The budget unveiled by Gov. Mark Dayton Tuesday probably did not catch anyone by surprise as he followed through on budget priorities highlighted during his campaign.
He said he planned to tax wealthier Minnesotans who he feels had not been paying their fair share, on a percentage basis, as compared to the middle class. Whether you agree about the fairness of that proposition or not, officials of both parties agree on the tax incidence study that showed what Dayton argues is largely true. Dayton’s tax-the-rich proposal would cut the red ink in half from about $6.2 billion to about $3.4 billion. Some higher taxes would start at a two-earner household income of $150,000 a year, an income level many do not consider “rich.”
Dayton’s budget also calls for $775 million in cuts in health care costs, one of the costs rising most rapidly in the state. Dayton’s plan would eliminate MinnesotaCare health care coverage for 7,200 adults.
Dayton’s plan actually increases slightly spending on education and maintains current spending on property tax relief programs like local government aid and other relief programs to those cities not getting local government aid.
All in all, the Dayton budget comes through as promised. It may be a good starting point for what are sure to be arduous negotiations with Republicans who have very different ideas. Minnesotans will be represented by both proposals.
The biggest battle may be over the increase in income taxes on the wealthy.
The tax rate Dayton is suggesting would give Minnesota the highest tax rate on upper income in the nation at 13.95 percent. While this is higher than Dayton’s campaign promise of no more than 11 percent, 3 percent of this is temporary.
Dayton is selling his tax increase as one that will not impact 95 percent of Minnesotans. And while Republicans continue to argue taxing wealthy folks hurts job creation, the facts have not really been on their side, at least not in any clearly identifiable way. They will have to come up with more evidence if they are to be convincing.