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Conformity bill is a little late, a little partisan.
If wealthy Minnesotans pay a smaller portion of their income in state taxes but when the federal taxes are added pay a slightly larger overall rate than middle class Minnesotans then this editorial sees it as "undercutting" higher state taxes on the wealthy. And who has deisgnated that the rates of taxation on the rich and the middle class must be equivilant? when did the idea of a flat tax or equal tax become the accepted policy? When did progressive taxation (where the rich pay alarger portion of their income in taxes) become "undercutting". The progressive tax rates of America are what created a thriving mniddle class and allowed it to perpetuate itself by well supported higher ed with low tuition rates, a safety system of social security and medicare to keep them out of old age poverty and created a consuming class of Americans that made many entrepeneurs and corporations rich. The effective tax rate of the rich in the state and Federal tax system is much lower than middle class rates when deductions, tax shelters and tax friendly investment portfolios are factored in. The rich must pay more if America and Minnesota have any chance to prosper and continue as an egalitarian society.
Willy53 - [The rich must pay more if America and Minnesota have any chance to prosper and continue as an egalitarian society.] *** Actually the rich pay much, much more than the average person in federal income tax. When you have 47% of federal filers paying zero FIT then the median FIT is probably very close to 0% or right around 1-2%. Meanwhile the "rich" (top 5% of income) pay well over 23% (total federal income tax burden including all the deductions/credits). So how much more do you want the rich to pay? Is 20% more not enough for you?
"The rich must pay more if America and Minnesota have any chance to prosper and continue as an egalitarian society." -- The real solution to the revenue problem is to get the people that pay NO income tax to contribute to the pot. OR we could just cut spending and give all taxpayers a break.
MN continues to tax capital gains and dividends for low income people. This income is exempted from tax for the fed. This results in low income retired people, who must rely on dividends and capital gains to survive, paying more MN income tax than federal tax.
The effective tax rate of the rich in the state and Federal tax system is much lower than middle class rates when deductions, tax shelters and tax friendly investment portfolios are factored in. ------------------NO, in fact the exact opposite is true. The rich pay, by far, the highest effective tax rate. Go to IRS website and investigate your self.
The tax incidence study is, of course, inherently flawed because it does not consider the distribution of transfer payments to the low end of the income spectrum. These payments more than wipe out the tax liability of the bottom two quintiles and makes the benefit/burden incidence for more tilted in favor of low incomes than the so called "incidence study" indicates.
One glaring omission from the conformance bill is a fix to the marriage penalty. Over 600,000 MN Married taxpayers who take the Federal standard deduction will continue to add $2000 to their MN taxable income. Over 50% of those have AGI under $50,000. Why are low income married taxpayers at the bottom of the priority list? The time to fix this is now! Please call you legislators.
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