My Point of View by Brian Hensley

Personal income taxes. Corporate income taxes. Sales and excise taxes. Property taxes. They sure do add up. Several Saturday’s ago, the Minnesota House of Representatives hosted a listening session in Albert Lea. Five different members of the Minnesota House attended and listened to local citizens talk about their interpretation of the impact of these taxes.

These four types of taxes comprise where our state earns its income so that it can provide the services that we expect. All Minnesotans want safe roads, quality schools, a protected environment, programs to help our citizens get back on their feet and services for our elders. Minnesotans would all agree that supporting our citizens in an effective and efficient manner is important. It’s part of being “Minnesota nice,” and we all expect to pay taxes to support these expenditures. Free rides are the American or Minnesotan way.

If we can all agree that in some manner revenue must be raised, then the question becomes, from which of these tax buckets should revenue come.

Personal income taxes raise revenue by taxing the citizens every time they earn a dollar whether it’s from a hard day’s work, earnings on investments or Social Security. Minnesota’s income rate is around 7 percent  until you earn slightly more than $150,000 and then increases to 9.85 percent. Our neighbor to the west, South Dakota, has no state income tax, while Iowa starts at a very low level and works up to 6.8 percent for the first $45,000 to a top rate of 8.98 percent starting at $69,000. In 2011 Minnesota collected an average state income tax of $1,400 — placing the state as the 6th highest among all states.

Corporate income taxes are paid by corporations on their annual income. Many feel we should make corporations pay their “fair share.” We have taken the approach that in Minnesota our corporations should pay more than their fair share and have imposed on corporations pay a flat 9.8 percent tax rate. This ranks the state third nationally in percentages.

Sales and excise tax are taxes that show up on many purchase you make. Go out for dinner and when you pay the bill — see the tax at the bottom. Buy a new car — there’s the tax. Gas taxes, cigarette taxes, tax on clothing, lumber, bricks, landscaping, massage therapy, fishing license, boat license, utility tax on electricity, phone service … these taxes add up. Minnesota charges 6.75 percent and then local communities can add to that amount. Minnesota ranks 18th nationally when you add up the local and state charges.

The final area the state feels compel to tax us is property taxes. This seems very straight forward. If you own a home or farmland, a local appraiser determines what the property is worth, and then government entities line up to tax you on the property’s value. Minnesota state and local governments collected $1,535 in property taxes per person in the recent past year. These dollars went to local schools, public libraries, emergency services and the state of Minnesota. Minnesota ranked 16th nationally.

So these four tax buckets make up the pot of money going to the state from each one of us. If you decrease revenue from one and want the same amount of revenue, you have to increase the revenue for another.

With Minnesota ranking sixth in personal income taxes collected, third in corporate income taxes collected, 18th in sales and excise taxes collected and 16th in property taxes collected — perhaps the problem needs to be re-evaluated. Maybe the problem isn’t from which bucket to collect more taxes, but from which bucket to collect less in taxes. When a state ranks where Minnesota does in the way it taxes the citizens, the state collects plenty in taxes.

In the 2013 session the Democratic House, the Democratic Senate and the Democratic Governor increased taxes. Period. Argue all you want over whether it came from the top 2 percent, the middle class, seniors, children, corporations, farms, family businesses, dog lovers or cat lovers. They collected $1 billion dollars more than they expected. Not $1 billion more in taxes from all those buckets, but $1 billion more than expected. Now Republicans and Democrats in St. Paul are discussing their plan to spend that money.

Maybe I make things too simple, but if you collect more than you expected, do the right thing and return the money from those who paid it.

 

Brian Hensley is the chairman of the Freeborn County Republican Party.