PHIL KRINKIE: How 'tax the rich' became 'tax us all' in Minnesota

ST. PAUL -- For years, Minnesota Gov. Mark Dayton has been pontificating about taxing the rich. He has bantered with and bullied legislators about raising taxes on Minnesota's top income earners.

Phil Krinkie
Phil Krinkie is president of the Taxpayers League of Minnesota.

ST. PAUL -- For years, Minnesota Gov. Mark Dayton has been pontificating about taxing the rich. He has bantered with and bullied legislators about raising taxes on Minnesota's top income earners.

(Ironically, the governor has lived off a South Dakota trust fund that pays little or no taxes on its earnings.)

Six weeks ago, Dayton's wish came true when DFL legislators passed $2.1 billion in tax increases. But the big lie about the Democrats' tax bill that Dayton so eagerly signed into law is that it raises taxes on all Minnesotans ---not just the rich, as Dayton has professed on numerous occasions.

While Dayton and his DFL cronies profess to take from the rich to provide property tax relief to the masses, in reality they enacted massive tax increases that will impact everyone in the state.

The list includes income taxes, business taxes, sales taxes, cigarette taxes, gift taxes and even Internet taxes, in addition to added fees for drivers' licenses and cell phones.


This tidal wave of taxes will ripple across the state and impact every family and business from Ada to Zumbrota. No matter what spin or hype Dayton and Democratic legislators use to hide their taxes increases, the true effects will be felt by everyone.

According to the Minnesota Department of Revenue, households of all income ranges will see their tax burden increase as a percentage of their income. Households with the lowest incomes -- less than $11,000 a year -- will see the greatest change in the percentage of state and local tax burden, the department reports.

These low-income earners will see a 1.56 percent increase in total tax burden, moving from their current 29.9 percent of income paid in taxes to a tax burden of 31.5 percent of income.

This compares to a .67 percent increase in taxes for Minnesota's top earners with annual incomes over $146,400, going up from 10.3 percent to 11 percent state and local taxes as a percent of total income.

While Democrats "achieved" their goal of making Minnesota's tax system hyper-progressive, they failed at reducing taxes for the poorest of households in Minnesota -- those with earnings of less than $20,000 annually. The result is a tax increase on Minnesota's lowest earners and at the same time, huge tax increases on the state's job creators -- the worst of all outcomes in tax policy.

Thousands of jobs likely will be lost as businesses move to lower taxed states, while our poorest citizens will be burdened with higher taxes and fees.

One of the more regressive taxes enacted by legislators this year was the $1.60 per pack increase in the cigarette tax. Under the pretense that smokers will quit, naive lawmakers increased the tax above the level of all of Minnesota's surrounding states. For example, the tax in North Dakota is 44 cents per pack compared to Minnesota's new $2.83 per pack.

The net result is likely to be less revenue than anticipated for Minnesota and more cross-border sales for smokers.


This study by the Department of Revenue also highlights that despite an increase of $120 million in aid to cities and counties, the total state and local tax burden will increase across all income levels.

In short, the results this year's tax legislation will be higher taxes for all households across all income levels, according to Dayton's own department.

If the taxes weren't increased enough as a result of the provisions in the tax bill, Democratic legislators approved more taxes in the transportation bill. While not passing a gasoline tax increase this year, they did expand statewide the option for counties to adopt a $10 per vehicle wheelage tax. They also passed legislation permitting any county outside the seven-county metro area to increase the sales tax by a half percent without voter approval, plus impose a $20 motor vehicle excise tax for any transit or transportation project.

The net result of Dayton's "tax the rich" scheme is that Minnesotans will pay more in taxes if they drive a car, renew their drivers' license, download a song or a movie, rent a car, smoke cigarettes, give a large gift, have a cell phone, subscribe to satellite television, are subject to the alternative minimum tax or earn more than $150,000 in 2013.

Minnesota's tax policy now reflects Governor Dayton's wish: to move Minnesotans back into the category of the "highest taxed" people in the country. He may have desired to tax only the rich, but the result is he ended up taxing everyone.

Dayton's "tax the rich" rhetoric is a big tax lie.

Krinkie is president of the Taxpayers League of Minnesota. He is a former eight-term Republican state representative from Lino Lakes, Minn.

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