Posted: 11/12/12 06:40
by Dave Mindeman
This may sound a bit strange coming from a "liberal extremist" like me, but I am not in a big hurry to increase Minnesota state taxes on the wealthy.
Don't get me wrong, the Federal Taxes, the Bush Tax Cuts, are a different deal. The wealthy portion of that deal needs to end and the middle class portion to continue.
But for Minnesota, I would prefer a fuller examination of the overall tax structure.
We do have a high tax bracket for higher incomes. It has been a Republican talking point for decades. I still don't believe that raising those tax rates will somehow hurt the state economy. And as I have said many times, the myth of wealthy job creators is still just a myth.
But there are other ways to increase revenues from wealthier tax brackets than raising the current rates.
I think we should overhaul our sales tax system. Keep the clothing and food exemptions, but broaden the tax base. That means several things....
1) Collect internet sales taxes. That should have happened long ago. It is an unfair advantage for internet commerce over brick and mortar companies.
2) Eliminate exceptions. Keep the exemption on food and clothing but tax the incidental exceptions that have creeped into the code via special interest groups....like feminine hygiene products.
3) Broaden sales tax to include services. This may be a way to collect more taxes from the wealthy. For instance: I pay sales tax on a purchase of TurboTax for doing my income tax. Shouldn't we be taxing accountants and tax attorneys who provide services for high incomes to beat paying tax?
Another means of collecting taxes from higher incomes would be to cap deductions. Put a deduction limit on home mortgage interest deductions. Cap miscellaneous deductions. Tax brokerage services. Cap financial service deductions. Things like that.
And if we broaden the sales tax base, then lets lower the percentage. Instead of 6.5% on a limited base; move it to 5.5% on a broader base. We can still increase revenue. And, if we are so inclined, make the sales tax a two tier tax. With a higher rate on luxury items like jewelry and recreational vehicles.
Some of these possibilities would bring in more revenue from higher incomes without resorting to an income tax increase. That would complicate GOP talking points, but still meet the need for increased revenues.
Do some of that and we can get serious about fixing budgets.