Support the Minnesota Budget Project on Give to the Max Day

November 16, 2011

It’s Give to the Max Day, when thousands of Minnesotans say a special thank you to the nonprofits they value. Please add the Minnesota Budget Project to your list of donations today. Your gift will help us continue our work advocating for tax and budget decisions that invest in Minnesota and build a prosperous economic future.

Our work takes on special importance in these difficult economic times. The Minnesota Budget Project is out in front calling for a balanced approach that strengthens the building blocks of economic growth: high-quality schools, strong communities, educated workers and opportunities for all Minnesotans to succeed.

Here’s a quick reminder of what your contribution to the Minnesota Budget Project means:

  • You’ll support the timely non-partisan analysis of budget and tax debates that you count on at Minnesota Budget Bites.
  • You’ll support our work to stand up for balanced solutions that include fairly raised revenues. You’ll see us testifying at legislative hearings, talking to the news media, and ensuring that those whose voices aren’t always heard can be part of the debate.

Please make your tax-deductible contribution today!

Your gift today can work even harder because it makes us eligible for $1,000 prizes drawn every hour. Each donation to us – no matter at what time or how often – gives us one more chance in the drawing.

Our work depends on donors like you to step up on Give to the Max Day and year-round. Thanks for your support today!

-Nan Madden


Minnesotans favor budget road not taken: Balance spending cuts and new revenue

August 8, 2011

Two out of three Minnesota residents want state leaders to balance the budget using a mix of tax increases and spending cuts, according to a new MinnPost poll. It found 66 percent favor a combination of spending cuts and tax increases. Only 23 percent want spending cuts only.

This finding is consistent with other polls.

  • The Star Tribune reported in May on a Minnesota Poll that said: “Sixty-three percent of respondents said they favor a blend of higher taxes and service reductions to tackle the state’s $5 billion projected deficit. Just 27 percent said they want state leaders to balance the budget solely through cuts.”
  • Public Policy Polling survey published in June asked Minnesotans: “Would you support a tax increase on the wealthiest 2% of Minnesotans to help balance the state budget, or do you think the budget should be balanced through cuts only?” And 63 of respondents favored the tax increase, compared to only 32 percent that supported cuts only.

Minnesota public opinion has been clear and consistent in its support for a balanced approach, including new revenues. This approach protects critical services such as education, health care, and support for seniors and people with disabilities. Numerous editorials from around the state supported a balanced approach as well.

Minnesotans support raising revenue when they understand what’s at stake. As Growth & Justice wrote in 2010:

Over many years, polls in Minnesota consistently have shown support for revenue-raising if the question is asked with even a smidgeon of context that reminds people what taxes pay for. Ask people point-blank whether they want to pay more in taxes, and they tend to say no. Ask them point-blank whether they want to slash investments in schools and roads and nursing homes, and they also will say no.

Unfortunately, the final budget deal was made up of spending cuts and timing shifts and other one-time fixes.

The legislative session is over, but the debate is not. We still have a mismatch between what our tax system raises and what it costs to fund our state’s priorities.

When two out of three Minnesotans support a balanced approach, legislative leaders should listen. They should do the right thing and create a sustainable budget — and a prosperous future — using a mix of spending cuts and new revenues, raised fairly.

-Scott Russell


Raising income taxes on high-income people won’t push them out of state

August 4, 2011

If states raise income taxes on high-income households, the wealthy won’t flee, according to a new report from the Center on Budget and Policy Priorities (CBPP). According to the report, many factors influence people’s decisions to move, but state taxes do not appear to be a main driver for most people.

An income tax increase for high-income Minnesotans was debated throughout the recent legislative session and state government shutdown. Polls indicated a majority of Minnesotans favored a balanced approach of new taxes and spending reductions. This approach would protect critical priorities, including the state’s schools and universities, health care, and services for seniors and people with disabilities. The Legislature rejected any new revenues, particularly a new tax bracket on the highest-income Minnesotans. Critics argued that, in response to a tax increase, the state’s highest-income residents would leave and take their tax dollars with them.

Available research does not support such arguments. The CBPP report found that taxes had little impact on decisions to move. The report particularly looked at three states that recently increased taxes on high-income households.

  • New Jersey: Impact of tax increase was “close to zero.” In 2004, New Jersey increased its income tax on households with incomes above $500,000. It was the largest tax rate increase on high-income households passed by any state during the seven-year period studied. A study published in the National Tax Journal found that the tax increase’s impact on whether high-income households moved out of state was “close to zero.” There was an increase in the migration rate of households subject to the tax increase, but there was a similar increase in the migration of high-income households who were unaffected by the tax increase.
  • Maryland: No millionaire flight, just a bad recession. After Maryland’s 2008 millionaire’s tax, the number of Maryland millionaires dropped. Examination of tax data showed that the vast majority of millionaires did not leave Maryland – rather, they were still in the state, but the national recession had pushed their incomes below $1 million.
  • Oregon: Study ignores key facts. In 2009, a business-backed study said that higher-income Portland-area residents moved to Washington State, which has no income tax, to avoid Oregon’s income tax. Among the study’s flaws, it ignored the fact that Oregon taxes wages of people working in Oregon even if they live out of state. Oregon workers could not avoid paying Oregon state income taxes by moving to Washington.

Interstate moves are rare for households at any income level. Between 2001 and 2010, just 1.7  percent of U.S. residents moved between states annually. The CBPP finds that “a large body of scholarly evidence shows that they do so primarily for new jobs, cheaper housing or a better climate.” Those most likely to move include people who are unemployed and those between ages of 18 to 24, neither of which is a high-income group. In deciding if and where to move, taxes are unlikely to overcome such factors as job, home, family, friends, or community.

Tax increases on Minnesota’s high-income households would not have the negative impact that opponents predict—and rejecting these tax proposals will hurt the state.

Pursuing a low-tax, low-services strategy will make it more difficult for the state to remain competitive. Minnesota needs to maintain high-quality education, health care, and other public services to retain current residents and attract new ones.

A new tax on Minnesota’s highest-income households would bring their taxes paid as a share of income more in line with what other households pay. On average, Minnesota households paid 11.5 percent of their income in state and local taxes in 2008, while the top one percent – those with incomes over $429,000 – paid 9.7 percent, according to the Minnesota Department of Revenue.

Minnesota’s recent budget deal did not solve the mismatch between what our tax system raises and what it costs to fund our state’s priorities. Policymakers are projected to face a $1.9 billion deficit when they seek to pass the next state budget in 2013. A targeted tax increase on Minnesota’s highest-income households should be part of the solution.

-Scott Russell


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