Gov. Dayton Wants To Tax Wealthy To Fix MN’s Deficit

ST. PAUL, Minn. (AP) — Gov. Mark Dayton looked to the wealthy to erase about half of a $6.2 billion budget deficit on Tuesday, proposing a new top tax bracket and an income surtax that together would give Minnesota the nation’s highest income tax rate.

The Democratic governor’s plan would raise nearly $2.9 billion from the top 5 percent of taxpayers, including a new property tax on homes valued at more than $1 million.

It would also increase taxes on health care providers and corporations with foreign operations, while cutting almost $1 billion in spending for programs including MinnesotaCare health care and nursing homes.

The tax increases and spending cuts are contained in Dayton’s proposal for a two-year, $37 billion budget that guides more money into education but could also cost about 800 state workers their jobs.

“This is a very tough budget for very hard economic times,” Dayton said.

Dayton said his proposal would shield 95 percent of state taxpayers from tax increases, while making the top earners pay a proportionate share of income in state and local taxes. The plan would restore recent levels of state aid to cities and counties, which Dayton said would help stave off local property tax increases.

Top Republican lawmakers gave the new income taxes zero chance of passing the GOP-controlled Legislature.

“I don’t want to say it’s dead on arrival. I don’t think it has much of a heartbeat,” said Deputy Senate Majority Leader Geoff Michel, R-Edina.

House Speaker Kurt Zellers said he was taken aback by the “epic” size of the tax hike for those with six-figure incomes. He said Dayton’s permanent and temporary increases would shoot Minnesota past Hawaii and Oregon for a dubious distinction for the highest tax rate, causing business leaders and others to flinch.

“This is a feeble and pathetic attempt at going back in time to raise taxes and increase spending in order to balance the budget,” said Zellers, R-Maple Grove. “It has not worked. It will not work.”

Democratic legislative leaders praised Dayton’s approach but wouldn’t commit to voting for the tax increases.

Senate Minority Leader Tom Bakk said the governor’s budget delivers on the blueprint he sketched during the campaign.

“Anybody that’s outraged wasn’t listening to Governor Dayton on the campaign trail. And he did win,” said Bakk, DFL-Cook. “Well-to-do Minnesotans have been getting a really, really good deal.”

Dayton campaigned on raising income taxes on the wealthy. His tax plan would impose a new fourth bracket of 10.95 percent for single filers making $85,000 and up in taxable income and couples who make more than $150,000. It tacks another 3 percent surtax on people with $500,000 or more in taxable income for the next three years, going beyond what he talked about as a candidate last year.

Assistant Revenue Commissioner Matt Massman said the tax increases would be partially blunted by federal tax reductions approved in December. Someone at the bottom end of the new tax bracket could expect to pay $139 more per year in state income tax while a couple with $1 million in taxable income could expect a $37,000 hit, according to his calculations.

The conservative Tax Foundation ranks Minnesota and New York as tied for the country’s eighth-highest tax income rate currently. Minnesota’s current top tax rate of 7.85 percent applies to taxable incomes starting at $75,000 for individuals and $132,000 for couples.

In all, Dayton would cancel $950 million in planned spending.

He would eliminate MinnesotaCare health coverage for 7,200 adults, including some parents, whose incomes are at least twice the federal poverty guidelines, or $44,000 for a family of four. MinnesotaCare is a state-subsidized health care plan for the working poor, who pay premiums on a sliding scale and get less generous benefits than those on federal health care programs.

Nursing home reimbursement rates would be cut 2 percent. Long-term care providers who work in homes and community-based services would have their reimbursements cut 4.5 percent.

For schools, the plan wouldn’t immediately repay $1.4 billion in aid that was delayed as part of last year’s budget fix. Dayton said he aims to begin paying that money back in the budget cycle that starts roughly three years from now.

But the governor would raise general fund spending on education to $14.2 billion, a slight bump. That’s about 38 percent of the state’s entire spending. Dayton’s budget also directs money to optional all-day kindergarten for poor students. It would set up a rating system to help parents make informed decisions about early childhood education providers.

State agencies would have to cut up to 10 percent of their budgets, with military and veteran programs exempt. And the state work force would shrink by 6 percent.

Dayton said he tried to aim his spending cuts at the least vulnerable people.

“I’m not willing to make barbaric cuts in the essential services that affect people’s lives,” Dayton said.

Republicans who took over the Legislature this year aim to hold spending to $32 billion, the amount of taxes the state is due to collect. Dayton’s proposal puts the sides $5 billion apart even before they get into the details of how much to spend on specific programs.

Dayton and top legislative Republicans both planned to fly around Minnesota talking about the budget Wednesday. Their travel plans, like their budgeting philosophies, were not scheduled to intersect.

Gov. Mark Dayton Delivers Budget Proposal (PDF)

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • middle of the road

    Ok, here is a start of doing the right thing. We need to cut some spending and raise some taxes and get this thing balanced for once. No more fee increases, and shifts. If Dayton proposes shifts, that is not right. If the Republicans do not go for some increased taxes, that is not right. We do need a balanced solution!!!!!

    • Really?

      You dems only know 1 thing!!! Tax and spend!! Pull your head out of your arse and get a clue!!!

  • vj in mn

    I agree. Property tax increases these last 8 years have been ridiculous! Thank you, Gov. Dayton, for recognizing that the average citizen cannot continue to shoulder these regressive taxes.

    • Speaknup

      What makes you think property tax is going to go down? Dreamer!

  • Sam I am.

    BS – the state needs to live within its means. Cut cut cut, anything and everything should be on table – especially welfare.

    • iconoclast

      yeah, yeah, we have heard that song before. It’s old and tired and it does not work. Cuts and increased taxes for the wealthy is the way to go. 50/50 compromise.

      • johnmpls

        It’s NOT a 50/50. There is no limit on how much spending can be increased, but there is a limit on how much more can be taxed.

        Easy solution: State the tax rates that will be in place for the next 10 years, then live within that budget.

        I defy you to tell me how much more tax should be paid (of course, all the taxes will be paid by those making more than you, right?)

      • Really?

        Can the dems come up with anything else? No!! They’re 1 trick ponies!!

    • dphilips

      Thats right Sam, You have yours,so to hell with the needy!

      • Sa I am

        No I don’t have mine. I live pay check to pay check. Did you hear me. PAYCHECK to PAYCHECK. My electric is behind, but I am paying my own way. Not reproducing kid after kid to stay on welfare year after year. Its there for the ones who need a helping hand, not for the leeches who bleed it dry year after year.

        Let me guess, 6 kids, 4 different Dads, double wide in the northern suburbs. You take your EBT card to get pizza at Papa Murphys.

        Yep just what I thought.

        At least I can say I earned mine.

      • E M

        @Sam I am: Really? Those services you despise can help you. You obviously see yourself as hard working and honest. The system was designed FOR YOU, not those that abuse it.

        Then again your White Pride won’t let you admit you need help huh? Or is it more you fear looking like a black person when you pull your EBT out to get some food?

        Admit it, you’re a closet racist.

      • 10.95% = veto

        E M: You are what is defined as a mental midget. Put the crack pipe down, go to the free clinic and get some condoms to prevent your seed from causing any further drain on our society. It’s always the race card when you have a limited mental capacity.. I’m sure your parents are proud.

      • Really?

        @E M- Where was race mentioned? Until you did it!!

  • I've Cutback

    I have cutten my person budget these last three years. I started out having lunch out everyday. As the economy tightened and I had to take a lower paying job I started bringing lunch in. At first when I had some savings I was bringing in ham sandwhiches and potato chips, maybe even some fresh fruit. After that Job vanished I needed to take an even lower paying job. Now pretty much all I buy for lunch is Ramon Noodles and microwavable Mac & Cheese. I realize the income is not there and I need to live withen my budget. When will the government learn to live within thier budget. I could go on and with my example.

    I think we should cut the budget even more. Starting with wasting money on light rail and all day childcare I mean Kindergarten. Lets completely drop 30% of all government programs.

  • Half Of Dayton’s MN Deficit Fix Comes From Taxes | PubSub Hub

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  • Papa K

    I am for changing the tax rates … makes good sense rather than shifting the burden to local cities and counties. By not raising property taxes we will avoid further problems in foreclosures and provide a fair way to provide revenue to the state.

    Equitable income tax rates and a balanced approach to spending cuts. I hope they can negotiate a budget bill we all can live with.

  • We the people

    Rob a grocery store if you can’t work to feed your family.
    Rob a bank if you can’t pay your bills.
    Steal from the rich and give to the poor.
    What do Bernie Madoff, Tom Petters, and Mark Dayton have in common?
    Nearly everything… except only two are in jail.

    The good news is that the govenor doesn’t write laws or define budgets, he only provides suggestions to the legislature of what he would like to see. So now it is up to them to have an honest moral compass.

    43.6% of the vote is not a “mandate” from the majority of the citizens of MN to pillage the hard working risk takers.

    • Jackie

      It sure wasn’t a mandate to pillage the most vulnerable and poverty-stricken populations either. People who work at low-paying jobs are honest workers and lots of ignorant people think all you have to have is a job and all will be well. Too many have low-paying jobs that don’t provide insurance and now many of these hard-working people may be cut off of MN Care. So I guess for some, the message is – working hard isn’t enough – you have to make enough money to be privileged enough to have any benefits. How do you sleep at night? Clearly you are a person who actually has to walk in other shoes to understand the issues….and I hope some day you have to.

      • Ginger Shepla

        Jackie, many of us do walk or have walked in those shoes. That’s what pushed up onto to better ourselves. Hard work is not easy, that’s why it’s called hard work. So if you want something more for yourself, make it happen, don’t be so dependent on everyone else to take care of you.

      • We the people

        I work 3 jobs and live paycheck to paycheck to keep my family fed and clothed.
        But the bottom line is still “Stealing is Stealing”, it can’t be called “Fair”.
        God even listed it in his top 10 sins. Thou shalt not steal.

      • Michele


        Obviously you have never worked a “poor man’s job” and must be making over 150K other wise you would not have said to work harder. Next time you go to McDonalds, or your favorite restaurant make sure you tip that “poor working man/woman” because they are not making anything worth living on!

      • johnmpls

        Funny, I’ve never worked for a company where the owner made less than $150K.

        Hopefully people making $50-75K will now be hiring people for good paying jobs.

      • dphilips

        Well said Jackie!

      • E M

        Yeah Cutting off MN Care before the 2014 Obamacare mandate? Good move there… Feed the Insurance pigs to bursting…

      • Really?

        How can you pillage someone who is poverty stricken? Get off the victim wagon and GO TO WORK!!!

    • 10.95% = veto

      I concur and obviously, a touchy subject. What can I say? I am already tired of paying for everyone else, now an increase to 10.95%?? Madness… Why is it that the biggest soapboxers are those that stand to reap the largest benefits?

      I’m interested to see if there will be any further corporate tax restructuring. With the Twin Cities being the 15th largest agglomeration in the US and hosting 21 of the Fortune 500 companies. What revenues do these firms bring in? Over 423.3 Billion in 2010. An increase of 100 basis points on their tax sheet could bring 4.23 Billion to the state, but we all know that will never happen.

    • Ignorance must be bliss

      You are an absolute moron if you think Bernie Madoff, Tom Petters, and Mark Dayton have anything to do with each other. Love how people do not even share the belief that they have but just spew BS hate out. I keep hearing from the GOPers to deal with all the repubs in office right now as the people voted them in, well take your own words to heart and STFU already with “how bad” Dayton is, the people voted him in too so find something else to cry about already.

      • Really?


  • PoBoy

    I want everything provided for me free of charge. I want education, healthcare, smooth roads, mass transit, sports teams with new stadiums, utility services, food, etc… You get the idea. I just have to get a little bit poorer and it will all be free. Let those working suckers pay for it, or better yet, let’s just borrow the money so no one pays for it.

  • rmsmkm

    I wonder if he is going to be paying the higher tax on the money that he and his family have in the Dakota’s , that would also help balance the budget.

    • Ignorance must be bliss

      Why would anyone pay MN for income that they have in either of the Dakota’s? Is this really all you have to complain about? I guess the better question is, is this even a question or just spewing more sh!t?

    • Really?

      Dayton does squirrel away his money and he’s been caught. The dem voters are so stupid, it’s laughable!!!

  • Speaknup

    Dayton shouldn’t be increasing spending on anything. Fifty years ago there wasn’t any such thing as “early childhood education” and kids turned out just fine. Poor doesn’t mean stupid. Any parent ought to be able to teach his/her child up through pre-K what their kids need to know to make it in Kindergarten without state aid.

  • Jay

    One area the government could pursue is to stay out of business. Like paying for stadiums for example. Only those citizens that can actually pay for some portion of a stadium should do so…as a choice. But, this is only one example. I guess I’m just tired of potilicians that don’t attend to the needs of their constituants statewide. If they really cared would they commit all the citizens to these huge long-time sums?!

  • Karen

    I would like to see a total freeze on hiring state workers, and reduce by at least 10% through retirements, We should also look closely at functions that could be done in the private sector saving the state long term obligations in retirement benefits.

  • Kevin

    So….increase taxes on the rich…..then increase spending on Education (union)? Not cool…..Then remove the poor from MN Care….not cool…..then slap the elderly and cut their money……not cool….but then give free Kindergarten to the poor (union)….So I guess if your in a Union your recession is over….if your rich your about to become less rich…if your poor and have MN Care your about to get kicked….and if your old your about to get kicked…..I got a better idea…someone kick Dayton!!!! We need cuts across the board! No more immigrants! Cut school spending! Cut govt waste! This guy is unreal!

  • I care about our children

    All day childcare??? All day every day Kindergarten should be a given across the board! Look at WI, not only do they have that… they also have 4 year old K in many districts. MN needs to make Kindergarten a priority and not only an “option.” I personally am not asking for help with Early Education and I would never qualify for help with Kindergarten. So, unfortunately my children don’t go every day. BUT this shouldn’t even be something parents worry about… schools need funding and it should start with getting our Kindergarten students in the classroom.

    • Eric

      A childs success in school comes from the involvement of the parents. We could double the amount spent on education in the state and it would not make a difference in results. The education industry has been duping us into believing it’s for the children rather than for their own pockets. Wake up, early childhood education will only succeed if we figure out how to make parents accountable for raising their children. The ones getting punished in this are the people who take pride in getting their children prepared for school, are involved from k-12 and beyond, but are forced to pay for the parents who could care less.

    • TS

      Why can’t you teach your own children the basics? I think you’re just looking for cheaper daycare.

  • jon

    All I am going to say is taxes need to be raised to fix the mess we are in.

    • thesuperman

      The mess were in is caused by the irresponsible idiots running this state. When the 35 w bridge was rebuilt. The contract went to a Colorado company. And it was the most expensive bid. Government never does anything the correct way.

    • Kevin

      Oh my…you are the Democratic Party’s wet dream……can you breed more of you?

  • cache

    Clown, mental midgit, dummer than dirt, puppet, thief…if one can’t live within ones means go steal from the taxpayers (golden geese). This State is descending into Hades with our arrogant insipid governor driving the green bus…I can’t seem to call this ‘thing’ enough names which only falls on deaf ears, blind eyes and the dumb. It seems NO One is paying attention or cares how bad it gets as long s they get their freebies. We are over run by overbreeding illegals and welfare slugs and those corporate rats who get freebies from us taxpayers!

    • thesuperman

      Exactly. You should be Governor

      • John

        You would get my Vote!!!!

  • Iconoclast

    The corporate patsies that call themselves the Republicans want you to forget that the wealthiest people in the country use to pay TWICE as much in taxes 50-60 years ago. That’s TWICE as much in case you were not listening. It’s called progressive taxation and it works. Nobody, least of all, middle class folks, should be defending the whining and straw men put forward by the Republicans over what certainly would be only a modest increase in taxes on the wealthy.

    • Eric

      I’ve seen the rates you refer to and the democrats love to use them for their talking points. Theres a little thing they leave out, the rates do not take into account deductions. Duductions were quite large back then, as the tax rates lowered, concessions were made on the amount of deductions possible, which decrease every year. Tax rates then, were the same as they are today, we just have a larger government and less income earning citizens to pay for it. You think the Rockerfellers and Kennedys of the world were getting that rich with an 80% tax rate.

    • thesuperman

      Your an idiot. What did mark Dayton do but, set up a trust fund in South Dakota. Why? To avoid taxes. Taxation does not work. It only deadens creativity and ambition. The same with regulation.

    • Gary B.

      Iconoclast, you are spot on.

  • Lisa Gonyea

    Early childhood education …not needed. There are numerous studies that prove children with headstart were not any furher along by the time they reached 2nd grade. All we are is providing childcare for many who are not in need of it anyway. Just a chance to get the kids out of their hair for a few hours every day. What is Gov dayton callin wealthy? A combined income of 200K? Usually achived at the time when their kids are off to college and not able to get assistance like lower income scaled families. That’s is OK..the last bastion of PC groups to hate..the so called rich!

  • Michele

    What the hell is Dayton doing?!! Cutting Home Health, Nursing Home Care, and Mn Care for the working poor is stupid and irresponsible!! Yes Mn should have all day Kindergarden, this is a no brainer, but there are school programs that should be cut…arts, choir, spots (if they want sports join a community league!) We already know we are going to pay higher for clothers so tax it already almost every state in the union does. Again the government is not listening, Dayton is a one term Governer..what a mistake voting him in!!

  • Patrick

    What the Republicans want you to forget is that the wealthiest people in the country use to pay TWICE as much in taxes 50-60 years ago. That’s TWICE as much in case you didn’t get it the first time. It’s called progressive taxation and it works. Nobody, least of all, middle class folks should be buying into the whining and straw men put forth by the Republicans. They spend as much as anyone but use tricks to put the payments off for the next person.

  • Alastair

    Legalize marijuana. Tax the living bejezus out of it. Regulate it. Tax clothing. Decrease welfare funding. Viola!

  • John Coulter

    Our Governor is nuts if he thinks the people of Minnesota are going to put up with higher taxes and more spending on programs that only encourage people not to work and drive businesses out of state. Needed changes are coming to America and Minnesota. IT IS AN EXCITING TIME TO BE ALIVE as politics heat up and we return to Americans taking personal responsibility for themselves! Who is responsible for me? I AM!!! Not my government!

  • Paul

    Are the poeple who are commenting against this making more than 132,000? If so, then you have a right to complain, but if not that seems crazy to me!

    • We the people

      Mob rule… parable…

      Suppose you’re hanging out with your buddies, and Joe says “hey lets go steal from that store”…
      You say “no that’s stealing”..
      Joe says “What??? Do you own the store? I’m not stealing from you. It’s unfair that the store has all that stuff that we don’t have. So we are just evening things out”.
      You say, “Oh… I get it… sure let’s go do it. Better still… let’s get our big brother Dayton to do it, because he is above the law”

      I think we understand exactly what you are saying.

  • Paula

    Today is a good day for poor Minnesotans! Their taxes won’t go up, the rest of suckers will have to pay! Oh happy day!!

  • Michele

    Why not just institute a death committe! Everyone who is in nursing homes, done. Home health care, done. Working poor, done. There is no reason that all day kindergarden “needs to be funded” just do it! Why pump money it the education system that is not broke, and just where the hell are the jobs? You people want to decrease welfare then create jobs…Look back to the past, get people picking up trash, cleaning around the river’s, parks, you have to create jobs to get more income into the state. There is no reason why companies can not step up and start hiring people give them a tax break in 2 or 3 years for hiring people to just clean up the state!!!!!!

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