Posted: 03/11/13 12:05, Edited: 03/11/13 22:16
by Dave Mindeman
In politics, bold thinking is never rewarded.
Governor Dayton is going to be dropping a large portion of his original tax plan. I guess getting reelected has taken precedence.
I can't exactly blame him....it is the nature of our political system. We either do nothing about problems until a crisis occurs or we do things in tiny, incremental steps.
The pragmatist in me accepts that, the progressive in me finds all of it deeply disturbing.
I doubt that our structural budget deficit can be fixed by raising taxes on the wealthy alone. There are just too many obsolete tax methods that are going to continue.
We still have a service economy and the ability to raise enough revenue on taxing goods will continue to decline. It is disappointing that the Governor is going to scrap the entire business service tax....some additional taxes on service would certainly have been appropriate.
For instance, I fail to understand the logic that corporations can hire consultants and accounting firms and lawyers for the sole purpose of reducing their tax liability....and yet, if we tax that service it will destroy the economy. Nonsense.
In addition, I am disappointed that so much attention was paid to the business tax, that we failed to articulate how beneficial it would be to lower the overall sales rate of 6.875 to 5.50. That will probably not change now and will allow the GOP complaints about how we are the highest sales tax state in the Midwest to go on ad infinitum. And it is true- we have the highest Midwest sales tax, but any kind of attempt to change that will take a major restructuring as Dayton had proposed and which everybody seems to be rejecting.
I still have some hopes for incremental changes. Here is my pragmatic wish list.
1) Wealthy Income Tax Hike
-- You know, I would have rather seen this go away than the buiness service tax. But then business wants none of it anyway. It is likely that this will pass now (with business and higher income residents objections), but it is now the only way to eliminate the deficit and do anything about education. The business community simply abdicates their state citizenship. They want the great education. They want the roads and bridges fixed and maintained. They want transit to be modern and able to transfer commuters and shoppers more efficiently. But the bottom line is they will not pay for it.
2) Transit Tax
-- the .25% transit tax has to stay on the table. We simply have to pick up the pace on a full transit mechanism for the Metro. I'm ok with it being a seven county only tax. Outstate will not see the full benefits -- but they will derive ease of access when they visit the Metro. They will still spend significant money in the metropolitan area; so they still pay some of it. But the longer we slow walk our way to a full transit system, the farther behind we will be as modern metro area.
3) Mayo Clinic Proposal
-- I realize that there are some questions as to how much the state would be paying overall in this venture. Bonding has a price (as the tobacco bond fiasco has shown us). But the quicker we move on this, the quicker Rochester can begin its development phase and be an engine of growth in a more rural part of the state. Rochester can not only be a "medical destination" but the entire state of Minnesota can be a leader in a growth industry as more and more medical personnel see Minnesota as the place to be.
4) Repeal of DOMA Discrimination
-- This is still just the right thing to do, no matter what kind of polls we get on the issue. We need to settle this and move on. A year from now, we will wonder what the big deal was.
5) Education Investment
-- The promise of new revenues in education has to continue. Dayton may have to dig deeper in the budget analysis to make this happen, but we need it to work. Unlike a lot of people, I'm OK with the budget shift repayment delay if we can get new permanent revenues. I think most of the school districts feel the same. The scaling back of Dayton's grand proposal will make this a little tougher now - but it is still a needed future investment for the state economy.
Those are my 5 "musts" for this session. The original intent had so much promise and was a true reform that would have put the state on its firmest financial footing ever. But we are not going to go there it would seem.
We will have to settle for the piecemeal approach....
as we always seem to do.