Governor Dayton recently unveiled an aggressive overhaul of Minnesota’s tax system that will lower tax rates while broadening the base to create a budget that doesn’t disproportionately rely on the middle-class. I applaud his effort to create a fair and balanced tax system that puts Minnesota on a course for long-term fiscal stability.
A decade of budget games and gimmicks and a tax system that is skewed toward protecting large corporations and the wealthiest Minnesotans from paying their fair share has led us down a rocky budget road. We can’t let the misguided budgetary moves of our predecessors dictate our ability to serve the people of Minnesota. By creating a responsible budget that includes a fair tax system, we will be able to invest in programs to help families in need and make our state a better place to live.
The governor’s first move is to lower the sales tax rate to its lowest level since 1981 (rate is reduced from 6.875 percent to 5.5 percent). Along with a broadened tax base, this change will make the tax system a fairer system for hard working Minnesotans. If passed, we will move from having the 7th highest sales tax rate to the 27th highest rate. Minnesota will rank 40th when you include state and local taxes.
The governor also targets property tax relief towards middle class families. His proposal calls for a $500 property tax rebate to an estimated 95 percent of Minnesotans. His budget also reduces the need for local governments to increase property taxes in the future by investing $120 million annually to local government and county aid.
The governor also backs up his campaign promise by creating a 4th tier income bracket of 9.85 percent for married-joint filers with income above $250,000. This means the top 2 percent will finally be asked to invest more into the programs and services that helped them get to, and stay, where they are today.
I would like to have a broader discussion and possibly add amendments to some aspects of the governor’s budget. The clothing tax and increased cigarette tax are two issues that will need further work. Both changes disproportionately affect the communities of color and Minnesotans living in poverty.
If we continue to move forward with the clothing tax, I am considering offering an amendment to move up the earned income credit to offset the increased financial pressure low-income families will feel. I would also like to dedicate some of the additional revenue created by the increased cigarette tax to invest in cessation programs.
The governor’s budget is a courageous proposal that will invest much needed dollars into state programs and services that have been neglected for far too long. I am looking forward to working with Gov. Dayton and his commissioners over the next several weeks and I am confident that we can find a package of bills that will lead to a healthier tax system.