May not be best time for tax plan [UPDATED]Published 10:14am Monday, January 28, 2013 Updated 12:16pm Monday, January 28, 2013
When Minnesota residents kicked out the Republican Legislature, it was clearly due to the fact that Republicans overreached on a wide variety of issues — from creating constitutional amendment votes on marriage and voter ID to refusing to approve tax increases of any kind to erase a $6 billion deficit to the point of shutting the government down.
With the release of Dayton’s budget, he’s probably going to be accused of overreaching the other way.
On Thursday, Dayton spoke to newspaper editors and publishers throughout Minnesota at the annual Minnesota Newspaper Association convention.
During their annual meetings, publishers and editors had heard about the most noticeable part of his budget: expansion of the sales tax. The expansion would include services, including advertising, printing and newspaper subscriptions.
For newspapers, of course, those are the three primary sources of revenue, in fact, about 98 percent of our revenue.
Thus, when the question-and-answer period came for Dayton, newspaper publishers from Little Falls to Andover to Hibbing came to ask why.
Why would you hurt our business, the ones which provide hyper-local news coverage and provides a valuable service to our residents? Why would you force us to cut jobs?
Dayton’s response was as expected. The governor’s idea is that expanding the base of products and services that can be taxed will allow the Legislature to reduce the overall sales tax percent from 6.875 to 5.5. In other words, more Minnesotans would pay the tax, but for those who have always been paying or charging the tax, it would be lower.
If he starts making exceptions, he isn’t likely to stop, and eventually, his plan won’t collect the needed revenues.
He also said he’s open to other plans, but that there isn’t a plan out there that will erase a $1 billion deficit and avoid pain. Tax increases and spending cuts, he said, will hurt, no matter what.
On Dayton’s budget, I am definitely torn.
As a newspaper publisher, clearly, I would be better off if I didn’t have to deal with a tax on advertising, printing and subscriptions.
Frankly, I’m more worried about the administrative end.
It’s complicated enough trying to accurately quote and bill our customers; tacking on a sales tax will only make it harder.
I also worry about our advertising customers. Should the tax come to be, it’s very likely that some will reduce the size of their ads, and a few may choose not to advertise.
On the other hand, the sales tax is one of the fairest taxes out there, because your tax is based on what you spend.
It’s certainly better than the property tax, where most Minnesotans have seen the glorious combination of watching the value of their home plummet, while at the same time, their annual property tax increase. This is because the Legislature chose to cut state aid to cities and counties, and cities and counties responded by increasing property taxes.
All of that said, I wonder whether Dayton’s “big plan” is really necessary.
Our deficit of $1.1 billion, in comparison to other years, just isn’t that large.
Clearly, the sweeping changes he wants to make aren’t necessary just to fill the deficit. But he also wants more spending on education, health care and other things, thus the need for more revenue.
But maybe it’s just not the right time for such a sweeping tax-and-spend proposal.
What if we just fix the deficit with small, temporary tax increases and small, temporary spending cuts?
If the economy improves and we get back into producing large state surpluses like the state had in the 1990s, then we can do a grand vision.
It could be that I’m just being a chicken about this. Then again, it’s easier to be a liberal when proposed tax increases don’t crash down on our backyard.
Joel Myhre is The Journal’s publisher. Email him at email@example.com