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Taxing vs. spending

September 17, 2012
The Journal

Last week Minnesota Revenue Commissioner Myron Frans was in New Ulm, making the case for Governor Mark Dayton's plan for tax reform. Later in the week, Dayton delivered a similar message to the Humphrey Institute at the University of Minnesota.

Any talk of tax reform, of course, draws criticism from conservatives that we don't need more taxes, we need to live within our means. We don't need to tax more, they say, we need to spend less.

We agree with the idea that state and federal governments need to control spending. Taxing more is not the sole solution to budget deficits, as Gov. Dayton suggests.

But we think there is a need to separate the issues of taxing and spending in the political debate.

Taxing policy decides how money comes it to the government. Spending policy dictates how the money goes out. It has been evident for some time that Minnesota's system of taxing is in need of an overhaul. It has become increasingly complex, and increasingly dependent on the property tax. The property tax classifications have increased, and the number of income tax credits and deductions has gone up.

Each attempt to ease the tax burden on one group of taxpayers, over the years, has increased the burden on others. Look at the way property taxes jumped for commercial properties last year after the state monkeyed with the homestead credit system for an example of the law of unintended consequences.

The state should be able to overhaul its tax system, make it fairer and make it simpler, without leading to increased spending. That is an entirely separate issue that the Legislature battles over every two years.

We think it is possible to separate the two issues. Let's make our tax system work, and then worry about how much we want to collect and spend.

 
 

 

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