Fixing The State Budget

[WMR]

Part of Governor Pawlenty's proposal to deal with the state's projected budget shortfall is to reduce the property tax refund credit for renters (not homeowners though). This is the credit applied for by using the orange tax form booklet, with payments usually distributed in August. While only a small amount, approximately $34 million, it would disproportionately fall upon lower income wage earners, seniors, college students, and persons with disabilities.

Minnesota 2020, a left-leaning think tank based in St. Paul has an interesting analysis on this subject. http://www.mn2020.org/index.asp?Type=B_ ... D9A%7D&DE=

It would be intriguing to find out how many renters (and home owners) utilize the credit in this area.

To me, this is a politically easy solution to fixing the shortfall. But a better fix is offered by Rep. Ann Lenczewski, chair of the House Taxes committee, which closes numerous loopholes used by individuals and corporations to avoid paying state income taxes. So which is more fair?
http://minnesota.publicradio.org/displa ... 9%E2%80%A6

[DCGrandma]

Again our politicians are looking to balance the state budget on the backs of the poor citizens, middle class families, college students and the old/disabled. When are our rich and famous citizens going to be affected? Why don't the politicians look at this faction of the population? Is it because they look to these citizens for political contributions, and favors that need to be returned?

[Citizen]

It is a common theme to hear that our gov't should tax the rich and leave us poor working class people alone. I too, used to subscribe to that line of thinking until I recently. I have learned several things.

The "rich" really do pay a lot of taxes. The public and certain left leaning folks in our gov't seem to think that they have more so, they should pay even more.

We need to be careful about how we tax the wealthy and business. They are the ones that employ us, create our jobs, drive our economy, etc.

Why should the successful be penalized for working hard by paying more taxes?

Why should they carry others (through social programs) because they worked hard, scrimpped and saved to pay for college, and had the courage to take a chance at being successful?

[wendi]

I don't think the rich people actually pay as much percentage-wise as the middle class. These figures came out of a Minnesota Department of Revenue study for 2007. It was also in an editorial written by Mark Dayton. Someone making about $40,000 per year pays about 12.2 percent of their income in state and local taxes. Someone who makes $350,000 per year pays about 9.6% of that income in taxes. And I know, since that is about what I make a year, that I'm going to feel the loss of that 12.2% a lot more then the person who is making $350,000 is going to miss the 9.6%, or for that matter, they'd still feel it less if they had to pay the same percetage as I do. Why shouldn't their burden be at least equal percetage-wise to mine? I don't think that expecting richer people to at least pay the same percentage of their income as what I have to pay is penalizing them for being a good business person or sharing their talent with society.

I also want to add that I scrimped and saved to go to college too, and I also work hard. Why am I only making around $40,000 a year? I am a teacher, not a business person. My choice? Of course, and I love my job! However, it is only fair that tax burdens should be, at the very least, an equal percetage of a person's income.

[DCGrandma]

Wendi, you are correct in that percentage-wise, the rich do pay less in taxes than the middle class folks. That is a fact!! That is my observation, too, because I see it in my neighborhood. The rich keep getting richer (they pay less in taxes) and the middle class keeps getting poorer because they have to make up the difference to keep the government's budget balanced. This is what is so unfair in today's society. And, that gap is getting larger and larger - soon the rich will have to start paying their fair share because the middle class folks will be gone (poor) and will no longer be able to foot the bill to balance the government's hungry budget. And I have yet to see the rich folks invest in jobs, etc. for this area. Most of the best paying jobs are going overseas or just disappearing because of corporate greed. I just don't buy that argument!!

[Citizen]

How many people do you know that earn $350k per year?

You are talking the upper crust here.

[wendi]

Actually I know about seven or eight people pretty well who make more then that. It's about 1% to 3% of the population in Minnesota who make $350,000 or more per year. I would imagine that whatever that actual population stat is, having them pay at least $10,000 more per year on taxes (that's how much more they'd be paying at the 12.2% rate on $350,000, and as we all know, a lot of these people will make much more then the $350,000) is going to add up pretty fast for extra tax money in Minnesota. And it's going to hurt their bottom line a lot less then it's going to hurt me when my rate goes up.

No one in their right mind likes to pay taxes! I don't and, for crying out loud, my wages depend on people paying them! I'm just saying there is no reason that the rate for the middle class, or even the lower middle class should be at a higher percentage then the rich in this state. I have a hard time understanding how anyone could see this and argue that it is a fair way to tax people.

[DCGrandma]

The problem with taxing wealthy people in Minnesota is that none of our legislators have a backbone to put this legislation into law. They don't want to make their wealthy contributors mad because they may stop contributing to their re-election campaign. Our politicians seem to have lost their vision as to why they were elected in the first place. Many promises are made before elections and more are broken when they actually start working.

[grj7543]

There are several problems with taxing the "rich" at the same percentage as the "middle class." 1) There aren't enough of them. They can't possibly pay enough in taxes to fund the state without driving them out of the state. 2) The state would take too much money out of the hands of the people. This would lead to another problem. 3) Some are business owners who use their money to fund their businesses. If a business has a loss in a year who do you think makes up the difference? The "rich" owner or owners. But if they are too heavily taxed they wouldn't have the funds to do so. 4) Looking at the percentage paid is a red herring. It is a way to ignore the amount actually paid and create an "injustice" that does not exist.

[richlundeen]

Well said, 'GRJ'. Some folks truly believe in 'free unicorn rides under the rainbow' for all. 'Something for nothing'.

It's actually fairly simple math. as GRJ has explained it to me. If any of you are interested, catch 'ol Ralph Lundeen, and have him break it down for you.