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Dayton Proposes $2.1B in new taxes

Dayton Proposes $2.1B in new taxes Click to Enlarge Photo:

Jan 22, 2013 at 1:43 pm

ST. PAUL, Minn. (AP) - Minnesota Gov. Mark Dayton hopes to raise $2.1 billion
more in state taxes, partly by subjecting more items to the sales tax in a
tradeoff for a lowered rate.
 
The Democrat's proposal Tuesday covers the waterfront in taxes. It would hike
the amount owed on income above $150,000 for single filers, subject high-end
clothing to the sales tax and raise cigarette taxes by 94 cents per pack. But he
also wants to cut the corporate tax and provide property tax rebates of up to
$500.
 
It's all contained in a two-year plan that would fuel about $38 billion in
state spending. It includes a promise to schools to add $52 more in aid per
student.

The governor says his education investments are necessary to improve Minnesota
and its economy. His plan for more education spending accounts for almost
two-thirds of his proposed state spending increases. 
 
Dayton has made funding K-12 education a top priority for his first term. He's
pledged to increase funding every year in office.

The budget blueprint Dayton has unveiled also proposes big changes to the
state's sales tax. It would apply the sales tax to some services now exempt, but
would continue to exempt food and medical services along with clothing purchases
under $100. 
 
More things would be subject to the state sales tax, but its overall rate would
drop from the current 6.875 percent down to 5.5 percent under Dayton's proposal.
That's a 20-percent decrease, which Dayton's office says is the largest in state
history. 
 
They say Minnesota would go from the 7th highest sales tax rate to the 27th
highest among U.S. states. 
 
Dayton says he has been reluctant to raise the cigarette tax because it's among
the most regressive taxes. That means it falls harder on people with low
incomes. But Dayton says he thinks that is ultimately outweighed by the fact
that increasing cigarette taxes has been shown to reduce the number of people
who smoke. 
 
The state's current cigarette tax rate is $1.58 a pack. Dayton says his
proposed increase would make Minnesota's per-pack tax equal to Wisconsin's.

Dayton's whole plan is the starting point in a debate likely to reach into May.

Abby Faulkner

Posted By Abby Faulkner

Assistant News Director

Abby Faulkner's Profile

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