Last week, Governor Dayton proposed his budget plan for 2014-2015 and it includes numerous changes to Minnesota’s tax code that will increase taxes on the middle class as well as our job providers. Dayton is asking for a new income tax bracket on individuals with incomes above $150,000 a year or $250,000 per couple, raising the rate to 9.85% which would be the fourth highest in the nation.
This tax increase would be on top of the additional sales tax on many services and clothing items that Dayton is asking for. While he is proposing to lower the rate to 5.5%, the fact is there would be an additional $2.1 billion dollars raised from the sales taxes that we all pay. This burden falls more heavily on low and middle-class taxpayers. Disappointingly, the Governor has yet to release the full list of goods and services that would be taxed under his new sales tax proposal. We already know that Minnesotans will see increased taxes on things like haircuts, oil changes, digital downloads, and dance lessons, but the list remains incomplete a full week later.
Despite all the talk of taxing "millionaires and billionaires," Dayton’s new income tax is 25% higher than the current rate and will impact thousands of Minnesota families and small businesses that file individually. He even proposes adding sales tax to the cost of preparing your income taxes.
Specifically, the budget would:
Increase spending to $37.9 billion in FY14-15
Raise $3.7 billion in new taxes and cut spending by $225 million
Add a new sales tax on business services, clothing (items over $100), and personal services
Increase the tobacco state tax by $.94 per pack
Delay full repayment of shifted aid to Minnesota schools until 2017
The average income for families in Minnesota is not growing at nearly 8% every two years like state government would under the Dayton plan. I believe the cumulative impact of the governor's tax increases will drive our job creators to relocate in neighboring states, like Wisconsin and North Dakota, which have lower business tax burdens as well as more business friendly regulatory climates.
I look forward to a thoughtful and productive discussion about how we can protect the middle class from further tax increases while providing good services to the people of our state.
Meetings in St. Paul
I met with several groups this week at the Capitol, including representatives of the National Federation of the Blind, 4H Youth and the MN Beverage Association. I took part in meetings such as the Outdoor News/Fish & Wildlife Meet and Greet, the MCCL Legislative Breakfast, the Isanti County Township Association, and attended a reception with Governor Dayton. If you are planning on visiting or would like to set up time to meet with me about an issue of importance to you, please contact me at 651-296-4346.
MN Health Insurance Exchange
As part of the Affordable Care Act, Minnesota’s DFL leaders have selected to set up a powerful and expensive state health insurance exchange in Minnesota. While many of our neighboring states have elected to participate in the federal health exchange instead, the legislature has begun the process of hearing legislation that would construct this “marketplace” for health coverage. I am opposed to this for several reasons.
The exchange is dangerous to middle-class Minnesotans and small businesses. It would be operated by a seven-member ‘super agency’ that seeks to control the entire health insurance market. This group would be appointed and accountable to no one, have access to spend taxpayer dollars without discretion, picks winners and losers as to who can sell insurance, and will inflate insurance costs by collecting up to 3.5% of plan premiums just to fund its operations. The DFL’s Health Exchange is not a basic exchange—it goes far beyond Obamacare mandates and threatens the future of Minnesota’s free marketplace of health care choice.
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Thank you for the honor of being your state representative.