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PEPPIN REPORT: WHAT IS A “TAX INCIDENCE ANALYSIS” AND WHAT DOES IT MEAN TO AREA FAMILIES?

Thursday, July 18, 2013

ST. PAUL—State Representative Joyce Peppin, R-Rogers, responded to a recent tax incidence analysis (Minnesota Department of Revenue) that shows the economic impact on Minnesota taxpayers under the 2013 budget signed into law by Governor Dayton. The new multi-billion dollar tax and spending increases were implemented on July 1, and will have an immediate and largely negative impact on families in the northwest suburbs. This is in contrast to the economic improvements under the 2011 bipartisan budget that was balanced without tax increases.

Whenever a tax bill is signed into law, the Department of Revenue undertakes what is known as a “tax incidence analysis” to determine the impact of tax changes on family income across income categories. “While it was well known that the Governor and Democratic majorities’ income tax increase would be particularly hard on middle class families in the northwest suburbs, under their new budget, folks across the state who earn the least will pay the most as a percentage of their income,” Rep. Peppin explained. “What’s more, state analysts say that families throughout Minnesota will shoulder an even larger tax burden when businesses pass their tax increases on to consumers. This study confirms the concerns of many about higher taxes and higher spending.”

Economists released June budget figures that show the state brought in $463 million more than estimated. June was the final month operating under the 2011 bipartisan budget, which leaves an $8 billion budget turnaround as its legacy, complete with refilled budget reserves and cash flow account, tens of thousands of new jobs and businesses, and the fifth fastest-growing economy in the country.

“The June budget figures really do show that our state economy is rapidly improving and doing so without the need for higher taxes. I am concerned that the new budget with its increased taxes puts our recent gains at risk. Looking back over the last two years, we can see that holding the line on taxes and spending helped build a healthier economy,” Rep. Peppin said. “Next year will provide us the opportunity to take a hard look at the effects of the new budget and how it impacts the state economy. I look forward to working with my Democratic colleagues in an effort to change things for the better.”

Peppin invites and encourages constituents to contact her throughout the summer months. She can be reached at rep.joyce.peppin@house.mn, 651.296.7806, or 281 State Office Building, 100 Martin Luther King Jr. Blvd., St. Paul, MN 55155.