Dayton drops business to business tax plan

One of the more unpopular features of Gov. Mark Dayton’s tax plan was his expansion of the sales tax to transactions between businesses. Taxing services like legal, accounting, advertising, and so on would have added considerably to the cost of doing business in the state, and undoubtedly would have resulted in higher, less competitive prices to customers.

Dayton warned that dropping the move means he wouldn’t have the money for his proposed property tax break to every homeowner, but that wasn’t a great idea, either. The flat $500 rebate wasn’t well thought out and wasn’t very equitable. It would have cost the state $1.4 billion a year.

If Dayton won’t be getting as much tax revenue to spend, maybe he should be looking for ways to cut spending. It is the one side of the equation that Democrats never seem to consider.

The state could help lower the property tax rate, for instance, by eliminating unnecessary and unfunded mandates that force local school districts, cities and counties to provide services the state thinks are needed, but leaves the funding to the local property tax payer. The state could shoulder its full responsibility for education funding instead of forcing districts to seek tax levy referendums. It could quit poaching on the Local Government Aid that helps cities with lower tax bases provide needed services.

The business tax plan needed to go, but there are plenty of ways to make up for it.

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