"He will put the sheep on his right and the goats on his left."
Matthew 25:33

Friday, March 28, 2008

From the Taxpayer's League of Minnesota

The sales tax increase in Metro counties is going to be used for what?
State and county officials have been saying a lot of different things about what a sales tax increase will mean for Metro county residents; whether it means new roads, better transit or property tax relief, it seems a ¼ cent tax increase is the transportation panacea we’ve all been waiting for. But the tax increase that passed this week in Anoka and Ramsey counties (and will pass next week in one, two or three others – more on that below), isn’t quite all it’s been advertised to be. In fact, it’s much less:
Among the feats of strength wrongly associated with the tax increase “there is the fact that none of the ¼ cent sales tax increase will go for roads. That’s right; contrary to what most people believe is the case, not one dime of the increased sales tax dollars will be spent on roads.
“Wait, it gets worse. None of the tax increase will be spent on buses either. So, you ask, if you can’t spend the money on roads or buses…what are they planning to spend the money on? The answer is…only new transit projects.
“But before these ‘County Transit Bandits’ (CTBs) could divide up their ill gotten loot, another surprise came to light. The Metropolitan Council, which operates the bus system and the 11 mile light rail transit line, wants some of the new tax revenue to help erase their $18 million budget deficit. This operating loss is on top of the millions of dollars of new money Metro Transit received from the constitutional dedication of the motor vehicle sales tax.”
Minnesota Free Market Institute Senior Policy Fellow Craig Westover nicely summarizes the food fight taking place twixt the Met Council and the CTBs in his column today in the Pioneer Press. Take a look and then try and tell me the CTBs didn’t just pull a fast one on the State Legislature.

843,673 got tax increases this week. 1,772,224 get theirs next week.
Earlier this week, county boards in Anoka and Ramsey approved sales tax increases with little (but spirited) opposition. While Carver county commissioners rejected the tax increase by a 5-0 margin, the bigger test will come next Tuesday (April 1st) when commissioners in Hennepin, Washington and Dakota counties will hold their authorizing votes.
If you’re still looking to make a last-ditch effort to keep your local sales tax rate from continuing to climb that confiscatory ladder – and you happen to live in northern Washington County, you may want to give Commissioner Dennis Hegberg a call at (651) 430-6211 or send him an email at dennis [dot] hegberg [at] co [dot] Washington [dot] mn [dot] us.
For our friends in the Apple Valley and Rosemount areas (District 7) in Dakota County, try contacting Commissioner Willis Branning.And if you’re really feeling in need of some entertainment this weekend, call the ringleader of the County Transit Bandits, Hennepin County Commissioner Peter McLaughlin.

The corporate tax fix leaders in the legislature are proposing isn’t going to fix much.
If you happened to read the Star Tribune’s editorial on Thursday about the tax bills percolating through the state legislature, you might get the idea that a new golden era of fairness and job growth was on the way. Unfortunately, the one percentage point cut being proposed for Minnesota businesses looks to be nothing more than a limp attempt to compensate for the myriad other tax increases that have been queued up this year. Scott Hodge from the Tax Foundation tells us why:
“America's political leadership is finally waking up to the fact that the tax rates businesses face in the U.S. are way out of step with our major economic competitors. Last year, for example, Ways and Means Chairman Charles Rangel proposed cutting the federal corporate tax rate from 35 percent to 30.5 percent. While a 5 percentage point cut in the federal corporate tax rate may sound significant, it may not be sufficient to meaningfully improve the competitiveness of the United States.
“Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent, second among OECD countries to Japan's combined rate of 39.5 percent. Lowering the federal rate to 30.5 percent would only lower the U.S.'s ranking to fifth highest among industrialized countries.”
To read the rest of the report from the Tax Foundation click here.

How 30 years of custom and usage suddenly becomes inconvenient.
As Phil Krinkie talked about during the Capitol Update last Saturday, one of the last remaining legislative hurdles of the session is the bonding bill. At this point in the process it’s not if we’re going to have a bill, but whether or not a garden variety budget deficit is reason enough for bill negotiators to throw out 30 years of generally accepted accounting practices; accounting practices that have historically kept capital investment bills to 3% of the state’s projected revenues. The reason this is a problem now is that current projected revenues are much different than what was projected prior to the February budget forecast that came up $935 million in the red. So, last month’s $900 million plus bonding bills in the House and Senate now have to be trimmed to a number closer to $825 million or risk another veto from Governor Pawlenty.
Of course, no one wants to give up anything (because everything is a priority), and thus Rep. Alice Hausman [DFL-St. Paul], who’s job it will be to tell Rep. So-and-so that their re-election campaign isn’t as important as Rep. Such-and-such’s, starts throwing out lines like this:“[Hausman sees the 3 percent rule as somewhat arbitrary. ‘It's a little like signing a no-new taxes pledge.’” Eh?

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