Lori Sturdevant, an editorial writer and columnist, has covered state government and politics for more than 30 years.

The Minnesota Senate's tax plan

Posted by: Lori Sturdevant Updated: April 22, 2013 - 2:03 PM

News about the Senate DFL majority's tax proposal, due to be unveiled Tuesday, was scarce Monday at a Humphrey School conversation among former House Republican Speaker Steve Sviggum and this session's leaders of the DFL majorities, Sen. Tom Bakk and Speaker Paul Thissen.

Instead, Bakk offered something else -- a more fulsome explanation than heard to date for the Senate majority's decision to pursue sales tax reform, despite DFL Gov. Mark Dayton's decision to drop his own sales tax proposal in the face of stiff business opposition last month.

Reformers have argued for years that taxing the purchases of clothing and consumer-purchased services would allow for a lower overall sales tax rate, which would stimulate sales. It would also help stabilize state revenues, drawing them from a broader, less volatile share of the state's economy.

To those well-worn arguments, Bakk added one more. Raising the sales tax shifts a portion of the state's tax burden to out-of state payers, particularly businesses based in other states.

"Generally speaking, the income tax falls 100 percent on the residents of Minnesota. The sales tax, on the other hand, a huge proportion of that is exported away from our citizens," Bakk said. He noted that 46 percent of today's sales taxes are paid by businesses, and not just local ones. "It ends up getting paid by Wells Fargo in San Francisco, by WalMart in Bentonville, Arkansas, by John Menard in (Eau Claire) Wisconsin. It doesn't all fall on Minnesotans." 

That may be true of the existing sales tax base. It's questionable how many businesses buy the digital books, pedicures, pairs of socks and other consumer items that Senate DFLers would add to the sales tax base. Nevertheless, that's the argument Bakk said he'll bring to the end-of-session negotiating table with Dayton and House DFLers, who've evinced very little interest in sales tax reform this year. 

"Broader and lower is good," Sviggum interjected. Bakk concurred.  The Senate's plan would take the state sales tax rate from 6.875 percent to 6 percent.

 

 

 

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