Tax the rich more. (They can take it.)
By RICHARD R. MILLER
Raise taxes on the rich. Is it a slogan from the past, a job-killing blunder, a plan destined for failure? The more former U.S. Sen. Mark Dayton has persisted with this theme in his campaign for governor, the more I've wanted to learn why.
Last week I read Dayton's tax plan, which led me to the Minnesota Department of Revenue's website and a document called the "Minnesota Tax Incidence Study." That study analyzes how much Minnesotans in various income groups pay in state and local taxes as a percentage of their total incomes. The study includes income, property, sales, gas, excise, liquor, cigarette, insurance and other taxes, and shows which groups are paying the bill for the state and local government services we get.
In 1990, Minnesotans as a group paid 11.8 percent of their incomes in total state and local taxes. At that time, lower-income families paid slightly less and higher-income families paid slightly more, as a percentage of income, in taxes to fund everything from our schools, universities, health care, roads, and city, county and state government.
The 10 percent of the population who earned the most paid 11.7 percent of their incomes for state and local taxes. The richest 1 percent of households paid 11.2 percent. The vast majority of Minnesotans paid between 11.3 percent and 12 percent. A pretty fair system.
In the most recent year studied (2006) Minnesotans as a group paid 11.2 percent of income in all state and local taxes. So taxes overall as a percentage of income dropped from 1990 to 2006. But I was shocked to see that median-income families paid 12.4 percent in taxes, while the those in the top tenth in income paid only 10 percent. So in a 16-year period, as taxes as a percent of income went down overall, they rose significantly for middle-income Minnesotans and dropped even more significantly for the richest.
It gets worse. In 1990, the top 1 percent paid 11.2 percent in taxes, and in 2006, the very wealthiest paid only 8.9 percent in taxes.
And, according to the Revenue Department study, the trend only gets worse. Next year, middle-income families will pay 12.8 percent in taxes and the very wealthiest will pay 8.8 percent.
In other words, over the last 20 years Minnesota has gone from basically a flat tax that was slightly progressive to a hugely regressive tax system that clearly favors the wealthy. It is stunning that the very richest among us get by with paying so much less, proportionately, than the entire group does. Those most able to pay get by with the lowest tax rate. It's shocking and shameful.
For the last 20 years, the state has had two Republican governors and an independent. We've been told that taxes scare off the rich. And Gov. Tim Pawlenty really pandered to the wealthy. He sure took care of them.
Three governors have let what was a very fair tax system become grossly distorted in favor of those among us who are most able to fund the common good. Dayton is the only candidate telling us that the emperor has no clothes.
We ought to listen to him before it gets even more embarrassing.
Richard R. Miller, Edina, is a former member of the Minneapolis City Council and is a retired Wells Fargo executive.
One minor quibble: it’s the emperor (and his court) who has all the clothes! Here’s a chart from a earlier post of mine (it’s the US as a whole; Minnesota does a little better than this):
This the most unequal wealth distribution since the Great Depression.
It isn’t merely unfair, it’s moronic to think you can have functioning democracy or a thriving economy with inequalities like this. Moronic.
Others — including me — have written about these tax incidence statistics, but Miller’s essay is about the best I’ve seen, and it earns a Spotty™.
Remember, boys and girls, a Spotty™ is awarded to the author of a op-ed piece, a letter to the editor, or a blog post or comment that Spot wishes he had written himself.
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