Governor Dayton and liberal legislators continue to defend the $2 billion in crippling tax hikes (several of which took effect July1), but the case gets weaker by the day. Tuesday was no exception, as Minnesota Management & Budget released their July 2013 Economic Update, showing that FY 2013 revenues are $463 million (or 2.7 percent) higher than predicted in the agency’s February forecast. Of note: income tax revenue accounted for more than 70 percent of the overage.
Key excerpt: “Much of the observed increase is believed to be attributable to high income taxpayers choosing to move even more income into 2012 than was projected in February’s forecast. The income shift into 2012 was triggered by the anticipation of higher federal income tax rates on the earnings and capital gains of upper income taxpayers.”
To avoid federal tax hikes, taxpayers shifted income from one year to another. To avoid Dayton’s state income tax hikes, expect many of those taxpayers to simply shift income to a different state.
According to MMB, “General fund revenues in fiscal 2013 are now estimated to be 9.2 percent greater than in fiscal 2012”. So Dayton and liberal legislators passed $2 billion in new taxes on the rich, poor, and everyone in between in order to “balance a budget” that was already balancing itself, thanks to the relative fiscal restraint of the previous legislature, and at a time of near double-digit year-over-year revenue growth.
Conservative legislators have asked the governor to call a special session in order to revisit the controversial warehousing tax that kicks in next spring. That’s a good first step toward undoing the unnecessary harm caused by the unrestrained tax and spending spree that defined the 2013 session.
