Can’t fix taxes until you fix all taxes

There’s a lot of discussion of the state Property Tax report analysis released on Friday. The Dayton administration is claiming property taxes are going down, a net drop of $8 million in the state in 2014. Republicans are claiming the state’s property tax is going up $125 million, and only new refunds and property tax credits of $133 million are bringing the grand total down.

(Republicans, of course, still fail to accept any responsibility for the property tax increases brought about by the cuts in Local Government Aid that the Pawlenty Administration used to balance the state budget during its “no tax increase” heyday.)

Here’s an example of what is wrong with the state’s convoluted tax system. When one class of taxpayer complains about paying too much, legislators or the governor may try to lower their burden with credits or refunds. These credits and refunds, of course, come from some other tax. When the state cut LGA to prevent income tax increases, it caused property taxes in the affected cities and counties to rise. When the state tries to lower property taxes, it has to do it by raising LGA, or paying credits and refunds to property taxpayers. Those credits and refunds come from from other tax sources.

The state’s tax system is like an old inner tube, with weak spots bulging out here and there. Try to squeeze one spot back down, and another pops out.

It is high time the state took a comprehensive look at tax reform. It needs a complete overhaul, not just another patch or two on the tire. The system needs to be streamlined, simplified, and readjusted so that everyone is paying their fair share.

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