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SPIN METER: On new tax effects, both sides stretch

  • Article by: BRIAN BAKST
  • Associated Press
  • July 30, 2013 - 3:30 PM

ST. PAUL, Minn. — Dueling news conferences Tuesday left Minnesota taxpayers with a blurry picture about how much they pay to run government.

Democrats led by Gov. Mark Dayton touted the first drop in property taxes in a decade. Top legislative Republicans countered that "everybody is paying more" when it comes to taxes overall.

But in searching for political advantage, both sides gave an incomplete picture. Neither can offer certainty when it comes to your taxes.

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THE SPIN: "Now for the first time in over 10 years, Minnesotans will receive the property tax relief they need," Dayton said in promoting a Department of Revenue analysis projecting a reduction in property taxes statewide by $121 million for 2014.

Any assessment that property taxes will go down by a certain amount should be viewed with skepticism because cities, counties and school districts have several more months to set their property tax levies — and they're the big players when it comes to what homeowners, cabin owners and businesses pay. Those rates won't be set until later this fall.

The Dayton administration bases its projection on an assumption that local leaders will pass along half of the state aid they get in the form of property tax relief and that more homeowners and renters will claim refunds designed to absorb some of their tax burden.

After grappling with stagnant or reduced state aid for years, many communities could opt to hire new police officers, tackle a backlog of road projects or pay off debt. Those that can't make their money stretch enough could choose to raise tax levies, too. But they will face an additional obstacle: The Legislature imposed limits on new taxes through local levies, but local leaders won't be notified of those precise caps until September.

Whether Dayton's claim pans out won't be known in until the Revenue Department does an analysis on firmer data in February.

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THE SPIN: "Every Minnesotan from every income level will pay more in state and local taxes because of this tax plan. Those are simple facts," said House Minority Leader Kurt Daudt, who joined Senate Minority Leader David Hann in criticizing the Democratic budget. They drew attention to a separate Revenue Department analysis on taxes produced earlier this summer.

It's true that the $2.1 billion in new Minnesota taxes didn't just hit the rich, whom Dayton and legislative Democrats demanded chip in more through high-end income taxes.

Smokers are forking over more for cigarettes. Online shoppers are finding it tougher to escape taxes on digital books, movies and other purchases. But property tax breaks could offset some of the higher cost. How it nets out will vary by taxpayer.

The analysis the GOP leaders held up as the benchmark study shows a rising tax burden up and down the income ladder, with those earning the least feeling the biggest pinch. That's largely attributed to the increased tobacco tax because those with lower incomes must pay a greater share of their paycheck for cigarettes. But not everyone smokes or buys goods over the Internet.

Here's the catch: Even under a no-new-tax budget that Republican majorities advanced in 2011, a tax incidence study from the Department of Revenue found each income group would pay more in taxes than they were before. Because of reductions in state aid to local governments, the report's authors figured higher property taxes would result. In that study too, those at the bottom were hit the hardest.

Looking to climb back into power in the 2014 election, Republicans are striving to show voters the new tax blanket is spread far and wide. The argument could backfire if it isn't.

EDITOR'S NOTE _ An occasional look behind the political rhetoric

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