After 99 days of doing nothing to solve Minnesota’s budget deficit, Democrats have announced that (shock, surprise, amazement) they’re planning massive tax increases. Here’s the summary information from Mary Lahammer’s post:

Highlights of the 2009 Tax Bill

REFORM

  • Proposes the most significant tax reform in over 20 years.
  • Eliminates dozens of business subsidies and tax expenditures that are outdated, ineffective, regressive or that we simply cannot afford.
  • Gives counties a new option that protects property taxpayers, saves jobs, provides essential services, and strengthens the state and local relationship.
  • Increases accountability, value and efficiency to property taxpayers.
  • Simplifies the tax system so that it is easier to understand, comply with, and administer.

FAIRNESS

  • Increases the progressivity of the tax system by replacing tax subsidies that disproportionately benefit upper-income earners and creates a new fourth-tier income tax rate of 9% on married joint filers making over $300,000.
  • Eliminates corporate loopholes and business subsidies that currently create winners and losers in Minnesota.

JOBS

  • Keeps and grows jobs in Minnesota.
  • Helps small businesses and farms through Section 179 tax cuts.
  • Gives Minnesota companies a competitive advantage by eliminating the job tax that accelerates single sales apportionment to tax year 2009.
  • Doubles the Research and Development Credit on the first $2 million of R&D expenditures and makes S-corporations and partnerships eligible for the credit.
  • Conforms to many newly passed federal provisions to make tax filing easier for businesses and individuals.
  • Protects community jobs by preserving Local Government Aid to cities.

RECOUPING GOVERNMENT COSTS

  • Increases the cigarette tax by 54 cents a pack to the same level as Wisconsin to recoup associated health care costs. Research shows that smoking-related health care costs actually equal $10.28/ pack.
  • Increases total alcohol taxes for the first time in over 20 years by 3 to 5 cents per drink to recoup associated alcohol abuse costs. Research shows that the economic costs associated with alcohol abuse amount to $4.5 billion a year or $900 for every person in the state of Minnesota.

Among other things, I’m questioning whether the DFL’s Tax Bill will create jobs. I’ll bet that it’ll drive jobs from the state rather than creating jobs here in Minnesota. For all of the DFL’s talk about needing a progressive tax, the DFL is proposing a tax increase on some regressive taxes.

Here’s some information from Rep. Steve Gottwalt’s e-letter update breaking down what’s in the Omnibus Tax Bill as proposed:

  • It adds a new fourth tier for income tax, giving Minnesota one of the
    nation’s highest income tax rates: 9 percent.
  • * Cigarette taxes go up 54 cents a pack, one of the most regressive taxes in Minnesota. The total cigarette tax would increase to $1.77 per pack. The liquor tax also would increase by 3-5 cents per drink.
  • It eliminates JOB-Z business development support which has helped our area retain and create hundreds of good paying jobs over the last several years. At a time when retaining and creating jobs is our top priority, this cut makes no sense.
  • It repeals tax credits for K-12 education, long-term care and
    employee health insurance. This is money that we leave with taxpayers to help meet education, long-term care and health care needs.
  • It contains several other corporate tax changes that will place more burden on our job creators at a time when we need more jobs.
  • The home mortgage tax deduction would be eliminated, replaced with a tax credit which is not linked to income.
  • The new income tax bracket would kick in at $300,000 of adjusted gross income for joint filers, $169,700 for single filers and $255,000 for heads of household.

Steve makes this astute observation in his e-letter:

One problem is the United States Census Bureau shows Minnesota has 94,000 companies with fewer than 10 employees and another 188,000 self-employed people. A majority of them report business income as personal income, so raising the top bracket would hurt small businesses and their employees by siphoning operating funds, profits and long-term investment capital. By the way, it’s these kinds of increases that result in more of those dollars moving to Florida, Arizona, etc.

As expected, the DFL’s tax bill is hostile towards most small businesses. It’s noteworthy that it includes a number of regressive taxes, too. (Isn’t the DFL always railing about the need for a more progressive taxation system? Why don’t they practice what they preach?)

Rep. Gottwalt gets this right in a big way:

This is a time when we need to grow jobs to rise above this recession and revive state revenues. Adding to Minnesota’s already heavy tax burden will only put us in a deeper hole. I will continue to support fiscal restraint and living within our means instead of raising taxes.

Finally, it’s important to factor in this information:

The Small Business and Entrepreneurship Council ranks Minnesota 49th nationally in terms of business taxes. Only New Jersey and the District of Columbia fared worse in the ranking. The American Legislative Exchange Council ranks Minnesota 40th in its 2009 state economic outlook rankings. All of Minnesota’s neighboring states are ranked higher, including No. 5 South Dakota.

If people thought that the DFL majority would get a clue and stop proposing oppressive taxation policies, I wasn’t on the same page as those people. Thinking that the DFL won’t reflexively increase taxes is like believing that making sudden movements towards a cobra won’t get you bit:

That said, does anyone in their right mind think that Democrats won’t raise taxes? I’ll believe that the day I get photos of a leopard rearranging the spots on his fur. Believing that a Democrat won’t raise taxes instinctively is like believing that making sudden movements towards a cobra won’t get you bit. You can believe it all you want but reality is reality.

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One Response to “Shocking News: DFL Raising Taxes”

  • FreschFisch says:

    We have about one month. We go cold tukey for one month. Oh, some won’t, some can’t. Think of walking into a restaurant and ordering water with your meal and telling the restaurant that you won’t be ordering booze because of the increased taxes. Think of the howling when all the municipal liquor stores find out no one is buying hooch for a month! This can work.

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