Minnesotans who make more than $1 million a year already are projected to pay $1.081 billion in state income tax for the 2011 tax year.The Minnesota rich are not unanimous in wanting to pay more taxes.
Some of the state's top earners said in interviews this week that the "tax the rich" plan rings hollow to them. Few would comment about the potential hit to their own paychecks and lifestyles. Most insisted that their chief concern is the broader impact on the state economy.Something tells me the reporters writing this story don't have a Rolodex of "rich" people's names to call asking about increasing taxes, so one really has no idea how many "rich" folks agree that they want to pay more taxes, but except for Bill Gates and Warren Buffett who both have said they would be willing to pay more, I doubt most "rich" folks want to pay more. But I could be wrong.
Raising taxes on the "rich," I assume, is for the most part raising taxes on small and medium size businesses. These businesses would likely curtail profit sharing for their employees. Increasing taxes on businesses would probably discourage new businesses from re-locating to Minnesota, and create higher unemployment. This is not rocket science.
The governor's plan would raise Minnesota's tax rate to twice that of Illinois. Twice. Double.
Currently, only seven states have a higher top income tax bracket than Minnesota.So, for all the pain and all the downside in raising taxes, it still doesn't get the state very far along in meeting the budget gap and its unintended consequences would probably exacerbate budget problems down the road.
Back of the envelope calculations: $5 billion gap/5 million people = $1,000/Minnesotan. $1,000 divided by 50 weeks is $20/person/week.
Oh, and this just in: Minnesota's credit rating was just lowered.
The $700 million might be needed just to pay the increased interest rates that will now be levied on Minnesota as their credit rating tanks. I assume the gap of $5 billion is borrowed money. Back of the envelope calculations: $700 million / $5 billion --> 14%.
The $700 million in tax revenue is in addition to large budget cuts that will have to implemented, so the majority of the budgetary pain will be inflicted upon those that benefit from government services.
ReplyDeleteI would advise everybody to watch the following youtube for the 10 minutes it's on.
ReplyDeletehttp://www.youtube.com/watch?v=661pi6K-8WQ
Basically states that for 2011 if you take *ALL* the money from the 'rich', and from the 'evil' profit companies, and many others, you can pay for the federal government spending for one year....
then after that......?
Yeah, it's worth a 10 minute viewing....
Oh,
ReplyDeleteand it is *ALL* about spending to any of these governments!
If you are spending 20% over your budget, then cut EVERY DEPARTMENT budget by 20% -
if spending is 30% over budget, then cut EVERY DEPARTMENT budget by 30%....
pretty simple...
Minnesota currently has 18 Fortune 500 companies. The proposted frontrunner of running Apple lives in MN., not California.
ReplyDeleteThe debt incurred by this shut down is raising Minnesota's unemployment payout, thus getting further in debt. Illnois may have higher taxes but, they also tax their sales for clothing. The Mall of America itself gets bus loads of visitors from around the country. Has anyone ever figured out what that revenue would generate?
Reporting from the frontlines of the Minnesota shutdown: Correction to "Anonymous". Not just "busloads" but planeloads of people come to the Mall of America primarily for the tax free clothing. More than one-third of credit card purchases are from out of state. In Europe they have a "value added tax" of more than 20% that they are supposed to pay but they figure under 55 do when they purchase in the USA and Fed Ex or UPS home. MSP airport is right next to the MOA. A couple of years ago I saw a United Arab Emirates 747 Jumbo jet parked on a side tarmac (a newer on with big winglets). People who work at the MOA tell me this is not uncommon.
ReplyDeleteBTW: The five billion dollar figure is the "wish list". Right now Governor Dayton (heir to Target Corporation which has their trust fund in South Dakota) and the republicans are two billion dollars apart.
By law Minnesota cannot run a deficit. The five billion might be for a bonding bill. In theory bonding bill money can only be used for long term capital improvements. (equivalent of my house needing a new roof which has an expected life of 25 years). That said, money is fungible.
Very, very interesting. Huge number of data points in that comment. Thank you.
ReplyDeleteThe fact that the governor's family has its trust fund in South Dakota speaks volumes.
With regard to Rory's comments above: great posts. I apologize for late response to Rory's post -- I have been traveling and many family activities.
ReplyDeleteI agree: if deficit requires 20 percent cut, then do it across the board; then six months later, re-evaluate and re-configure budget to help those who are hurting the most. Not rocket science.
I'm behind on posting / replying to comments but after reading the story about restaurants/bars being affected, I'm not so sure the following is entirely accurate:
ReplyDeleteThe $700 million in tax revenue is in addition to large budget cuts that will have to implemented, so the majority of the budgetary pain will be inflicted upon those that benefit from government services.