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Legislative News and Views - Rep. Paul Anderson (R)

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Gov's budget and agriculture

Friday, January 25, 2013

Dear Neighbor,

The ripple effect of new taxes Gov. Mark Dayton is proposing may be felt throughout our state economy, but I am told it appears ag-related purchases would not be directly impacted.

We are still sorting through the details of the governor's 2,008-page budget proposal, so more things may come to light. I am closely monitoring this situation and will pass along clarification as more information becomes available.

As of now, here is a list of some things we know about the raw numbers of the governor's proposal:

· $37.9 billion in state spending for FY 2014-15 (compared with $35.2 billion in FY 2012-13)

· 7.6% increase in spending and 11.9% increase in taxes from FY 2012-13 to FY 2014-15

· $225 million in cuts to forecasted spending increases and $3.7 billion in new taxes (that translates to $16 in new taxes for each $1 in spending reductions)

Of the $3.7 billion in new taxes proposed by the governor, $2.1 billion would come from extending the state sales tax to goods and services which previously were exempt. Here are some things we know would be taxed under the governor’s plan:

  • clothing items over $100 per item
  • club memberships
  • over-the-counter drugs
  • personal care services and instruction (haircuts)
  • auto repair services
  • business-to-business taxes including legal, accounting, management consulting, advertising, and business support services
  • 94-cent per pack additional tax on cigarettes
  • 25% increase in income taxes on highest 2% of earners ($250,000 married, $150,000 individual)
  • “snowbird” tax (subject to a pro-rata income tax based on the number of days they are present in the state)
  • online purchases and digital downloads

It concerns me that many of these new taxes would be paid by middle-class citizens throughout the state. We heard an awful lot about “tax the rich” last fall, but these taxes would impact all of us, even the poorest Minnesotans. Most of us already saw our paychecks shrink when the federal government allowed payroll taxes to rise earlier this month and these new taxes would just add to the burden.

Work on the budget will heat up once we receive our state’s update economic forecast in late February. The governor’s plan is designed to serve as a guideline for the Legislature and I will continue advocating for our area’s best interests.

I’ll keep you posted.

Sincerely,

Paul