Governor Dayton unveiled his budget proposal last week, proposing the largest tax increase in the history of the state to pay for billions of dollars in increased spending. At a time when states across the country are working to make government smarter and more effective, Governor Dayton is instead choosing to add billions of dollars in spending without any meaningful reforms.
Part of the $3.7 billion dollar tax hike is a sales tax expansion that will mean more money out of the pockets of working families across Minnesota. Every day items like clothing, over-the-counter medicine, and oil changes will cost more under Governor Dayton’s plan. You’ll be paying more on gym memberships, personal care services for loved ones, and getting your hair cut. Hockey camps, swim lessons, and piano lessons for your children all will cost more thanks to the sales tax expansion. Families are already paying more in taxes thanks to our federal government. Now is not the time to raise their taxes further.
Governor Dayton alleges that lowering the sales tax rate, coupled with a one-time $500 property tax rebate will offset any extra money Minnesotans may pay on the sales tax expansion. The problem with this approach is that in subsequent years, low and middle-class taxpayers will not receive the rebate and as a result will be paying more for in taxes everyday goods and services.
Minnesota businesses are also set to see billions of dollars in more taxes if Governor Dayton’s proposal becomes reality. Accounting services, legal services, and advertising services all will be taxed at the 5.5% rate. Fortune 500 companies like Target, Best Buy, Cargill, and others spend millions of dollars each year on business services, and Dayton’s tax plan could cost them tens of millions of dollars in taxes, putting bottom lines and good paying jobs at risk.
These taxes make Minnesota less competitive while other states in the Midwest and around the country are implementing policies aimed at luring businesses from other states. GOP Leader Kurt Daudt described Governor Dayton’s budget as a “budget for a better Wisconsin” thanks to the jobs it would send to our neighbors to the east. We should be making Minnesota more competitive for jobs, and making every effort to attract businesses to open and relocate to Minnesota. This budget represents a step in the wrong direction for jobs in our state.
I look forward to discussing these important issues in the coming weeks and months with Governor Dayton and my colleagues in the majority. Our budget solution must be one that helps create jobs and improves the lives of all Minnesotans – not one that simply seeks to increase the size of government.