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Editorial: Caution urged on increase of taxes

As Minnesota’s Legislature heads into its final weeks, the primary topic in St. Paul and around the state is the pending tax bill.

There are three different proposals: the House tax bill, the Senate tax bill and Gov. Dayton’s proposal. They all include more taxes in one respect or another.

The three proposals are not in agreement, so they are headed for negotiations.

Dayton was correct earlier this week when he told the House and Senate to slow down on their rush to tax Minnesotans.

The House bill expands alcohol tax by 7 cents a drink. This doesn’t sound like much, but it totals $27.75 per a keg of beer, which adds up for small business bars and restaurants. It could also be harmful to Minnesota’s breweries.

The Senate bill proposes cutting the sales tax to 6 percent, but expands the sales tax to include clothing, all digital downloads, pay television, personal services and online purchases.

Dayton has called for a fourth-tier of the top 2 percent (or above $250,000) to pay a higher rate. while the House wants a fourth-tier for those making more than $400,000 to pay a 4 percent surcharge until the school repayment is completed. The Senate applies a higher tax rate to those earning more than $130,000.

There are concerns over these various tax plans and there should be, for the total increase could be $2.6 billion. The business community has raised concerns, claiming that many small business owners would be adversely impacted by these tax increases.

The Legislature and Dayton have some worthy priorities — paying back the school funding bill, a significant funding increase for education and programs to address rising property taxes.

At risk here is Minnesota’s place in the competitive business state. A healthy business climate produces growing private enterprise, which in turn spurs a strong job market. If the House bill passes, Minnesota would be ranked among the top five tax states in the nation. That would not be beneficial to businesses or jobs for our state.

All legislators preached the importance of jobs and economic development during the 2012 campaign. This is something each legislator and Dayton should remember as they negotiate.

Dayton and the legislators should remember the Republican overreach in 2012 on social issues. A Democratic overreach in 2013 on taxing and spending could quickly have a similar political impact.