Dear Friends and Neighbors,
In my weekly email updates, I make it a priority to share the facts and provide more detail and background on bills the House is considering. I have received many comments from community members who appreciate this approach. So, today, I want to give you more detail about the aspects of the budget that are causing the impasse we currently face. I think it's important to understand more about the numbers than can be shared in a video update or the sound bites you hear on the evening news.
Let's start with the Minnesota's current tax standings:
- Minnesota has the 5th highest marginal income tax rate in the country at 9.85%. That is only behind California, Hawaii, New Jersey, and Oregon.
- Minnesota’s lowest income tax rate of 5.35% is higher than the highest tax bracket in 16 other states.
- Minnesota has the 3rd highest corporate tax rate in the country.
- Minnesota has the 2nd highest commercial/industrial property tax rate.
Likewise, the Governor’s own Department of Revenue has indicated that, under his proposal, ALL income earners will see higher taxes. This is fundamentally why I remain opposed to any further tax increases. We cannot tax our way to prosperity.
Now, here’s a snapshot of Minnesota’s current tax revenues:
- Minnesota has already collected $3 billion MORE in tax revenues this year than last biennium. Even without the changes being talked about this session, our state’s tax collections have already increased significantly.
- Minnesota has a $1 billion surplus, meaning Minnesotans have paid more in taxes than our government requires.
- The recent April budget report shows an additional $500 million in tax revenue collected ABOVE what was projected in February.
- Minnesota also has an additional $2 billion in budget reserves.
Again, considering these numbers, I am especially opposed to any efforts to collect more taxes on your family, your property, your business, your farm, or your estate.
Proposed Gas Tax Increase:
In negotiations, the governor has indicated a willingness to take 4 cents off his 20-cent per gallon gas tax increase. So this proposal now sits at a 16 cent increase. Often lost in the discussion surrounding this topic is what this 16 cents will actually fund. 7 cents of this increase would go to backfill funds that the governor wants to move from transportation into the state’s general fund. And 3 cents of it would go to pay for a working family tax credit. The governor admits that the gas tax impacts lower income families the hardest – making it a “regressive” tax – so he's countering it with more tax credits for low income families.
Therefore, this proposed gas tax will only result in 6 cents of new revenue for transportation. What’s more, of that 6 cents half will go to metro transit, leaving only half to fund roads and bridges. The governor has asked you to pay 20 cents more per gallon, now 16 cents more per gallon, and yet hasn't told you that only about 3 cents of that will actually go to improve the roads and bridges you use every day. That is not honest budgeting.
Lastly, remember that we put historic amounts of money into roads and bridges last year without raising the gas tax by a single penny.
Provider tax – also called the Sick Tax:
Democrats are also pushing for a continuation of the 2% provider tax, which is a tax on nearly all healthcare services. This is estimated to raise the cost of Minnesotans’ healthcare by about $2.5 billion over the next four years and will disproportionately impact those who go to the doctor the most and already have the highest medical bills. Similarly to the gas tax, this tax is regressive in that it impacts lower income families the most. For example, on average this creates a $300 additional tax on every baby delivery and adds thousands of dollars in additional costs to cancer treatments. I also want you to know that only 6% of the 2% tax actually goes to fund healthcare costs for the working poor through MN Care. Additionally, even though all dental services are taxed, virtually no money goes back to fund dental care for the poor. Access to dental services is sorely needed in rural Minnesota, especially dental care for young kids. In short, I don’t believe collecting more taxes on healthcare is the right way to lower healthcare costs and I want you to know how these taxes are actually being spent.
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Ultimately, I believe we need to hold government accountable and demand efficiency in spending across all departments. We must exercise fiscal discipline in order to fund our shared priorities – like education, public safety, transportation, and healthcare – without simply increasing taxpayers’ burden each year. That path is unsustainable.
I hope this detailed information helps you understand why I will continue to hold firm in fighting the $12 billion dollars in tax increases the governor is calling for. I am fighting for your pocketbook and a responsible state budget.
Staying in Touch
If you ever have questions or concerns regarding any issue, please contact me. You can reach me at rep.barb.haley@house.mn or 651-296-8635.
Talk to you soon,
