Editorial: Dayton's budget proposal for state of Minnesota includes sweeping changes
Gov. Mark Dayton announced his budget proposal Tuesday which includes some sweeping changes in Minnesota’s tax system.
His budget proposal unveiled a $37.9 biennial budget in which is he seeks to balance the $1.1 billion budget, invest in education and fund the biggest tax reform effort since the early 1970s.
Among his key points of his budget are:
* Dropping the state sales tax rate to 5.5 percent from 6.875 percent, but extending the tax to more goods, services and some online services.
* Create a new tax rate of 9.85 percent for the top wage earners in the state.
* Extend sales tax to over-the-counter drugs, but not prescription drugs.
* Extend sales tax to clothing purchases over $100.
* Increase tax on cigarettes by 94 cents to a total of $2.17 a pack.
* Provide a $500 rebate on property tax to most homeowners, including farmers.
* Reduce corporate tax to 8.4 percent from current 9.4 percent and eliminate some business exemptions.
* Freeze statewide business property taxes and reduce unemployment insurances taxes over two years by $347 million.
A major objective of Dayton’s budget proposal is to balance the state’s revenue more evenly between property tax, income tax and sales tax. Currently, property tax funds more than 40 percent of the state’s revenues, with income taxes providing 33 percent and sales tax providing 27 percent.
The governor’s budget also makes more investment in K-12 education, higher education and city and county government aid, plus pays back the final $41.1 billion in delayed K-12 aid used to balance the last budget.
Certainly no one wants to pay more taxes. There are a number of proposals in Dayton’s budget that will tax certain categories for the first time, including services and clothing.
The business and legal communities will be able to speak to the Legislature about their concerns. The business community’s concern about state competitiveness should be listened to.
Minnesotans, as well, will have an opportunity to talk or communicate their preferences or concerns as the Legislature’s leaders say they will seek feedback from their constituents.
The budget proposed by Dayton is not perfect, but it provides a starting point for legislative consideration.
Now let the debate begin.