I heard history's echoes in the tax proposals Gov. Mark Dayton made Tuesday to balance the 2014-15 state budget. Dayton knows state history well, and remembers the same governors I do. My guess is that those echoes were not coincidental.
Two highly regarded 20th century governors were tax reformers aiming to reduce property tax burdens and shore up education funding. Gov. Floyd B. Olson introduced the first state income tax in 1933 to ease the property tax bills of people whose incomes collapsed during the Great Depression. Property tax delinquency was such a problem in 1933 that some rural school districts were unable to pay teachers. Olson's income tax was initially dedicated to education.
In 1971, while the baby boomers strained school facilities and budgets, Gov. Wendell Anderson faced a property tax revolt when he pushed through what is still Minnesota's largest-percentage sales and income tax increase, in order to reduce property taxes and boost education funding.
Dayton's new budget employs essentially the same strategy. He would raise both income and sales taxes in order to cut property tax bills, via a $500-per-household rebate, and send more resources to education. That was a winning formula for Olson and Anderson, both of whom handily won reelection after their reform moves. (Dayton's due to be on the 2014 ballot.)
The DFL governor relies more on sales taxes than his DFL precedessor Anderson did. Farmer-Laborite Olson rejected the sales tax altogether; it would not be introduced in Minnesota until 1967, 31 years after Olson died in office. But Olson would surely smile on Dayton's proposal to boost income taxes paid by high-income filers. I hope to see Anderson next week in advance of his 80th birthday on Feb. 1. Watch this blog for a report on his view of Dayton's proposals.
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