In a Star Tribune interview last week, Governor Mark Dayton said he would continue to fight to make Minnesota’s tax code more progressive, to ensure the wealthy pay their “fair share.”
Since the mainstream media often limits itself to journaling the predictable partisan ping ponging – “Democrats cheered, Republicans jeered” — it’s worth a quick look at the substance behind Dayton’s assertion.
Of course, “fair share” depends on individual values. To me, “fair share” means wealthy Minnesotans should pay a slightly higher percentage of their income to support their community than middle and lower income citizens. Not 50% more than the poor and middle class, but something like 5% more.
I realize not all of my fellow Minnesotans share that viewpoint. But judging from the polls finding overwhelming support for increasing income taxes on the wealthy, I’m assuming that for the majority of Minnesotans “fair share” means the wealthy should at least pay a proportion of their income in taxes that matches what the non-wealthy pay. As this chart shows, even that minimum fairness threshold is not being met in Minnesota:
When you take property, sales, business and income taxes into account, as Chart 1 does, the wealthy are paying not paying a higher percentage than the rest of Minnesotans. They are not even paying an equivalent percentage. Wealthy Minnesotans are actually paying a lower percentage of their incomes in taxes than non-wealthy Minnesotans.
At this point, conservatives say “but poor people pay little to no INCOME TAX, so leave the wealthy alone.” In other words, they isolate the argument on one tax only, the progressive income tax, and use that as their evidence that the wealthy are paying their fair share.
That’s like asserting that the Vikings are a better team than the Packers, based on the fact that the Vikings Jared Allen is a better player than the Packer’s Jarius Wynn. As Minnesotans are painfully aware, a football team is about more than just one player, just as a taxation system is about more than just one tax. Teams and tax systems both must be judged in their totality, because both function as a unit and have collective impacts.
The reason wealthy Minnesotans are paying a lower percentage of their income in taxes than the non-wealthy (Chart 1) is that our system has several regressive taxes and only one progressive tax (Chart 2), which makes the overall impact of the entire tax system regressive.
Therefore, the “no new taxes” pledge is a nifty way to lock in the significant advantage wealthy Minnesotans enjoy in the current state tax system.