A revealing headline: "Minnesota House DFL tax plan goes after drinkers, smokers, high earners"

The above headline is from a Star Tribune news story on Monday.  It struck me that the easiest way to raise taxes is to go over the fewest number of people so there's less political push back.  In this case, as the headline suggests, that includes consumers of alcohol, cigarettes and those with higher incomes.

A new House DFL tax plan would raise $2.6 billion by tapping high earners, smokers and, in the newest wrinkle, drinkers.

The plan would place a temporary surcharge on the wealthiest wage-earners, catapulting Minnesota’s income tax rate to third-highest in the nation. At the same time, state taxes on beer, wine and hard liquor would double.

The alcohol tax, which hasn’t risen in more than 20 years, would increase by 7 cents a beer, 47 cents per bottle of wine and $1.58 cents per bottle of hard liquor.

 Ironically, Speaker Thissen says higher taxes means a "stronger and more prosperous future."  The only problem is the government isn't a wealth creator.  More government doesn't mean more growth.  In fact it's the exact opposite.

“Minnesota residents have paid the price for too long for irresponsibility budgeting,” House Speaker Paul Thissen, DFL-Minneapolis, said in releasing the tax proposal on Monday. “It’s time we turn the page on that past and look toward a stronger and more prosperous future.”...

The amount and breadth of proposed tax increases is amazing.

While much of the proposal had dribbled out in recent weeks, the dramatic alcohol tax hike is a new component that is drawing furious criticism from Republicans. Democrats are looking to raise an additional $350 million every two years from a tax that hasn’t been raised since the mid-1980s. As Thissen pointed out, for someone who drinks a beer a day, the new tax would cost about $25 a year.

House Republicans say the mashup of taxes goes far beyond the DFLers’ campaign pledge to erase a state deficit by raising income taxes on the wealthy...

House DFLers would raise income on the top 1.1 percent of the state’s taxpayers. For married couples that would kick in at taxable income above $400,000. That’s a scaled-down version of DFL Gov. Mark Dayton’s plan, which would raise income taxes for the top 2 percent of wage-earners.

But House DFLers would tack on a two-year, 4 percent income tax surcharge on taxable income above $500,000 a year. Revenues from the surcharge would help pay off the remaining $808 million the state borrowed from public schools and would allow the state to offer tax breaks to businesses for new equipment purchases. Dayton and Senate Democrats have not embraced the House tax plan, but Thissen said he believes most Minnesotans will support it.

The proposal includes direct property tax relief for 1 million homeowners and renters, along with money to help the city of Rochester with a massive, 20-year expansion of the Mayo Clinic. The House also sets aside money to aid expansions of 3M’s Maplewood campus and the Mall of America.
Sin taxes would go up

The proposal raises nearly $790 million from the so-called sin taxes.

Cigarettes would go up $1.60 per pack, taking total taxes to $2.83 for a pack of cigarettes.

“There is overwhelming evidence that tobacco and alcohol consumption cost the state billions of dollars,” Thissen said. “These user taxes will allow the state to recover some of those costs.”

The House proposal carves out a tax credit for small craft brewers that produce less than 200,000 gallons a year and wineries that produce less than 100,000 gallons a year.

 Of course Republicans are having a field day going after these proposed tax increases.

“I think Democrats in the House need to start a new reality TV show called Taxes Gone Wild,” said state Rep. Greg Davids, a Preston Republican and former taxes committee chairman. “There’s a tax increase for everybody, the rich, the middle income, the poorest of the poor. It’s an outrageous proposal.”

Rep. Pat Garofalo said this is proof the Democrats are not able to control spending. “This is why you don’t let the Democrats have total control over the state of Minnesota,” said Garofalo, R-Farmington. “There’s no adult supervision to stop these crazy things.”

The problem with going after the wealthy is they are often the small business owners and businessmen who create jobs and generate economic growth.  Eventually, some of them will decide it's just not worth doing business in Minnesota.

I'm afraid those in power can't say no to many of their special interest groups.  One of the consequences of this is it means a significant shift of resources from families to the government.

Gubernatorial candidate Mark Dayton wants to tax the rich in Minnesota - big time.

Former US Senator Mark Dayton, who wants to be our next governor, announced his proposal to "tax the rich" and receptivity for a new state owned casino.

Former U.S. Senator Mark Dayton, a DFL candidate for governor, is offering new details of his "tax the rich" proposal.

Dayton has frequently talked on the campaign trail about his proposal to raise income taxes for the wealthiest 10 percent of Minnesotans. He said the change would bring fairness to the tax system and provide the state much-needed revenue.

During a wide-ranging news conference Monday, Dayton said he would propose three new income tax tiers. He also said households with annual income of $150,000 and above would have to pay more.

"You've got three ways you can balance the budget," said Dayton. "You can raise taxes on the richest Minnesotans. You can raise taxes on the rest of Minnesotans, or you can pretend you're going to wave some magic wand and $5 billion to $7 billion is going to disappear from state spending without consequence to anyone, which is the Republican answer right now, which belongs more on the comic page than it does on the front page"...

In another place, he suggests this would raise about a $1 billion.

This tax favoritism for the rich is costing our schools, universities, hospitals and other essential services upwards of $1 billion per year. It may be great for political support and campaign contributions. But it's terrible for Minnesota. It's unfair, and it's wrong.

Then he says he wants to open a state run casino to raise $200 million a year.

Dayton also said Monday he would consider supporting a Twin Cities casino to raise money for Minnesota's ailing budget, but not for a new Vikings stadium. He said a metro-area casino would raise about $200 million a year.

He says such a facility would bring "much needed competition" to Mystic Lake Casino, the only tribally run casino in the Twin Cities. The Prior Lake establishment is owned by the Shakopee Mdewakanton Sioux Community.

A few observations.

• He would seem to not realize or care that "the rich" are also the people who create jobs which employ lower income folks. So one can expect his proposal to hurt employment and cause businesses to leave the state.
• His casino idea will no doubt alienate the Indian Tribes which have been huge DFL supporters.
• Casinos and gambling actually cost the state money in terms of all the social problems which result.
• Raising taxes on the wealthy would only hit a small portion of the current state deficit. If it's a $5.4 billion deficit that's $1,000 per man, woman and child. I'm curious how much of that deficit he'd be willing to eliminate through spending cuts.
  
• I have to give him credit for being very up front with his desire to raise taxes rather than being vague and non-committal. Hopefully, his announcement will make people realize that this is probably the tip of the iceberg. There will be a lot more tax increase proposals following this one if it's already a centerpiece of his campaign.

Looks like there will be a homosexual marriage push at the Minnesota state legislature this year.

As a Minnesota Independent newsblog article points out there will likely be a push for homosexual marriage in the upcoming Minnesota legislative session. Senator Marty, the chief sponsor of the bill in the state Senate and candidate for governor, is both a firm believer in homosexual marriage and I'm sure interested in gaining the support of the gay community. They're a significant DFL party constituency.

Senator Marty's goal is to get the bill passed out of the committee though he doesn't expect it to necessarily pass the legislature.

“I’d like to have a hearing and a vote — assuming we have the votes– to begin moving the bill through the process,” he said. “Attitudes are rapidly changing, and by having a thoughtful discussion in committee, I think we can assist in that effort.”

I think a hearing would both give the issue a higher profile in the state and help make it a campaign issue in the fall; especially since all the DFL candidates for governor are pro-homosexual marriage.

Will homosexual marriage be a big wedge issue in the 2010 Minnesota Governor's race? Let's hope so.

It's interesting that all DFL candidates for governor in Minnesota have staked out a position more liberal than the majority of voters in Maine. They support homosexual marriage.

Eric Black in a MinnPost column entitled, "All DFL guv candidates back gay marriage: A wedge issue in the making?" points out the uniformity of DFL candidates for governor in favor of homosexual marriage. And as the title points out, this could be a wedge issue in the governor's race. My response is: I certainly hope so.

The unanimity of DFL gubernatorial candidates on the issue points out the influence homosexual activists have on the DFL party and apparently none of the candidates have moral sensibilities on the nature of marriage being between a man and a woman. And if they do or did, they've certainly been submerged by political ambition. They realize they can't be the DFL candidate for governor if they don't toe the line on homosexual marriage.

Some are more outspoken on this than others.

Some of the Dem candidates bring this up even in their brief two- or three-minute summaries of what they will do as governor. Former state Rep. Matt Entenza features prominently in the "issues" section of his campaign website that he co-authored the first bill that would have "redefined the legal definition of marriage to explicitly include two persons of the same gender." Others don't bring it up unless asked. But when asked, all say they will sign a same-sex marriage bill, although I gather the most current term for the idea is "marriage equality" (which is not an unreasonable term, but certainly has the whiff of the political Marketing Department about it).

None of the Republican gubernatorial candidates favor legalizing same-sex marriage.

In other words, leaving aside for the moment the Independence Party nominee (there are still no publicly known candidates from that party), the 2010 election will offer Minnesotans a fairly clear choice on, among other issues, gay marriage.

This story is all about movement, specifically movement on the political thinkability of gay marriage. If it seems intuitively obvious that the DFL would nominate a gay marriage advocate for governor, allow me to point out that it is unprecedented. With one possible exception, no major-party nominee for governor of Minnesota has ever been four-square for legalizing same-sex marriage.

The possible exception is state Sen. John Marty, who was the DFL nominee in 1994 and who is running for the nomination again this year (and who says that he expects to sign marriage equality into law within about three years). Marty says he has favored full equality for gays for many years, and did so in 1994, but doesn't recall whether his published positions that year included explicit reference to marriage....

Black interviews DFL state Senator Tom Bakk from the Iron Range who says he now supports homosexual marriage but believes economic issues will be the key ones in the upcoming election.

I think economic issues will be key in lots of people's minds, but marriage will be important to many people as well.

I would argue the two are intimately related. Unless we have strong marriages we won't have a strong economy. The family is the foundation of our economic system. If families are breaking up that ultimately leaves our economy vulnerable. So it's short sighted, at best, to think it's just about the economy and ignore what's happening to marriage and families. Homosexual marriage is an arrow pointed right at the heart of the institution of marriage in our society.

What to expect from 2008 Minnesota Legislative Session? Haggling and Posturing

What should we be expecting from the 2008 Minnesota legislative session? A lot of haggling and posturing and not a lot of substance. Why? Because there isn't much money to go around. The state is projecting a $373 million budget deficit by the summer of 2009. That's about 1% of the state's general fund budget. It shouldn't be too hard to scale back a bit especially for a 1% reduction over a year and a half time period. Especially in light of the $1.95 billion deficit the state faced in November of 2001. Even with that huge deficit there were no tax increases.

DFLers in the legislature will demand tax increases to cover not only the deficit but provide for other spending projects. Ultimately, Governor Pawlenty holds all the cards, along with the Republican minority in the state House who will be needed to uphold any vetoes of tax increases. If they hold firm there will be no tax increases and therefore no big health care and education initiatives.

The lack of money will act as a bottleneck on all the health care, education and other social spending programs proposed for individual legislators. If there's no money then they won't have a lot to do.

DFL'ers want to close a "corporate tax loophole" for foreign corporations which would bring in about $244 million. Pawlenty said he's supports doing that if the new revenues are used for tax cuts which means there is no net increase in state taxes.

As a result, the 2008 legislative session will see a lot of haggling and posturing but not a lot else. That's not a bad thing if your chief concern is the possibility of state shrinking the family budget by raising taxes.