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Column: State Senate plan would restore tax fairness

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opinion Red Wing,Minnesota 55066 http://www.republican-eagle.com/sites/all/themes/republicaneagle_theme/images/social_default_image.png
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Column: State Senate plan would restore tax fairness
Red Wing Minnesota 2760 North Service Drive / P.O. Box 15 55066

As most people are aware, the Senate and the governor have taken very different approaches to resolving Minnesota's $6.4 billion budget deficit.

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The governor's plan focuses on using one-time money, accounting shifts, and borrowing against future state revenues to fill the budget gap. Additionally, his patchwork proposal will increase local property taxes by $624 million and leave a $2.6 billion budget shortfall for the next two years.

Alternatively, the Senate's fiscally responsible and long-term solution breaks the state's shortfall into three manageable pieces and provides balance through the year 2013.

The Senate proposes to use one-third federal economic stimulus funding, one-third proportional budget cuts to state government programs, and one-third revenue increases through a temporary income tax increase that would turn off when the state's budget is back in balance.

From the get-go, the governor has criticized the Senate plan and says that he opposes any tax increase to balance the budget.

But the reality is that the governor is proposing a $624 million property tax increase. This is on top of the $2.7 billion property tax increase Minnesota home and business owners have already seen under his administration.

The governor may be taking the politically popular approach by advocating "no new taxes," but he's actually just clinging to a campaign slogan that has long been broken. The Senate, in turn, is attempting to restore tax fairness and economic prosperity to our state.

The Senate's tax bill will return Minnesota's tax rates closer to the 1998 levels, before massive cuts were made by then-governor Jess Ventura. Under this system, regular, middle-class Minnesotans have been paying a higher percentage of their income than multi-millionaires. Along with being unfair, these rates set our state up for these repeated budget deficits.

The Senate's bill also creates a fourth-tier income tax bracket for earners making over $250,000.

To the average Minnesota family -- parents and two kids, with $35,000 in taxable income -- this amounts to a $59 tax increase. A family earning $65,000 would see a $252 increase. The wealthiest families, with taxable incomes over $200,000, would be asked to pay $1,054 more in taxes.

While I understand that the Senate's approach is asking folks to make sacrifices, it's important to note that the income tax increases are temporary and the new fourth-tier tax bracket also will disappear. The revenues raised will provide Minnesota the money it needs to get through these tough times without jeopardizing our schools, health care, higher education, and public-safety services.

Further, the Senate's bill provides some great job-growing business incentives. It provides immediate economic stimulus by exempting business capital equipment purchases from sales tax.

It also provides a tax credit for emerging and start-up businesses to help create new jobs. Business tax credits for high-tech industries and historic building preservation are also included.

And just to rebuff the false claims that I know will be coming by political opponents: The Senate's bill does not create the highest income or sales tax rate in the nation. There are several states with higher in each, and the Senate's bill does not even include any sales tax increase.

And for those who will say that we need to balance this budget with cuts, the Senate is actually making more spending cuts than the governor is proposing in his budget.

In the end, the Senate is offering a fiscally responsible approach to balancing the budget. A budget deficit of this magnitude simply cannot be solved with cuts alone.

We restore tax fairness for working Minnesotans, protect property taxpayers, and institute policies that will attract new jobs.

We're thinking long term to set Minnesota up for a successful economic future.

Steve Murphy, DFL-Red Wing, can be reached at 651) 385-7649 or sen.steve.murphy@senate.mn.

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