Is Dayton giving up on tax reform?

We hope Gov. Mark Dayton, knocked back a couple of steps on the issue of a sales tas on business-to-business services, isn’t giving up on the idea of tax reform, which is a different issue entirely from raising taxes.

Reforming the tax system in Minnesota is a goal worthy of this governor’s and this Legislature’s efforts. The governor has been sending his Revenue Commissioner Myron Frans around the state for months with a pair of three-legged stools, making the pitch that out tax system has grown out of whack, that it relies too much more on property taxes than it used to. He has been pointing out that our income tax and property tax formulas have grown increasingly complex, with far too many categories and loopholes. The state needs to simplify the tax system and make it more fair.

We agree, and think the system needs to be fixed. And we think it can and should be done in a revenue-neutral fashion, not one where the state adjusts this and fiddles with that and – hey presto! – there’s a billion or two more in revenue coming in.

Part of Dayton’s tax reform plan was extending the sales tax to goods and services and lowering the rate, not a bad idea, but the conflict came over all that he included in the extension. He wanted to raise enough money from the sales tax to fund his $1.4 billion property tax rebate program. That’s not going to happen without the sales tax on business services, but that’s no reason to abandon the idea of sales tax reform.

Instead, Dayton is going back to raising the taxes on the wealthiest two percent of Minnesotans. So much for tax reform.

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