sales tax increase will be levied on warehouses, electronic repairs and telecommunications.
Finally and most importantly, the DFL’s tax increase and their budget won’t strengthen Minnesota’s economy because it only focuses on the middle class. This budget hurts businesses. You can’t be create jobs if you hate the employers. It’s that simple.
This article is the article everyone’s expected since Election Night. Unfortunately, it isn’t the article we’d been hoping for.
Thissen, Gov. Mark Dayton and Senate Majority Leader Tom Bakk of Cook said they agreed on spending targets and will give conference committees a few other guidelines, such as:
- The sales tax would not rise on consumer goods, including clothing, but businesses could pay sales tax on goods sold to other businesses.
- Income taxes would go up on people in the top 2 percent of Minnesota earners, couples with $250,000 or more taxable income.
- An income tax surcharge would be added for Minnesota’s richest of the rich, with proceeds going to help repay money the state has borrowed from school districts.
- Cigarette taxes would rise.
- Some business tax breaks would disappear.
- All-day kindergarten would be funded.
- The state would spend $400 million in property tax relief, such as by increasing aid sent to local governments.
Thanks to this agreement, companies will leave Minnesota. Businesses staying will get with multiple tax increases. Businesses will get charged sales taxes on services. Additionally, they’ll get hit with higher income tax rates. That’s bad enough but that isn’t all. Current deductions will get eliminated, too.
Why would a business stay in Minnesota and absorb all those tax increases in a single year? The simple answer is many won’t.
The supposed property tax relief is a mirage. When liberal mayors get their increased LGA checks, it won’t go towards property tax relief. It’ll go towards increased spending. That isn’t a prediction. It’s noting what’s happened in the past without fail. Anyone that thinks Chris Coleman won’t increase spending on things that aren’t necessities isn’t paying attention. He’s done it in the past. He’s a creature of habit. He’ll do it again.
The three Democrats said middle-income Minnesotans would not pay more taxes other than for cigarettes. But when reporters pushed him on the subject, Dayton said that some of the business taxes could trickle down to consumers in higher prices.
Whether it’s in the form of a direct tax increase or it’s in the form of higher prices charged by businesses who’ve gotten hit with a tax increase, the net effect is that the middle class will get hit with higher prices, leaving people with less money to spend on the things of their choosing.
Most importantly, this budget won’t strengthen Minnesota’s economy. The best outcome we should expect from this budget and these policies is that it won’t hurt the economy too much. Fewer jobs will be created as a result of the tax bill. Company profits will be significantly smaller. People will have less disposable income thanks to the energy bill that’s about to get signed.
Gov. Dayton has sent out emails touting a “better budget for Minnesota.” That’s what we deserve. Unfortunately, the DFL has seen to it to give us this budget, which doesn’t strengthen Minnesota’s economy.
When people read Baird Helgeson’s article, it’ll be easy for them to picture a DFL nightmare in 2014:
With 19 years at the Legislature, the last 10 in the Senate, Bakk is betting his political currency on a proposal that would reach far beyond the governor’s tax-the-rich approach. Bakk not only would extend the sales tax to clothing and some consumer services, his income tax hike would reach down into what many would consider the middle class. In addition, he’s seeking a politically unpopular pay raise for lawmakers, the governor and agency heads.
That’s a disaster in the making. Raising taxes on business services wasn’t popular before. That’s why Gov. Dayton dropped them. Raising income taxes on the middle class is a political nightmare. Imposing a sales tax on auto mechanics and tax preparers won’t be popular.
At this point, DFL senators must be losing confidence in Bakk’s leadership abilities. This is why:
Bakk’s soaring political currency took a body blow this week when the DFL-controlled Senate got caught by some shrewd, last-minute GOP vote-flipping and failed by a slim margin to pass its own tax bill.
A grim-faced Bakk called DFLers into a closed-door meeting. When they emerged, they had cobbled together the needed votes. But the momentary defeat served as a flustering chastisement for Bakk and one that may weaken him as he enters final negotiations with Dayton and Thissen.
Simply put, Bakk, Rest, Eaton and Koenen couldn’t even count to 34, the number needed to pass the Senate Tax Bill, aka the biggest bill they’ll pass all year.
Question to taxpayers: Do you want someone writing budgets when they can’t count to 34?
Senate Democrats say they have never seen Bakk resort to arm-twisting. Even the governor’s staff say he is known for sitting in important meetings, absorbing what is being said by all sides and not saying a word.
That being said, Capitol insiders have told me that Sen. Clausen and Sen. Hoffman were told that they’d be changing their votes so the bill would pass. That isn’t arm-twisting. It’s just giving them orders.
Sen. Bakk’s insistence that a middle class tax hike be part of the final Tax Bill is outright stupidity from a political standpoint. The GOP will beat the DFL over the head with that during the next campaign. Gov. Dayton will have to defend it if he signs it. House candidates will have to defend it if they vote for it.
Bakk’s senators won’t have as much to worry about because they aren’t up for re-election until 2016. Still, campaign committees have long memories. When they’re up for re-election, campaigns will remind voters that they should thank the DFL for insisting on a middle class tax increase.
That’s how political nightmares start.
Sen. Bakk and other numerically-challenged DFL senators are attempting to blame Republicans for the initial defeat of the tax bill:
Sen. Bakk should be embarassed by Monday’s initial vote. His whip team couldn’t count straight. When Sen. Rest said that she was busy counting votes and forgot to vote, red flags went off. That’s because she isn’t part of the DFL Senate Whip team. Lyle Koenen and Chris Eaton are the Senate DFL whips.
If Sen. Bakk can’t even assign these basic functions without his leadership team getting confused, then he’s inept. Counting votes isn’t that difficult. It’s the DFL’s responsibility to pass bills. With the exception of Sen. Senjem, who voted for the bill because of the money for the Mayo Clinic expansion, Republicans voted en masse against the DFL’s middle class tax increases.
The next thing I expect to hear from Sen. Bakk and their allies is that their awful policies are the GOP’s fault, too.
In 2011, Sen. Bakk criticized the GOP, saying that they didn’t have the veteran leadership required to run the Senate. Monday, Senate veterans Tom Bakk and Ann Rest couldn’t count straight. As a result, the Senate’s middle class tax increase was initially defeated. The DFL’s incompetence showing, Sen. Bakk is now attempting to spin away the fact that this was the biggest mistake made in Senate history.
This wasn’t just any bill, either. The Tax Bill is the cornerstone legislation for the DFL this year. If ever there was a bill that Sen. Bakk should’ve lined up the votes for, it’s this one. He, Sen. Rest and his whip team failed that test miserably.
Though it’s one of the saddest days in Minnesota politics, it isn’t surprising. For all their talk about a progressive tax system, the DFL didn’t hesitate to raise regressive taxes if they need the money to pay off their political allies. For all the DFL’s talk about taxing the rich and building the middle class, the DFL hasn’t hesitated in raising taxes on the middle class and working poor.
That they’re willing to break their campaign promises is disgraceful. That they’re incompetent in counting the votes needed to break their campaign promises is a picture in ineptitude.
This Tribune op-ed highlights the tax increases being imposed on Minnesotans. Here’s a glimpse:
The tax plans and budget proposals that’ll be debated and hammered together in St. Paul in the coming weeks do include healthy tax hikes on wealthy Minnesotans. But they also include taxes and fees every one of us will pay, no matter what our income level. In fact, some of the new and rising “revenue sources,” as lawmakers like to call tax hikes and fee increases, would be paid, disproportionately, by lower-income Minnesotans.
Most notably on the table are tax increases on beer, wine and booze, in a state that hasn’t had a tax increase on liquor in 26 years. But now we face the prospect of paying 7 cents more in taxes per drink and as much as $4 more in taxes for a case of beer.
The state’s cigarette tax also is almost certain to go up, to $2.83, a $1.60 increase, under a House proposal.
And if you thought Minnesota’s first-ever tax on clothing died when the governor dropped it after his initial budget proposal, well, not so fast. It’s still alive in the Senate, along with a long list of other previously untaxed services, including on car repairs, over-the-counter drugs like aspirin, tattoos and even dating services.
Sports fans can be on alert, too. The Senate has a new 13 percent wholesale tax on sports jerseys and other memorabilia to help cover the state’s portion of funding for a new Minnesota Vikings football stadium. The total sales tax on sports memorabilia, including sales tax, could push 20 percent in Minnesota.
If you think this was a Strib op-ed, I have to say that it isn’t. It’s in the Duluth News Tribune. If you thought that the Strib editorial board would write something like this, you really need to get back in touch with reality.
Two weekends ago, Matt Entenza tried spinning the DFL’s tax increases, which I wrote about here. Here’s how Entenza tried spinning the DFL’s tax increases:
Part of what Democrats are responding to is an election where people said ‘We’re tired of higher class sizes. We’re tired of roads that are falling apart and a Human Services Department that doesn’t work as well as it should.
Policy lightweights like Entenza know that raising taxes on cigarettes, income and liquor won’t fix a single pothole. They’re fixed by revenues from the gas tax. Period.
The heart of the DFL’s tax increases are summarized in this theory:
The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C’s interests, are entirely overlooked. I call C the Forgotten Man.
Last fall, the DFL ran on the Forgotten Man theory of taxation. This year, however, the Senate DFL, the ones that can’t count straight, have decided that the middle class aren’t paying their fair share. In addition to raising the plethora of regressive taxes listed earlier, the Senate, in Sen. Bakk’s finite wisdom, has decided to raise income taxes on the middle class.
What’s interesting is the sports memorabilia tax. It should be renamed the Boy-did-I-screw-up-the-Vikings-Stadium-funding-bill tax increase. Thanks to the Dayton administration’s willingness to buy into the gambling industries’ wildly optimistic projections on e-tabs, the state is forced to rethink their funding of the Vikings stadium.
Had the Dayton administration been honest about the e-tabs projections, the stadium likely wouldn’t have gotten support. Then again, if the DFL had honestly campaigned on raising taxes on everyone, they wouldn’t have gavels this year.
Thanks to the Duluth News Tribune’s editiorial, Minnesotans are finding out that the DFL won’t hesitate in lying about taxing the middle class and the working poor.
Tags: Tax The Rich, Mark Dayton, Tax Increases, Cigarette Tax, Income Tax, Liquor Tax, Sports Memorabilia Tax, Tom Bakk, Middle Class Tax Increase, DFL, William Graham Sumner, The Forgotten Man, Economics, Philanthropy
In March of 2011, Sen. Bakk hinted that Republicans didn’t have the sufficient experience to run the Senate. Yesterday, the DFL-controlled Senate laid the biggest egg in Minnesota legislative history:
There were a few hiccups along the way but the Minnesota Senate voted for a tax bill that raises income taxes on top earners, increases tobacco taxes and expands the sales tax to clothing and other services.
The bill’s final passage came after the Senate initially defeated the measure. Senate Democrats quickly met in private and then voted to reconsider the initial vote.
Two Democrats switched their votes. Sen. Greg Clausen, DFL- Apple Valley, says he switched his vote from no to yes because he was worried the Senate would not be able to commit to spending priorities if the tax bill failed. “For me, what it came down to quite honestly is that we made a lot of gains in education,” Clausen said. “I ran on an education platform and I wasn’t willing to put those education investments at risk by not having this tax bill.”
DFL Senate Majority Leader Tom Bakk says several DFL members were confused when a few Republicans signaled they would support the bill but eventually switched to a no vote. “There were people that voted no because they thought there were plenty of votes up to pass it,” Bakk said. “I think people didn’t realize that people were going to play a little trick when the roll was closed and switch their vote back. I think there would have easily been the same number of votes had the Republicans had been honest and put up their red vote when the roll was called.”
Bakk said he didn’t twist arms to convince Clausen or Sen. John Hoffman, DFL-Champlin, to switch their votes. Sen. Ann Rest, DFL-New Hope, also voted for the bill after not voting the first time.
Mr. Scheck was spinning the Senate’s vote on the Tax Bill when he said “there were a few hiccups along the way” to passing the Senate Tax Bill. Having a big majority in the legislature means that you pass the bills you prioritize. Getting the DFL’s highest priority bill defeated might be proof of outright sloppiness on Sen. Bakk’s behalf. Either that or Sen. Clausen and Sen. Hoffman got lectured for thinking they were elected to represent their district’s wishes.
When Sen. Bakk lectured Republicans about the need for experienced leadership, little did anyone think that they’d see Sen. Bakk look the part of inept freshman legislator in his first week in St. Paul. Monday, that’s precisely what Sen. Bakk looked like.
It’s bad enough that the DFL got the policies wrong. It’s worse that they got the policies wrong, then had to vote a second time to pass tax policies that will a) raise taxes on the middle class, b) hurt Minnesota’s economy, c) drive companies from Minnesota and d) hurt Minnesota’s retailers.
When Minnesotans elected a DFL majority to the Senate, I’m certain they didn’t think they were voting for middle class tax increases and Sen. Bakk’s inept leadership. Unfortunately, that’s what we’re stuck with for the next 3 years.
It anything comes through in this statement, it’s the DFL’s stated intention to spend the taxpayers’ money recklessly. Here’s an example:
Aiming for a course correction after a decade of disinvestment, the House and Senate are likely to take up historic education bills next week at the State Capitol. Some the features of those bills include:
- Investing in what works – early learning: New investments to fund early education and all-day kindergarten, helping Minnesota students get on the right track early.
- Strategic funding for K-12 schools: Increasing per pupil funding for Minnesota schools throughout the state.
- Reducing college tuition and debt: Making the first investment in higher education in a decade to ease the burden of skyrocketing tuition and student debt.
The consensus I found is that: 1) socioeconomic conditions are the single largest determinant of success in school and life, 2) benefits of intervention accrue primarily to children in dire socioeconomic circumstances, and 3) benefits to the general population are minimal, fading by third grade, presumably because they are getting what they need in their home environments.
Dr. Kern later noted:
I reviewed Dr. Rolnick’s calculations and indeed, the benefits for 123 pre-school children studied in Ypsilanti Michigan, were giant—50% reduced incarceration rates. However, in their policy discussions, Rolnick and Grunewald downplay the nominal 50% incarceration rate in this community. Yes, the return on investment supporting now famous claims of 17-dollar ROI…are based almost entirely on money saved by reducing incarceration rates from 50% to 25%.
In spite of the highly unusual nature of the circumstances surrounding these children’s lives, proponents of these programs regularly extrapolate a 17 to 1 ROI to every dollar spent on virtually any early childhood program. It is extremely cynical or delusional that Rolnick and Grunewald fail to emphasize the critical caveats to these estimates based on just 123 subjects from one pre-school in desperate need of help.
In other words, all-day Pre-K is just spin to spend tons of money on the Education Minnesota wish list. It doesn’t help kids. It helps the unions while raiding taxpayers’ wallets.
It’s insulting to hear Thissen talk about “reducing college tuition and debt” without hearing Thissen talk about reducing the cost of higher ed. Furthermore, why isn’t Thissen talking about how MnSCU is helping SCSU administrators cover up the deleting of hundreds of grades from students’ transcripts?
“The other piece of it is that it’s difficult to do some things like helping with student success, some things like doing accurate assessment if people disappear from our records and we don’t have that information in our records anymore or if we learn for example that, and this is kind of an odd example I suppose, you don’t know that a student has taken a course three times because there is no record of it and the student is in there for the fourth time and you’re trying to figure out a way to help that student be successful and yet you’re blindsided by this lack of information.
Having a student’s transcript omit the fact that he/she has taken and failed a class 3 times isn’t a minor clerical mistake. It’s the Potter administration’s deletion of transcript information. Might some of these deleted grades be in classes that the student got federal or state grants?
Is that the type of disgusting behavior taxpayers should be subsidizing? I think not.
Why aren’t Speaker Thissen, Sen. Bakk, Sen. Bonoff and Rep. Pelowski talking about the U of M spending money on an event aimed at helping undergraduate women achieve more and better orgasms? Here’s what the event description includes:
The university’s official online description of the event entitled, ‘The Female Orgasm,’ describes it as open to both male and female students. ‘Orgasm aficionados and beginners of all genders are welcome to come learn about everything from multiple orgasms to that mysterious G-spot,’ reads the description posted on the school’s official events calendar. ‘Whether you want to learn how to have your first orgasm, how to have better ones, or how to help you girlfriend, Kate and Marshall cover it all…’ it adds. ‘Are you coming?’ it asks.
I don’t know how this event is paid for. If it’s being paid for with the taxpayers’ money or through student fees, then it’s wrong. If people want to pay for something like this with their money, that’s their business. If they want to pay for it with the taxpayers’ money, that isn’t acceptable.
Speaker Thissen talks about historic investments in education. What he didn’t talk about is the tons of money that’s recklessly misspent. It’s noteworthy that Speaker Thissen won’t talk about the SCSU transcript scandal, either. Apparently, it’s ok with Thissen if administrators are changing student transcripts without the professors’ signing off on the changes.
Tags: Paul Thissen, Education, Higher Education, University of Minnesota, MnSCU, Student Transcripts, Earl Potter, SCSU, Corruption, Early Childhood Education, Spending Increases, Gene Pelowski, Tom Bakk, Terry Bonoff, DFL
Rep. Pat Garofalo ripped the DFL as out of control during this speech during the DFL tax increase debate:
There were 2 highlights during the speech. Both related to the silica sand tax included in the House DFL tax increase bill.
Here’s what Rep. Garofalo said about that tax:
You’re gonna actually tax an industry out of existence with a tax on silica mining. I actually had a liberal activist say to me they thought that by raising taxes on silica mining, they would somehow impact the fracking in North Dakota. (Laughter in background) Spoiler alert. They’re gonna get the sand from other states. Doesn’t matter. It’s gonna have no impact whatsoever on other states’ ability to do fracking of natural gas and oil but it will kill jobs here. And it’s not business groups saying that. It’s not small businesses saying it.
We’ve heard from the local 49ers. We’ve heard from the local unions. In fact, members, this is how totally delusional this tax increase is: Mark Dayton actually labeled the House DFL silica sand tax “ridiculous.” So when a tax increase is so high that Gov. Dayton labels it ridiculous, you know you’re checked out for lunch.
That’s stunning. A DFL activist thinks that killing jobs in Minnesota will shut down the Bakken. That isn’t stupid. That’s beyond frightening. And that isn’t the most frightening part of this.
The truly frightening part of this is that Gov. Dayton, the man whose every thought is to raise taxes, thinks the silica sand tax is “ridiculous.” When a taxaholic like Gov. Dayton thinks that a tax increase goes too far, red flags should go off immediately.
I wrote here about the differing DFL tax bills, characterizing them as disastrous and counterproductive. Little did I know just how disastrous and counterproductive the DFL tax bills were. This is downright frightening.
Tags: Tax Increases, Silica Sand Tax, Paul Thissen, Unemployment, Cigarette Tax, Environmentalists, Mark Dayton, Tom Bakk, Sales Tax, DFL, Unions, 49ers, Fracking, Bakken Oil Field, Natural Gas, Pat Garofalo, MNGOP, Election 2014
True to their waste-aholic history, the DFL legislature voted against government accountability:
A commission designed to judge whether state agencies, councils or boards have outlived their usefulness may itself cease to exist.
The Democratic-controlled House and Senate have voted to abolish the Sunset Advisory Commission, a 12-member commission championed by Republicans as offering greater accountability and efficiency in state government.
“I think they’re (Democrats) scared,” Rep. Joyce Peppin, R-Rogers, said of taking tough votes on the commission.
A product of 2011 legislation, the Sunset Advisory Commission is patterned after a 30-year-old commission in Texas, one billed as having saved the Lone Star State almost $1 billion at a cost of about $33 million.
Minnesota’s Sunset Commission reviews state agencies and recommends whether a given agency should continue to exist.
Rep. Peppin is right. DFL legislators don’t want to vote on wasteful spending. DFL legislators don’t want to admit that their pet agencies, councils and panels are actually patronage positions.
The DFL is spinning their vote:
The idea of duplication was voiced by another commission member, Rep. Michael Nelson, DFL-Brooklyn Park. “One of the tasks of the sunset commission is to get rid of duplicative government functions,” he said. There’s already the Office of the Legislative Auditor.
Why have both? Nelson asks.
Rep. Nelson, we need both because it’s apparent that there’s a ton of bloat in state government, things that the OLA hasn’t discussed.
As for Rep. Nelson’s assertion of duplication, I’d love hearing his explanation on what it’s duplicating. I’d love hearing him cite the times when the OLA has recommended the sunsetting of a commission, panel or council.
Sen. Bonoff’s statement needs ridiculing:
Bonoff, like other Democrats, argues the commission is itself duplicative. “If committee chairs are doing their jobs, they should be doing this kind of detailed oversight,” she said.
There’s a simple explanation for Sen. Bonoff: the chairs have never gotten into this type of detailed oversight. The Sunset Advisory Commission would’ve been a great tool that forced the legislature to deal with commissions, councils and panels that outlived their usefulness.
Furthermore, does any thinking person think that the DFL would investigate the importance or relevance of these hideouts for their political cronies? Let’s get serious. When Keith Downey proposed reducing the state workforce by 15% by not replacing retiring workers, Eliot Seide accused him of waging war “against working families.” What DFL legislator will vote for sunsetting these commissions, councils or panels knowing that they’ll get primaried by an AFSCME-endorsed candidate?
That’s why the Commission is essential.
Finally, this DFL legislature has repeatedly proven that they oppose accountability. The GOP legislature passed a bill that required teachers to pass a basic skills test, which Gov. Dayton signed. The DFL wants to repeal that law. The GOP legislature passed the Sunset Advisory Commission, which Gov. Dayton signed. The DFL legislature just voted to repeal that essential accountability legislation. Will Gov. Dayton reverse himself & say no to government accountability? If he does, he should prepare for getting labeled as a) a hypocrite, b) a cheap politician who does what’s popular, not what’s right and c) the unions’ puppet, not the public’s servant leader.
This week, the DFL legislature voted for higher pay for themselves, higher taxes on the middle class and less accountability within government. I don’t think that’s the bumper sticker they’ll want to deal with in 2014.
Tags: Terry Bonoff, Mike Nelson, Tom Bakk, Paul Thissen, Mark Dayton, Eliot Seide, AFSCME Council 5, Public Employee Unions, Cronyism, DFL, Sunset Advisory Commission, Accountability, Government Oversight, Reforms, MNGOP
At the start of this session, I said that the DFL would sail through because Alida Messinger would give them their marching orders. When Gov. Dayton introduced his bill, businesses far and wide criticized it for imposing a sales tax on transactions between businesses and lawyers, accountants and other service providers. When the House DFL introduced their tax bill, it was criticized for imposing a gigantic, disastrous income tax increase, raising the top income tax rate from 7.85% to 12.49%. It’s difficult to imagine how the Senate DFL’s tax bill could be worse.
Difficult but no longer impossible:
Democrats in the state Senate released a plan today that increases income taxes on wealthiest 6 percent of Minnesotans, raises the sales tax on clothing and services, and increases the cigarette tax.
Republicans don’t like it and even some Democrats in competitive districts are uneasy about the taxes and spending. But DFL leaders say the $1.8 billion dollar tax increase is needed to erase the state’s budget deficit and increase spending for schools and property tax relief.
It’s incredible that the Senate DFL took the worst part of Gov. Dayton’s tax proposal, the sales tax increase on services, watered down the worst part of the House DFL’s tax increase, then added their own terrible wrinkle by raising income taxes on the middle class.
While Senate DFL leaders praise the bill as good tax policy, some of their rank-and-file members remain apprehensive about it.
“This is going to be a hard one for me to support,” said first-term DFL Sen. Melisa Franzen. Franzen, who represents the swing district of Edina, Minnetonka and Bloomington, worries the bill could harm the state’s business climate.
“If the cost of doing business in Minnesota is going to rise and small business is going to be impacted, that is something that I have to take into account,” Franzen said.
Sen. Greg Clausen, DFL-Apple Valley, worries about the income tax portion of the bill, but said he thinks many of his constituents could live with it since the bulk of the extra spending is dedicated to education.
“There certainly are people out there that say ‘no new taxes.’ Whenever they see a tax they don’t support that,” Clausen said. “But I think there is also a group of people who recognize that there are needs in our state.”
First, Sen. Rest is wrong that the Senate bill is “good tax policy.” It isn’t good tax policy raising the cigarette tax because it’ll significantly hurt convenience stores while cutting cigarette tax revenues without reducing smoking.
Hurting retailers and Minnesota’s general fund while doing nothing to tamp down smoking is a nasty negative trifecta of tax policy.
Second, there’s no way the cost of doing business in Minnesota doesn’t increase. Businesses will get hit with higher income taxes & higher business costs thanks to the sales taxes on services. That’s before talking about how the cigarette tax increase will hurt convenience store sales.
If the DFL doesn’t pull its act together quickly, they’ll find lots of complaints on the campaign trail next year.