>>Fairness of Governor Dayton’s income tax proposal

The shutdown of the Minnesota state government shutdown is less than a week away, with the $5 billion budget deficit still unresolved. Governor Dayton and the Republicans are expected to work Saturday on the most contentious issues, taxes and health and human services.

The governor and organizations throughout the state have argued that some portion of the budget solution must come from  new revenues in order to keep budget cuts from causing irreparable harm to seniors, Medicare recieptents and other vulernable Minnesotans.

JRLC has just received data from the Minnesota Department of Revenue on the Governor’s proposal to raise income taxes. These data project which taxpayers will pay more and how the proposal affects tax fairness across income groups. They have worked up the following chart from the data; it shows the effective tax rates for all state and local taxes on income groups — poorest to richest, left to right, with and without the Governor’s income tax proposal.

The data show that with the proposed income tax increase, the richest 10% (tenth decile) would still not reach the rate shouldered by the middle class (fifth decile), nor the rate paid by the average household (11.5%), nor the rate paid by the vast majority of households.

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