60 thoughts on “OK, Now Sell “Tax the Rich”.

  1. PM says:

    Look, it ain’t a gonna happen. At least not without DFL majorities in the House and Senate, which means not for a while…..

    We all know that his budget was going to be DOA, so this was the right thing for him to do, politically–punt. Make the R’s do the hard work of showing real cuts, and taking it on the chin when grandma finds out she’s not getting anymore Metro Mobility Rides….

    All Dayton has to do is wait a little bit until the R’s start in with the comprehensive budget proposals where they cut state spending by $6billion, and all of a sudden the discussion will not be about people leaving because of higher taxes, but rather people leaving because there are no roads or schools or parks…..

    So, all that said, i have to disagree with you–this is not portrait in political courage from Dayton. If anything, this is the opposite–rather than taking the lead to paint a responsible way out of our budget difficulties, he has cynically and politically taken the easy road–keeping true to his campaign promises, and putting out a budget that will never get anywhere, and daring the Republicans to put up or shut up–to show us all what a budget balanced by cutting only would look like. And we all know that it will be very ugly indeed.

    Of course, if he had asked me, i would have told him to do exactly what he has done. Putting forward this kind of a budget will keep all of those true believers on the left happy, because (as lambert has shown) dayton really is one of them. And there isn’t a snowball’s chance in hell of it ever coming to pass, so we really do not need to worry about the what if’s of its passage.

    Dayton has made the first (predictable) move of the chess game. Now the question is if the Republicans will follow suit. The smart money is that they will–propose a budget that is red meat for their partisans (lots and lots of cuts for programs they don’t like–say goodby to high speed trains, for instance, and watch what happens to public employees unions!), which will also not have a chance in hell of surviving a veto (and may not even get passed by both houses).

    The we will see who gets beat up the most–taxed to
    death meme, or cut to death meme–and who blinks first in terms of proposing a sensible, split the difference budget solution that does some of everything.

    Wake me when we get there……

    1. Joe Loveland says:

      When Democrats propose taxes, Republicans say “aint gonna happen, period..end of discussion.”

      When Republicans propose the deepest cuts in history, Democrats say “well, we’re willing to cut too.”

      With those as the two opening bargaining positions, the whole debate always seems to play out exclusively on the cutting side of the ledger.

      The only thing that will change that predictable dynamic and bring taxes into the final budget solution is…vetos. Vetos will have more to do with Dayton’s ability to balance the package with taxes in the mix than verbiage. If Dayton wants taxes to be part of the solution he is going to have to be willing to veto, veto, veto, veto. That’s what allowed TPaw to win year after year, not the persuasiveness of rhetoric.

      Datyon needs to say “relying 100% on cutting aint gonna happen” with a veto stamp in his hand. But it will be the veto stamp that proves persuasive, not his verbiage.

      1. PM says:

        I generally agree….with one caveat. all of this will be done with each of those politicians looking towards the next election–2012, with (drumroll, please) a popular incumbent president headed towards a comfortable victory against a weak opponent, and the exact same debate taking place at the national level (do we solve the deficit with taxes or spending cuts?).

        All of the players will be trimming their sails so as to position themselves for a successful re-election campaign–they will all be interested in being able to say that they helped to solve the crisis, as opposed to being labeled as the one who created the crisis. “Do nothing” congresses do not get re-elected, and shutting down government isn’t a popular strategy.

        In that context, the verbiage could be critical.

    2. PM: You may very well be right. As I say, I’m giving Dayton credit for actually putting it in writing, but I’ve never seen how anyone — much less a guy with his limited social skill set — makes the idea viable. That said, “taxing the rich” is appropriate, morally (in terms of being fair and progressive) and fiscally (they have the money, others do not).

  2. Newt says:

    Wouldn’t it be so much easier to establish how much government is really needed, then address the taxation issue?

    It’s clear that liberals see taxation primarily as a vehicle to make sure no one gets ahead in life “too far” rather than a mechanism to fund operations.

    1. PM says:

      One problem with splitting them apart–how much government people think is necessary is directly related to what they will have to pay to get it (which is that taxation part).

      If they think that someone else is paying for it, they will want more (why the Wilf’s want a really nice stadium, for example). If they think that they are paying for it (and someone else is using it), they will want less government.

      For example–i don’t go to Vikings games, so the Metrodome seems fine to me…

    2. Newt says:

      My point is that liberals view taxation primarily as an instrument of social control.

      My preference would be that taxation is used as means to fund public priorities.

      What’s also lost in this discussion is how government spending increases are largely codified on auto-pilot. The damage is compounded annually, outside the legislative process.

    3. PM says:

      Pretty much all economists view taxes as a tool to modify behavior–sin taxes, for example.Soc. Sec and Medicare taxes are clearly designed as a tool for savings. Tax breaks for R&D and all sorts of various things in the corporate tax code are also designed to either elicit or limit certain types of behavior.

      Maybe not exactly social “control”, but certainly social engineering.

      Clearly there is a problem when too much of this stuff accumulates, and there is another problem when the squeaky wheel gets the grease. Often there are conflicting definitions of what is a social good (should housing really be subsidized?).

      I think that it is a great idea to do something like the Bradley Gephardt tax Act of 1986 every few years–get rid of all the loopholes and deductions and start over with a clean slate.

      1. PM says:

        Well, that is the next step, isn’t it? The House and Senate will have to produce budget alternatives now that they have seen that the Gov’s proposals are not acceptable to them.

        And then it will be the turn of others to complain…..and so it goes.

      2. Newt says:

        Brian – being coy is a necessity in this political environment. We start from the premise that the DFL and the media are thoroughly convinced there is no waste or fat to cut.

        Far better to ram though cuts in a single bill than suffer a protracted battle in the media.

      3. Joe Loveland says:

        Hi Newt. Do you think there is no waste and fat in corporations? I’ve seen lots in the many corporations I’ve worked in, around and with — thick layers of wheel-spinning management, cumbersome and inefficent processes, CYA risk aversion in the name of job security. The same sorts of things that plague large government organizations plague large corporations. I’ve worked in both worlds, and frankly I don’t see differences in the area of waste.

        Does the fact that waste and fat exists in corporations stop you from investing in them?

      4. Newt says:

        Joe: Like any investor, I look for ROI. As a shareholder, I want management’s feet put to the fire for waste and excess.

        Not sure what this has to do with the state budget.

  3. Minnesotan says:

    I seriously doubt I’ll ever be in the bracket that this may impact, unless the $5 Powerball ticket I bought today hits big.

    But the problem I’ve always had with Dayton’s proposal is targeting one group of people to fix our mess.

    Fill in this sentence, “To fix our budget problem, we will tax the ________.” If you replaced “rich” with “whites,” “native americans,” “blacks,” etc can you imagine the uproar?

    Obviously I understand comparing race to income level isn’t comparing apples to apples, but singling out one group just seems wrong. Unless you can unequivocally prove that the uber rich in MN are the reason we have a $6 billion deficit.

      1. Joe Loveland says:

        I understand the point, Minnesotan, but one can also fill in this sentence: “To fix our budget problem, we will CUT _____.” I’m confident that most of the blank is not going to be filled in with “things used predominantly by the richest Minnesotans,” so that’s not equally sharing the burden either.

        When you balance the budget with all cuts, upper income Minnesotans will not lose nearly as much due to the biggest cuts…in health coverage, K-12, saftey net supports, job training, higher ed need-based scholarships, transit, child care support, etc…or they have doable workarounds available to them because of their income (e.g. send the kids to private schools).

        Folks who lose their family health coverage because of cuts will lose a lot more money out of their pockets than most rich people would lose under the tax increase. The impact of a “cut only” approach is far from equitable across the income quintiles.

  4. Festus says:

    People don’t pay taxes, money does. The tax is on a dollar of income, which Dayton pleads should be done fairly. Some dollars are taxed at a lower rate, even though they disproportionately benefit from the commons of a well regulated state. For example, do you benefit from intellectual property law? Dollars that benefit from a smoothly functioning state apparatus should pay their fair share for that apparatus.

    1. Festus says:

      Well, then, let’s try again!

      Dayton does not want to tax the rich, he wants to tax large amounts of income in a way that is fair with respect to small amounts of income (a homeless person suddenly appointed CEO of BlueCross would pay the larger tax on the winnings). By fair, I mean at least the same or better a higher rate than small amounts of income. Why higher? Because high incomes are generated from activities that differentially benefit from all the stuff that the state does (intellectual property law, trade agreements, business development grants, etc, etc, etc), so those high incomes should pay differentially more for enjoying the ‘commons’ of a smoothly functioning state apparatus.

      Access to and benefit from the extensive commons provided by the state is the rationale for higher tax on higher income, not because ‘they can afford it’.

      I may try again after happy hour!

      1. Minnesotan says:

        That’s more clear Festus. While I’m certainly not as up to speed on tax issues as many people here, isn’t a lower rate for higher earners more of an attempt to make the taxes paid more equitable?

        Just using simple math, let’s say one woman earns $1 million annually in income and pays 10% in income tax, while a recent college grad earns $30k and pays 25% in income tax. The woman would pay in $100K in taxes, while the recent grad would pay $7.5K. The woman may disproportionally benefit from these commons, but 93% more?

        Again, my Powerball didn’t hit last night, so I don’t plan on being hit with this tax. I just don’t see targeting one group as the right way to do things. If people are for raising taxes, we should at least raise everyone’s taxes – with the rich folks rate going up at a higher percentage.

      2. john sherman says:

        Look at it this way, if trade in my 13 year old Ranger for a new BMW 7 series and I call my insurance agent, she’s going to say, “That’s great, your insurance is going up a zillion percent.” It won’t help me to say that it’s still me and the thing I drive. Similarly, in general the same is true for house insurance; the guy with the new 10,000 sq. ft. McMansion pays a lot more than somebody like me with a 125 year old 2,000 sq. ft. vernacular house. In a sense the police and fire departments provide more service to the rich because if they lose everything they lose more.

        The point on intellectual property is a good one. My immediate short term self interest lies with the pirates in China who make the software and dvds, etc, which get sold very cheap; on the other hand, we have an array of tax supported entities including the State Dept. and ultimately the military supporting the interests of Bill Gates and Disney and the estate of Michael Jackson against the pirates. I don’t necessarily think that is wrong, but this is a clear case of tax expenditures benefiting the super rich and large corporations.

  5. Joe Loveland says:

    We are hearing that rich Minnesotans are being asked to pay more than their fair share of taxes.

    But the top 10% of Minnesotans currently pay lower effective tax rates on state and local taxes (combined) than any other household income decile. The wealthiest 10% of Minnesotans pay an effective tax rate of just 10.1%, compared to 23.8% for the poorest 10% of Minnesotans and 11.2% for the average Minnesotans. (Table 1-5 in this report).

    The change Dayton proposes would restore some equity in the tax code.

    1. Erik Peterson says:

      We have a progressive income tax. The phenomena where the high quintiles show greater tax avoidance is the manifestation of savings / excess earnings by the wealthy that are not exposed to the sales tax.

      As a crank, I’m not reflexively anti-tax, but do find this ‘effective rate’ nonsense that comes from Growth and Justice completely unconvincing. The purpose of the income tax is not to remediate the lack of progressivity in other taxes.

      As a ‘message’, I don’t think I’m alone. This consistently falls flat.

      1. Joe Loveland says:

        The logic of the total effective tax rate measure makes more sense to me. If you want to learn about the relative fairness of Minnesota taxation, you have to look at the cumulative impact of ALL types of taxes Minnesotans pay, not just some to the exclusion of others.

        For instance, if my local property taxes increased by $2,000, but my state income tax decreased by $200, would I think I got a tax cut that year…because, after all, income taxes are what really matter? Of course not, because my total tax burden would have increased. What matters to us in daily life is the overall tax bill, and that’s why this measure is more meaningful than cherry picking some taxes but not others.

        (One note though: I see the MN Department of Revenue authors say there are reliability problems with the measurement of the lowest quintile, so disgregard the point I made about the lowest quintile. The larger point still holds, though: The richest 10% is paying a lower effective rates on total state and local taxes than any other income grouping in MN.)

      2. “Effective tax” is the best place to have a coherent discussion. Very few of the targeted crowd pay anything close to the “advertised rates”. If they do, they fired their accountants the next morning and filed an appeal.

      3. Erik Peterson says:

        As a statistical matter it’s got less to do with sheltering strategies than it does the sales tax and the full assessment of value on high priced real estate (but this is almost certainly less true in recent years).

        Both the progressivity and the revenue problem are primarily sales tax problems. There’s been a shift to consumption of services. In addition to just not spending all their income, the wealthy consume a ton of services, and there’s no revenue being drawn from that activity.

        The sales tax is undoubtedly broken. Minnesota is one of the last places to not tax services. The income tax is not all that broken. There’s probably some value in an effective tax measurement, but under the circumstances arguing to raise the income tax to mitigate the inefficiencies of other taxes is not compelling.

        You folks are too ideologically attached to the income tax. You fix the sales tax, and you will fix the progressivity problem.

      4. Mike Kennedy says:

        Good points, Erik.

        Both federal income and state income taxes are quite progressive.

        However, when discussing federal tax rates, liberals want to lump the payroll tax and everything else into the soup to use as justification for increasing federal income tax rates despite the fact they are already very progressive.

        If a certain tax is regressive, then address it.

        BTW, I thought many types of services in Minnesota are taxed under the sales and use tax.

      5. Erik Peterson says:

        I’d clarify. As a statistical matter it’s got nothing to do with sheltering strategies. You’re either taking money as income or you’re not, and we’re measuring taxes against income.

        You fix the sales tax and you will go great lengths to fixing the effective rate disparity.

      6. Mike: I’m not sure that simply saying the income tax is quite progressive quite cuts it. It looks good on a bumper sticker, but there all those pesky statistics arguing otherwise. Moreover, in my experience the crowd playing rhetorical sleight of hand with the numbers are the conservatives who rarely if ever factor in the loopholes, deductions, shifts, off-shore incorporation tricks every sizable company applies to its tax bill. Instead they simply howl about the first, unmitigated rate … and how we’re turning in to hellhole France … which would be kind of nice, considering they have better roads, affordable health care, much lower tuition rates and a really cool train system.

      7. Mike Kennedy says:

        Brian:

        Well, yes, it is progressive, according to many studies. The OECD found the U.S. income tax rate to be the most progressive among all its peers.

        However, as you well know from past postings, I am in favor of doing away with the deductions, exemptions and making the tax more flat and more simple. As I also have noted, I expect hell to freeze over first.

      8. Erik Peterson says:

        The MN Tax Incidence studies measure taxes against reported income, and yes, an effective rate disparity among the quintiles is demonstrated.

        The loopholes such as they exist are not relevant or important. The loopholes are not income and the disparity is demonstrated regardless of them.

      9. Joe Loveland says:

        A tax system is like a Booyah (stew). We have some Booyah ingredients that are more regressive and some ingredients that are more progressive. It’s the overall blend of Booyah ingredients that determines overall progressivity/regressivity of the stew. The fact that one of the many stew ingredient is progressive obviously doesn’t ensure that the stew is, overall, progressive.

    2. Mike: Yes, income taxes as they are designed are meant to be “progressive”. But that’s about the point where the reality of progressive ends. As we see today that intent is out of whack, with a little “catch up”/remediation required on the part of the top tier to reinvigorate the lofty concept of “progressive”. i might add that what we’re trying to do here is restore the system prior to the trend of self-serving politicians fobbing off the cost of providing legitimate services on to municipalities and property taxes … which are even further out of whack in terms of “progressivity”.

  6. PM says:

    The proposal of Dayton’s that i expect is the biggest non-starter is the extra state property tax on homes valued over $1,000,000.00.

    I expect that this will potentially cause problems with localities about who “owns” property tax proceeds. Certainly the municipalities of the metro area have the most to lose from this.

  7. I think this is a great move for Dayton – really the only one available to him if he really believes in liberal principles. Next year – 2012 – the entire legislature is up for election because of the 2010 census. So if the Republicans show themselves to be the heartless thugs they are, and if they cause enough pain for enough people, Dayton might stand a chance of governing with a Democratic majority in one or more houses in 2013.

    1. Agree with Rob. The “we can’t afford to be fair” argument that the Republicans, Doug Tice, Craig Westover, and that Lucca Brassi-type business lobbyist floated is so rotten, odious, and Social Darwinist, it just has to turn people off.

      Incidentally, I think the figure that Brian quoted in the post itself is not quite right. As I understand the proposal in the budget, there is no effect on joint filers at the 150K level; it’s 200K where the tax bite is about the amount that Brian records.

      Moreover, it isn’t even that much. State taxes are deductible on one’s federal return; our family with the 200K TAXABLE income, not GROSS income, would have their federal taxes reduced by about a third of the state increase.

      Since Minnesota has been a net exporter of dollars to the federal government for a long time, this does not strike me as unfair.

      1. the figure I quoted came from an AP breakdown, which I may have misrepresented. I think you’re right about the $200k level, but the story placed it in the context of the “entry level” $150K — (the GOP’s “average cop and nurse” household). And the precise number in the story was $139.

        The rest of what you say argues again for the apples-to-apples discussion of “effective tax” , since that’s the only way to input the staggering number of Lobbyist-driven codes, statutes, exemptions, etc.

    2. Rob: The only problem is that something has to be DONE about it THIS YEAR. Crippling every aspect of state government/service, even for a bi-ennium, in order to remain competitive with … Wisconsin, which is really looking attractive to millionaires and their rapidly expanding corporations is not a pleasant prospect. What I hope, and what I’m saying is that Dayton needs to create this stark choice in the public mind RIGHT NOW.

  8. bertram jr says:

    Ah, for today, let’s clarify what is the meaning of “barbaric” is, shall we?

    The neccessary budget cutting that will undo decades of Democratic bloat in “services”, and “investments”. No.

    How about the mob rape of a lovely blonde CBS “correspondent” by Muslim fundamentalists, which even her employer CBS tried to cover up, and which even now the lame-stream media is looking away from?

    Yes.

    1. PM says:

      What a fool–
      first, apparently not a rape, but sexual assault.
      secondly, not muslim fundamentalists, but the thugs of Mubarak, and rescued by the protestors of tahrir square and the egyptian army.
      third-CBS withheld comment at the request of her family–hardly a cover up you pinhead!
      fourth–it is all over the press

      Yes, you are a twit.

  9. Ahhh, bertram jr on tax theories — i.e. blondes manhandled by Muslims. You of course MISSED each and every network reporting what they know about the incident, right? Or is the echo chamber talking point that the “lamestream” is covering up for Muslims, because it’s afraid of blondes? Have you oiled your barrel yet this morning?

    1. Newt: WE are the ones arguing that state AND LOCAL services are pretty much down to the bone … and have been waiting for you bumper sticker kids to simply point to what you see as non-essential. What is it? Early childhood? MinnesotaCare? Street repairs? Coops? You tell us where the waste is … to support YOUR ARGUMENT. Meanwhile, we’ll do what we can to plow your street.

      1. Minnesotan says:

        I have family members that work in the public sector, so I’m not a bumper sticker kid. But not everything we use tax money for is “essential.” For example, the 2011 budget for the Metropolitan Mosquito Control District is $17.9 million. Is mosquito control “essential?”

        Then there are stories like the one Channel 5 did a few months back, where they followed workers in St. Paul who were supposed to be filling potholes, and instead were taking naps, running errands etc. Obviously not all public workers are slackers, but its frustrating to a struggling family to see blatant waste like that.

        So, you take some of the less essential things we spend tax money on, mix in some skepticism about how hard public employees work, add a splash of legislators saying we need to raise taxes, and you’re left with the agitated political climate we see now.

      1. Perhaps you can lead a tour of legislators, from desk to desk, pointing out those whose services are no longer required. Personally, i don’t like the cop who gave me a ticket for expired tabs. So he’s outta here.

  10. Mark Thein says:

    I originally posted this on your facebook page but it appears you are monitoring discussion here and not there, so…………

    If a person is paying at a nearly 47% higher rate (BEFORE this new hike) on every dollar above $77,000.00, how can your statement: “The idea of making the wealthiest pa…y more — up to as much as a percentage of their income as the lower 50% — resonates with the public” – be true?

    With his definition of “rich”, a married couple earning $200,000.00 per year would pay another $1,800.00 in income taxes. This does not seem like much but it is “another” $1,800.00 on TOP of the $15,000.00+ that they were ALREADY paying to the State; plus the $50,000.00+ that they are ALREADY paying to the Feds; plus the thousands they are already paying in property taxes (and sales taxes and fees).

    Why does our Government have to be so BIG?!? This new budget GROWS the General Expenditures by 7.5% – WHY?!?

    It’s EASY to say “Tax the rich” but, even though I am NOT rich (even by Dayton’s new low standards) it does not make it “right” and doesn’t explain why we (supposedly) want government to be so intrusive in our lives…..

    1. Mark: Sorry. I’m not a big FB guy. Where are these numbers coming from? ANOTHER $1800 on (gross income?) of $200,000?

      As for Why the growth? The two easy answers are that people want these services — certainly those that effect them … and a fat chunk of employee-related costs might be contained if we could get serious about health insurance increases.

      1. PM says:

        And another area would be in pension costs. particluarly the closed off pensions that are in such big trouble with cities having to bail them out. Not an area i understand well–someone care to explain? Why were there these separate pension programs in the first place?

  11. Minnesotan says:

    For those that are like me, who don’t think Government or taxes are evil, but also don’t think government can continue to grow by leaps and bounds every year, the question becomes when do we collectively (both tax payers and legislators) say “no?” Not everything can be essential. If we’re already truly cut to the bone – and running a $6 billion deficit – aren’t we effectively screwed?

    Sure, we can raise taxes on the rich. What happens when that doesn’t solve the problem (and it doesn’t sound like it will)? Somebody please show me the light.

  12. bertram jr says:

    PM, if you wish to equivocate thusly please, by all means proceed.

    But the facts are the facts. CBS is a “news” organization that sent her into harms way, then didn’t report what happened – the “news”.

    Secondly, I don’t give two s**s who “rescued” her. It is not germane to the question of using “barbaric” in it’s proper context where neccessary spending cuts are concerned.

    Thirdly, your attempt to water down the name of the physical assault is deplorable.

    Almost akin to the silence from the women on the liberal, loony left.

    Not quite, but certainly akin.

    You want to get personal with me, it can be arranged.

    1. bertram, my man, it almost sounds if women of the “liberal looney left” have frustrated your intentions in some way. Perhaps you’d like to open up. We’re all friends here … ready to help.

      Of course, you’ll have to be frisked first …uh, Newt!

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