Column: Tax reform on a stick
ST. PAUL -- This year's State Fair experience was similar to past years at the "Great Minnesota Get Together." It was a mix of just wandering the fairgrounds and the usual list of mandatory stops. The usual destinations included the education building, the grandstand, a bag of mini donuts and, of course, a large helping of politics, all flavors. Politics at the State Fair this year seemed to be rather subdued, even quiet, in comparison to past years. Perhaps it stems from the fact that nearly everyone has already decided who they're voting for, or maybe everyone is just tired of the political banter because the Presidential campaign started over a year ago.
The one thing, however, there was no shortage of this year was opinion surveys. There were surveys on long-term care, health care, Minnesota history and, of course, the usual 20 questions about legislative proposals at the State House booth. But the most intriguing survey was the one being conducted at the Minnesota Department of Revenue booth, where I was asked to complete a survey on tax reform.
This push for tax reform is coming from Gov. Mark Dayton. His tax reform agenda is entitled "Governor Dayton's Tax Reform for a Better Minnesota." A one-sheet handout states that Dayton is sending Revenue Commissioner Myron Frans on a statewide tour to talk about our tax system and collect suggestions on how to make our Minnesota tax system "fair and simple." On the bottom of the sheet in big, bold, blue type it states, "Tell us your ideas for tax reform!"
So, Gov. Dayton, here it goes. Let's reform the Minnesota tax system by using the "State Fair model." The "State Fair model" is simple and very fair. It's a system where everyone pays.
Everyone who enters the fairgrounds everyday must pay; rich or poor, young or old, worker or observer. The "everyone pays" system at the State Fair has been in place for decades. It is simple and easy to administer; everyone who enters the Fairgrounds pays the admission fee. There are different rates for seniors and children, there are discount tickets and promotional days, like Seniors Day, but everyone must pay to enter -- the only exception is children under the age of 5. Whether you are working at the fairgrounds all day or just stopping to pick up a Pronto Pup, you still pay to get in.
My State Fair tax reform idea addresses the fact that today approximately 30 percent of all Minnesotans pay no state income tax. At the federal level, almost one-half of all Americans pay no income tax. As the federal government runs up trillion-dollar deficits and the State runs up billion dollar deficits, we have millions of people who don't pay anything. Everyone wants to enjoy the benefits that government provides, but fewer and fewer people are paying for the cost of the services. With the plea for ideas on tax reform, the Department of Revenue handed out a sheet of paper explaining how much in state revenue is currently being collected from the variety of state taxes. Their numbers show that 44 percent of all state revenue comes from the individual income tax, of which 30 percent of Minnesotans do not pay.
In the last 10 years total state revenue collections have increased by more than 45 percent, now topping $26 billion per year. This means that people are paying a greater percentage of their income to run state government. Yet Gov. Dayton's tax proposal is to raise income taxes, placing a greater tax burden on the people who are already paying the most. What is fair about this concept?
My "everyone should pay something" tax model should not be confused with the so-called "fair tax." The premise of the fair tax is to eliminate the income tax and only have a sales tax, or what is termed a consumption tax. This approach, if applied to the State Fair, would mean that there would be no admission fee, but there would be a higher tax on every service or product sold at the fair. Those who eat 10 corn dogs would pay more than those who only ate one. A consumption tax is a simpler tax system and would probably work better than our current tax structure, but it would make our sales taxes some of the highest in the nation.
If all Minnesotans benefit from a good education system, public safety, health care, transportation and public welfare, why shouldn't everyone help pay at least something to provide the services? The state's minimum income tax could be very small, perhaps not much more than the price of admission to the State Fair. Hundreds of thousands of Minnesotans each year pay to attend the State Fair and have money to buy food and entertainment. Is it asking too much for every Minnesotan to contribute a few dollars to provide for the state services from which we all benefit?
If Gov. Dayton is truly seeking a fair and simple tax system, he should adopt the State Fair model, where everybody pays something, rich or poor, young or old, and contributes to supporting state services. In addition, this tax policy would be transparent, broad based and inclusive. Just like the Great Minnesota Get-Together!
Phil Krinkie is a former state representative and current president of the Taxpayers League of Minnesota.