“Rethinking Minnesota Taxes” Sota Has Below Average Business Taxes, When You Measure All Taxes Paid by Business As a Percentage of Private Sector Activity
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VolumeCENTER 2 FOR A PROSPEROUS,Mar. FAIR 2005 & SUSTAINABLE MINNESOTA ECONOMY BOARD OF DIRECTORS Dan Cramer Ron DeHarpporte Arlen Erdahl Growth & Justice launches David Foster n February 23, the House Lew Freeman Tax Committee scheduled 45 Tom Gegax, Secretary minutes for a discussion of Sylvia Kaplan Growth & Justice’s tax strat- Joel Kramer “Rethinkingwith hearings Minnesota at the legislature Taxes” egy proposal for Minnesota, Ross Levin Oand ended up devoting twice that much time David Lillehaug to it. One day later, the Senate Tax Commit- Lee Lynch, Chair tee heard Growth & Justice’s plan, and it, Chris Mahai too, ran long. Tom McBurney Larry Meyer A number of members in both houses and both Michael O’Keefe parties remarked afterward that they appreci- Erik Peterson ated the opportunity to look at the tax system Mark Ritchie strategically – as a single big picture – explor- Martha Meyers, Treasurer ing what’s fair, and hearing about research on Jorge Saavedra how different changes might affect economic Tina Smith growth. It was a change of pace from how they Emily Anne Tuttle spend a lot of their time, listening to special Tene Wells pleadings for one tax exemption or another. Betsey Whitbeck, Vice Chair The Growth & Justice plan, “Rethinking STAFF Minnesota Taxes: Fairer for families and JOEL KRAMER testified before both the better for business growth,” proposes a swap House and Senate Tax Committees about EXECUTIVE DIRECTOR the Growth & Justice “Rethinking Minne- Joel Kramer of higher income taxes on high incomes for sota Taxes” proposal. More than 60 lower taxes on business, and says this could legislators and staff, 50 tax officials and ASSISTANT DIRECTOR happen if conservatives would give up their lobbyists, and many other interested Lori Schaefer cherished (and wrong) belief that high income highercitizens income have already tax rates engaged and lower in discus economic- sions about the proposal. RESEARCH & POLICY DIRECTOR taxes are bad for business and liberals would growth because they knew people who had Baris Gumus-Dawes give up their cherished (and wrong) belief that left Minnesota over income taxes. Growth high business taxes are progressive. The plan & Justice Executive Director Joel Kramer ADMIN & PROJECT ASSISTANT also includes broadening the consumer sales responded that anecdotes aren’t the same as Emily Saunoi-Sandgren tax to more items and lowering the rate. To an overall picture of what’s happening. Some see the presentation, and supporting materials, also raised the question of what’s fair: The go to www.growthandjustice.org. wealthy already pay most of the taxes, even if they don’t pay as high a proportion of their Among the livelier aspects of income, and they don’t use more services. Joel Policy leaders respondINSIDE to “Rethinking the Q&A with legislators: Kramer responded that an argument could be Minnesota Taxes”........................................ 2 made that the wealthiest benefit most from Thank You 2004 G&J Supporters ............ 4 • Some Republicans in the House doubted the government services that protect property evidence that there is no clear link between continued on next page Workforce First inspires Early Care & Learning Act .......................................... 6 Meet the new G&J staff ............................... 8 2324 University Ave. West, Suite 201 St. Paul, MN 55114 phone 651-917-6037 fax 651-641-7223 www.growthandjustice.org continued from previous page rights and from investments in infrastructure Policy and community leaders and education that benefit businesses. respond to Growth & Justice’s • Senate Tax Chair Larry Pogemiller ex- pressed great surprise over a chart from an Ernst & Young study showing that Minne- “Rethinking Minnesota Taxes” sota has below average business taxes, when you measure all taxes paid by business as a percentage of private sector activity. Sen. “The Growth & Justice tax plan makes a lot of sense. Many Pogemiller said you’d never suspect that Minnesotans don’t know that the wealthiest currently do not based on all the testimony he has heard from business groups about high taxes. To pay their proportional share in overall taxes. Also, I like the this point, Joel Kramer responded that those fact that Growth & Justice doesn’t just talk to people who who argue that we have a bad business tax climate are including the personal income tax agree with each other, but looks for people who have dif- and the overall tax level, not just taxes paid fering viewpoints. That’s how you get good policy.” by businesses. —Bill Hansen, Owner, Sawbill Outfitters; participant in It’s too soon to know if any bill will be written this year incorporating Growth & Duluth roundtable discussion Justice’s strategy, but there are plenty of indications that it’s affecting the thinking of a number of key legislators about how best “GROWTH AND JUSTICE’S TAX PROJECT is important because to raise revenue for the state. Minnesota’s tax system needs improvement. It needs stable revenue sources so the state’s contribution to the economy can continue. And, a Citizens engage in rethinking different mix of taxes could make taxes less burdensome on families with tight budgets. Growth and Justice is asking all the right questions and is Minnesota taxes getting key leaders to join in.” In total, nearly 200 people participated in —Wayne Cox, Minnesota Citizens for Tax Justice Growth & Justice’s Tax/Revenue project leading to the “Rethinking Minnesota Taxes” report. Thanks to those who took the time to “AS A MEMBER OF THE HOUSE TAX COMMITTEE, I appreciated the attend our roundtable or work group discus- sions around the state, and those who shared opportunity to look at the entire state and local tax system from a strategic their input via our website. perspective vs. dealing with one tax or one proposal at a time. Growth & Justice’s approach challenges assumptions about taxes from both liberals A very special thank you to: and conservatives. This work is enlightening, and the approach is needed to get people working together on good tax policy for Minnesota.” • Sarah Aadland & Bill Mague, project researchers —State Representative Connie Bernardy (Fridley), • Rep. Connie Bernardy, legislative re- House Tax Committee, and legislative research sponsor of search sponsor; and House nonpartisan research and fiscal staff Growth & Justice’s tax study • Charlie Quimby, Words-at-Work, pre- sentation development • David Schultz, Pam Neary, John James, “WE NEED MORE ORGANIZATIONS like Growth and Justice who Julie Bunn, and others who contributed are willing to challenge the assumptions of both major political parties. to early research Minnesotans expect legislators to look for common ground and Growth • The Robins, Kaplan, Miller & Ciresi, LLP Foundation, and the Otto Bremer and Justice is helping us do so.” Foundation who provided support for the Tax/Revenue Project; as well as the —State Representative Ann Lenczewski (Bloomington), hundreds of other individuals and founda- Lead Democrat, House Tax Committee tions who support our work. 2 2324 University Ave. West, Suite 201 St. Paul, MN 55114 phone 651-917-6037 fax 651-641-7223 www.growthandjustice.org “WE APPRECIATE GROWTH & JUSTICE’S determination to get the business community’s perspective and its recognition that business taxes are regressive.” —Tom Hesse, Minnesota Chamber of Commerce “AS A SMALL BUSINESS OWNER, I am glad that Growth and Justice has recognized that it is people who ultimately bear Growth & Justice would like to the burden of paying taxes, and that making taxes more fair for thank the following advisers, business actually translates directly into making taxes fairer for G&J Advisers the people.” for their expertise, advice, and counsel. These leaders in —State Representative Phil Krinkie (Shoreview), their fields have helped shape House Tax Committee Chair &our organization and our policy work. “THOUGH WE MAY not agree with the proposal in its entirety, I believe it is provocative and has jump started a broader discussion David Andreas Truck Morrison on Minnesota tax policy. We appreciate the fact that the proposal Marcia Avner Pam Neary recognizes the importance of job growth to Minnesota’s economy.” Tom Barrett John Nelson Peter Bell Robert Olson —Charlie Weaver, Executive Director, Minnesota Business Jim Bernstein Don Ostrom Partnership Jeff Blodgett Frank Parisi Bruce Bomier Larry Perlman Steven Bosacker Mark Peterson “GROWTH & JUSTICE is providing valuable input Julie Bunn Akshay Rao Arne Carlson Art Rolnick to the public discussion with regard to tax fairness Phil Carruthers Tom Rosen and incidence.” Bert Colianni Alex Rothman John DeSantis Steve Rothschild —Senator Larry Pogemiller (Mpls), Senate Tax Committee Chair Bill Drake Nina Rothschild Utne Anita Duckor Dennis Rysdahl Judi Dutcher Terry Saario Arvonne Fraser Kris Sanda Don Fraser Sharon Sayles-Belton Peter Gillette David Schultz Terry Gips Jon Scoll Peter Heegaard Joe Selvaggio Coming soon to a newspaper or meeting room near you Jean Holloway Catherine Shreves “Rethinkingfter a year of research and publicMinnesota Earlier this month, Taxes:”Joel Kramer spoke Tom Horner Al Silver discussions with interested citi- to the Minnesota Women’s Economic Linda Ireland Jeff Smedsrud zens around the state, Growth Roundtable, and at the end of the John James Wy Spano & Justice launched its plan to make month he will be speaking at two Marcie Jefferys Tom Streitz Minnesota taxes fairer for families and DFL Education Foundation groups. better for business.