Governor Dayton proposed his two year budget plan on Tuesday for 2014-2015 and it includes a plethora of changes to Minnesota’s tax code that I believe will harm the middle class. First, Dayton is asking for a new income tax bracket on individuals with incomes above $150,000 a year or $250,000 per couple, raising the rate to 9.85%. Despite all the talk of taxing "millionaires and billionaires," Dayton’s new income tax is 25% higher than the current rate and will impact thousands of Minnesota small businesses that file individually. Policies either help create jobs or help eliminate them. This is a job-killer.
The second large piece of Dayton’s plan is a new state sales tax across services and products that are currently exempt and account for a large part of family annual budgets. Dayton would lower the sales tax to 5.5% but no longer exempt clothing (items over $100.00), personal services (like haircuts and oil changes), or professional services (like legal work or accounting). The change, he claims, will bring in $2 billion in new revenue that the state can use to grow and expand government. Dayton would like to spend nearly $38 billion over two years, a 7.6% increase over current spending, and would do so with $3.7 billion in new taxes on Minnesotans. This is the largest tax increase ever called for by a Minnesota governor.
As a newly elected state representative, I’m still learning my way through the budget process. I don’t need years in St. Paul, however, to know that average incomes for families I represent are not growing at nearly 8% every two years like state government would. In some estimates, Dayton’s growth of government would be twice as fast as the growth of Minnesota’s entire economy itself. That’s a recipe for disaster.
Residents of Scott County would also be subject to a new “transit” sales tax to fund bus and rail projects decided on by the unelected members of the Metropolitan Council. Not to forget smokers, Dayton is asking for a new $.94 per pack tobacco tax, making the total tax $2.52 for every pack sold. While running for governor in 2010, Dayton said he opposed expanding this tax because it was “money out of the pockets of working people and the poor.” It appears he’s had a change of heart.
As many of you know, a public school shift to balance the budget in years past left our area schools with less aid than they anticipated this year. Before session began, my colleagues in the House pledged to pay the remaining debt back to local school districts. The Governor’s shameful plan wouldn’t fully pay schools back until 2017.
Finally, throughout this budget cycle I will call on my fellow public servants to seek a balanced approach to our spending problems. While he claims his plan is balanced, Governor Dayton only cuts $1 in state spending for every $16 in new taxes he collects from the wallets of Minnesotans. We can and must demand better from our state’s leaders.
As always, I look forward to hearing your thoughts on the budget and other important issues as we move through the 2013 legislative session.