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Growth & Justice Aims to Make the State Revenue System More Fair And CENTER FOR A PROSPEROUS, FAIR & SUSTAINABLE MINNESOTA ECONOMY GROWTH JUSTICE Volume 1 Oct. 2004 Growth & Justice aims to make BOARD OF DIRECTORS Dan Cramer the state revenue system more Ron DeHarpporte fair and good for job growth Arlen Erdahl David Foster Is it possible to make Minnesota’s state i.e. it will offer a different way to collect Lew Freeman and local tax system more progressive the amount of revenue the state raises now. Tom Gegax, Secretary and more supportive of good job growth Sylvia Kaplan at the same time? It will include raising more money from Joel Kramer the income tax, from high-income Ross Levin That’s the question Growth & Justice has households, while actually reducing the David Lillehaug been exploring through research, tax burden on business to foster a good Lee Lynch, Chair roundtable discussions and meetings with business climate for job growth. (Lowering Larry Meyer experts. The answer we keep hearing is business taxes also can improve fairness, Michael O’Keefe yes, it’s possible, it’s desirable, it’s not because businesses pass along much of Erik Peterson easy, take the opportunity to also make their tax burdens to consumers and Martha Meyers, Treasurer employees in a manner that hits lower- Kris Sanda the system simpler, and go for it. Jorge Saavedra and middle-income Minnesotans harder Tene Wells Minnesota’s current tax mix is somewhat than the wealthy).We will discuss at the Betsey Whitbeck, Vice Chair regressive, which means that those with roundtables some options for the best the highest incomes pay a smaller share way to lower business taxes. Our Mark Ritchie, Chair Emeritus of their incomes in all state and local taxes proposal will also include broadening the combined than the middle class does. sales tax and lowering the current 6.5% rate. There was widespread support for moving the system toward proportionality In addition, Growth & Justice will lay out STAFF by shifting some of the burden toward a plan for how the state can raise EXECUTIVE DIRECTOR those more able to pay, and enthusiasm substantially more revenue fairly. The Joel Kramer for simultaneously focusing on a good idea is to build in a unified refundable business climate. credit against the income tax, so that if in ASSISTANT DIRECTOR the future the state raises a regressive Lori Schaefer About six months into our Tax/Revenue tax, such as the tax on cigarettes, we can Project, building on the feedback from our offset a small part of the revenue gain ADMIN & RESEARCH ASST first round of meetings, Growth & Justice with an increase in the credit. That way, Dan Carroll is about to lay out a concrete proposal raising a regressive tax won’t make the for reforming Minnesota’s taxes. This overall system more regressive. proposal will be discussed at another INSIDE series of roundtables, and after further Participate…Provide Feedback refinement based on the feedback, we If you are interested in participating in a Taxes: Why it Matters who Pays.....2 plan to take a plan to the public and the roundtable discussion on Growth & Workforce First........................................3 legislature early next year. Justice’s tax proposal, call 612-872-1460 Worst Political Ads................................4 or email [email protected]. Thank you G&J Supporters...............6 The Growth & Justice Proposal When the roundtables begin, we will post About Growth & Justice........................8 The main proposal that we will take to the proposal on our website, and you can G&J on Straight Talk radio.................8 the roundtables will be revenue-neutral: comment on it via email. 2104 Stevens Avenue South • Minneapolis, MN 55404 • phone 612-872-1460 • fax 612-872-8662 • [email protected] • www.growthandjustice.org Taxes...why it matters who pays Sign up to participate in Growth & Justice believes that a raise, but how do we raise it? Who pays, the Growth & Justice coherent, principle-based revenue system and why? Growth & Justice believes that could achieve broad public support and examining the question – who pays, and Tax/Revenue Project! strengthen the state. The choices involved why – offers an opportunity to move have substantial impact on the availability beyond polarization, and to use tax policy If you are interested in of jobs, on after-tax incomes of workers, to make Minnesota and Minnesotans participating in a Tax/Revenue and on the stability of government’s more successful in an increasingly project roundtable discussion to capacity to pay for the infrastructure competitive economic environment. critique the Growth & Justice needed to preserve and improve our revenue proposal, please call quality of life. They also affect A lot has changed since 1967 #612-872-1460 or email us at environmental outcomes such as air Minnesota has not made a sweeping pollution and sprawl, and health outcomes change in its tax mix since 1967, when [email protected]. such as smoking rates. the Legislature launched “The Minnesota Miracle” by adopting the nation’s first We expect the second series of Who pays vs. how much? state sales tax and using the revenue to roundtables to take place later this There is a sharp political division in sharply increase funding of education, year. Minnesota about taxes and how big state making workforce quality Minnesota’s and local government should be. Taxes competitive advantage. As a result, have dominated discussion at the Minnesotans’ personal income has grown legislature in recent years, and have much faster than the nation’s for several Test your knowlege contributed to the increasing polarization, decades. even paralysis, that now characterizes of tax trivia Minnesota politics. A lot has changed since 1967. Q1. What portion of their income will The overwhelming theme of this ongoing Global, national, and state economies the wealthiest 5% of Minnesotans discussion has been “how much?” How have been characterized by increasing pay in total state and local taxes in much revenue should Minnesota collect? economic interaction and competition. 2005? In other words, how much government The resulting battle for market share and A. 25.6% should we have? productivity has dramatically reshaped B. 14.8% consumption, production, and trade C. 9.7% While that question sounds strategic, it patterns around the world. D. 8.5% has been debated – fiercely – in a most unstrategic way, focused on the surplus Globalization has increased overall wealth Q2. Minnesota has a 6.5% general or shortfall of the moment. in America, but also – when combined sales tax on consumers. Where does with federal and state tax changes that this rank us nationally? When revenues were running high, the have shifted the burden from capital to A. 1st governor and legislature agreed to provide labor – has widened income and wealth B. 4th refunds rather than build reserves, and to inequalities and heightened economic C. 11th lower tax rates. Later, when the combined insecurity. D. 25th impact of those rate cuts and a downturn in the business cycle produced a dramatic In this atmosphere, Minnesota’s Q3. Minnesota’s price of government budget shortfall, the 2003 session economic future can be made brighter if (the total amount of revenue balanced the budget with a combination we make our tax policy simultaneously Minnesotans pay to state and local of some one-time shifts, new or expanded more competitive, so we attract and retain governments) was 15.1% in 2003. fees, and substantial budget-cutting – no good jobs, and fairer, so working people What was it in 1994? new state taxes. Now, local property have enough after-tax income to support A. 12.5% taxes and such fees as college tuition are their families and contribute to the local B. 14.1% rising much faster than usual to economy without government assistance. C. 15.3% compensate for some of those state cuts. D. 17.7% What gets lost in this political firefight is For more on the Growth & Justice Tax/ an equally important – perhaps more Revenue Project, check out our website The answers to tax trivia can be found important –question: Not how much we at www.growthandjustice.org. on page 8 of the newsletter. Growth & Justice, 2104 Stevens Avenue South • Minneapolis, MN 55404 • phone 612-872-1460 • www.growthandjustice.org • Oct. 2004 Page 2 Growth & Justice Wage Project culminates in the Workforce First report It’s no secret that business, labor, government, nonprofits, report identifies a number of ways to bust one of the most and academia. Workforce First concludes through barriers to make college important economic that Minnesota can substantially increase educationJUSTICE more attainable for people with issues facing the number of self-sufficient families and lower incomes. Minnesota is the also strengthen the state’s economy with inability of lower- one bold stroke: a serious commitment to The Workforce First report was made income workers to providing more education and skills for possible by a generous grant from the support their families workers. McKnight Foundation, and Growth & on their earnings. Justice is proud to be among the many Growth & Justice The Growth & Justice Workforce First organizations whose work they support. believes that all Minnesotans will benefit report asserts an ambitious but achievable when we have a strong economy in goal of 10,000 more college graduates For a copy of the Workforce First report, which all Minnesotans can earn a decent and 15,000 more skilled workers per year visit www.growthandjustice.org or call living, and we believe this is a goal around -- above current levels. That means that #612-872-1460 to have a copy mailed. which Minnesotans can unite. This was by 2015 we would have 250,000 more the premise of the first major policy topic Minnesotans with postsecondary degrees tackled by Growth & Justice.
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