Raising taxes not all that easy

The Minnesota Senate, even with a DFL majority, had a tough time passing its tax hike bill on Monday. The package of $1.8 billion in tax increases, including increasing the rate in the top tax bracket, extending the sales tax to clothing and some services (while lowering it to 6 percent), and raising the tax on tobacco, failed in its first floor vote, and only passed after a quick caucus meeting to get the votes lined up.

Several DFL senators joined the Republicans in opposing the measure. DFL?Governor Mark Dayton doesn’t like it, since it goes beyond his “tax the richest” philosophy.

With the DFL?in control of the House, Senate and governor’s office, it was expected that tax increases would sail through. But with the governor’s disapproval, and the House passing a very different tax increase package, the final package is going to look very different. The House wants a lot of what the Senate wants, but would also raise the tax on alcohol, and they want to raise an extra $800 million to pay back money “borrowed” from the K-12 school districts.

What bothers us most about the tax bills being passed in the Legislature this year is the fact that the House and Senate are both proposing over $1 billion in tax increases to cover the pending $627 million budget deficit. They include a lot of extra tax revenue to cover all the extra spending they want to do. Yes, the spending is for things like increased funding for schools, stabilizing the Local Government Aid and providing some property tax relief. But the approach to the budget starts with the spending, then raising the taxes to match. We still think it is better to show some restraint, to decide how much you can raise, and trying to control spending to stay within that amount.

As the budget negotiations begin to bring the House and Senate proposals in line, we can only hope some restraint will be brought into the mix. But it is a faint hope.