Dayton flip-flops: Will support new regressive taxes

Dayton flip-flops: Will support new regressive taxes

On this one, you can’t say we didn’t warn you.

DFL Governor Mark Dayton on Jan. 22 announced his proposal for a two-year 2014-2015 spending and taxing plan that’s received little public support outside of his office walls.

With a new DFL majority taking power in the MN legislature, nothing stands between Dayton and his vision of complete government dominance and sky-high tax rates. The plan, if passed by the House and Senate this spring, would raise taxes on “high income earners” – you know, the “millionaires and billionaires” we heard about during the campaign. In actuality, rates will go up for individuals making over $150,000. That includes small businesses that file individually (92% of them do) and bring in over $150,000.

If passed, this new income tax rate would put us fourth in the nation behind only Hawaii, California and Oregon; but even in those states the income level required for higher taxation is much higher ($1 million in CA). This plan is a wet blanket that our recovering economy cannot afford.

In addition to higher taxes on those people that employ others and create jobs, Dayton’s plan envisions a new sales tax across products and services that are currently exempt (while lowering the rate by 1%). That means sales taxes would become 5.5% but will include clothing (items over $100), oil changes, tax services, legal fees, hair cuts, gym memberships, Tylenol (all over-the-counter drugs), newspaper subscriptions, online sales (like iTunes and Amazon), and the list goes on and on. Our clothing tax exemption welcomes millions every year from outside the state to places like the Mall of America. Dayton justifies it by saying his lowering of the overall rate will “balance out” for every MN family and nobody will pay more. I don’t even have to convince you how ridiculous that sounds.

In fact, the list of services that would be exempt/not exempt from taxation is still changing. Similar to exempt corporations under Obamacare’s coverage mandate, Dayton says the list is not solidified yet and certain exceptions can be made, through him, with a “compelling reason,” sounds an awful lot like a dictator picking winners and losers, not an elected official. Dayton’s already fuzzy math crumbles like a Jenga puzzle once certain items/services are taken off his new sales tax wanted list. Minnesotans and our lawmakers ought to know better.

Quite possibly the worst piece of Dayton’s budget puzzle is the spending. It would spend $38 billion over 2014-2015, nearly an 8% increase over current spending. Most Minnesota families won’t see their income grow 8% in two years, and neither should government’s. It raises $3.7 billion in new taxes ($2B from the new sales tax), making it the largest tax increase ever proposed by a governor. To give you some comparison, Iowa spends around $12.5 billion every two years and has a population roughly 3/5 of Minnesota. Accounting for population, their spending would come in around $22 billion compared to our current $35. Minnesota has a spending problem not a spending opportunity.

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.

Here’s a good one for all you fans of a public education. In 2011, the Governor signed a budget agreement that borrowed over $2 billion from public schools and “shifted” it to balance the budget. Last fall, he and GOP candidates both said they would prioritize paying schools back this spring for what they are still owed. The new budget would delay repayment to schools until 2017, adding over $100 million to the price tag just for the cost of borrowing.

Rather than taxing middle class families, it’s time for the government to do what millions of families have to do each year – tighten their belts and live within their means. Minnesota is projected to have $35.7 billion dollars in existing revenue for the next biennium—more than enough money, and good enough to be the largest budget in state history. Our last budget was $34.4 billion, and we should be spending as much, if not less than we did during the previous biennium. The path to economic prosperity in Minnesota comes through growing the private sector, and responsibly managing our budget – not increasing the size of government by billions of dollars. Remember, big government is not sustainable.

The budget may be more appropriately labeled “for a Better Wisconsin” since the new tax rates would further drive job creators and consumers across our borders. Wisconsin Governor Scott Walker told the public he was welcoming of new business to the state following Dayton’s budget release. On Jan. 24, Dayton told reporters he didn’t feel there is a correlation between job growth and tax rates. If this is truly the case, we are in much worse shape under his leadership than many had feared, for a leader with such a lack of understanding for free market principles is destined to make mistakes that destroy prosperity.

The move is a huge gamble by Dayton as he enters into campaign reelection mode for 2014. Many Democrats in St. Paul have been quick to distance themselves from this large tax overhaul fearing backlash from the same voters that entrusted them to bring balance and logic to the Capitol.