By Mike Kaszuba
A state Department of Revenue analysis of DFLer Mark Dayton's so-called "Tax the Rich" proposal to add tax brackets for high-income earners showed Tuesday that the gubernatorial candidate's plan would raise roughly half of what he had hoped to get to help solve Minnesota's $6 billion budget deficit.
Dayton has campaigned on a promise to have the state's richest 10 percent pay the same percentage of their incomes in state and local taxes as the rest of the state's taxpayers, a move he said could help raise $3.8 billion in the current two-year budget year. He said the new tax brackets would be combined with proposals to restore a third property tax bracket, a plan to eliminate tax loopholes for "snowbirds" who only live in Minnesota for part of the year and a renewed attempt to crack down on tax evaders.
But Tuesday's analysis, while looking at only the plan to add tax brackets, showed that adding a new top tax bracket at a rate of 10.95 percent starting in 2011 would raise roughly $1.9 billion in the 2012-13 biennium. Adding the new bracket would give Minnesota one of the highest tax rates in the country for high-income earners. The 10.95 percent rate is set at $150,000 for married joint filers, $75,000 for married separate filers and $130,000 for single and head of household filers, the department said.
Under the scenario, the department added, an estimated 99,400 returns would receive an average tax increase of $7,573 per return in 2011.
Katharine Tinucci, a Dayton spokesperson, said the analysis showed "that more work is needed to identify additional sources of revenues". The analysis, she added, "shows us what we already know: there is no single solution to raising the revenues needed to make Minnesota's taxes fair and to fund essential services."
