Tax reform in Minnesota?
The only things certain in life are death and taxes, according to Benjamin Franklin.
Franklin neglected to mention a third inevitability: The arguments associated with taxes. And it's not difficult to realize why these arguments are unavoidable.
September of 2011 adorned streets across America with "Occupiers," which originated with the Occupy Wall Street movement.
The Occupiers' goal was to address the disparities between the 99 percent and the 1 percent; the poor working class and the opulent upper class.
Debates regarding tax reform are always peppered with the arguments among classes.
The bottom 10 percent of income-earners in America pay an effective tax rate of 30.5 percent; the top 1 percent pay an effective tax rate of 9.7 percent.
The injustices are self-evident.
But don't be fooled by the phrase "effective tax rate."
A different vantage point affords this view: The top 10 percent of income-earners pay 37.5 percent of all taxes; the bottom 10 percent pay only 2.3 percent.
So, debate ensues. Is it fair to say the top earners already pay their fair share? Or should they pay more, since they have more?
Minnesota Revenue Commissioner Myron Frans is trying to address these concerns, along with other issues with the
Frans presented ideas and prompted debate at a tax reform meeting last Friday at Alexandria City Hall.
At this reform, Frans offered a comparison of a balanced budget to a three-legged stool.
For the stool to balance, the legs must be of relatively equal length. Similarly, a balanced budget must consist of relatively equal revenues from income tax, property tax and sales tax.
Frans proudly displayed the stool representing the 1999 budget. The revenues were as follows: Income tax was 33.6 percent; property tax was 30.4 percent; sales tax was 34.7 percent.
Although dealing with slight discrepancies among legs, the stool was still able to stand.
Frans then displayed the stool representing the 2010 budget. Income tax generated 34.8 percent of the revenue; property tax 39.8 percent; sales tax 26.6.
This stool was not able to stand.
Frans noted that the shift from purchasing U.S.-made goods to U.S.-made services accounted for some of the changes.
Frans and the Governor Dayton administration are working to address this balance issue.
After Frans' presentation, the ensuing debate carried on for a half-hour, until it was cut short.
Debaters across the political spectrum put in their two cents.
One argument was that raising taxes on the top 2 percent of income-earners, which the Dayton administration is considering, would not lower taxes for everyone else.
People asked where these extra tax dollars would be going, if not to those with more modest incomes.
Frans responded by reminding attendees that the state wouldn't want more tax dollars if it didn't have places to put it.
Some argued that raising taxes for the top 2 percent could also have the adverse effect of the top 2 percent choosing to leave the state; in effect, reducing revenue.
A local official from Pope County brought up Pope County's resentment toward state-mandated taxes
"I'm trying to think of anything in Pope County that we want that the state mandates we pay for," he said.
His wish was for more power to be allocated to local governments.
Other arguments surfaced regarding class discrepancies and allocation of funds, but the tense atmosphere was assuaged by the closing of the forum, when attendees calmly chatted with each other.
Frans traveled to other Minnesota cities to gather opinions; Ely, Grand Rapids, Bemidji, Thief River Falls and Moorhead were among some of his stops.
The opinions gathered at these forums will help determine the future of Minnesota's tax system.