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Talking Points: Gov. Dayton’s Sales Tax Proposal

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(credit: CBS) Esme Murphy
Esme Murphy, a reporter and Sunday morning anchor for WCCO-TV, h...
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MINNEAPOLIS (WCCO) — In the coming weeks, Gov. Mark Dayton will be trying to sell his new tax plan. The plan would reduce the current sales tax rate from 6.8 percent to 5.5 percent, while increasing the number of goods and services that will be taxed.

That would drop Minnesota from the 7th highest sales tax in the nation to 27th. But it also includes controversial items like taxing clothing. But just how likely is the plan to pass?

The state has a $1.1 billion budget deficit. The governor says his sweeping overhaul of state taxes will balance the budget and actually lead most people to pay less. The governor says lower the rate of the sales tax but expand it to include more goods and services — those hair salon visits, skating and dance lessons will now be taxed — so will gym memberships, vet bills and clothing over $100.

But how can the governor be so sure that his math is right? State projections on the amount of money electronic pull tabs would bring in have so far fallen way short of estimates.

Tina Smith, the governor’s chief of staff, appeared on WCCO Sunday Morning.

“The non-partisan staff at the Department of Revenue does an outstanding job of assessing how they think the dollars are going to come together,” Smith said. “You are always working with forecasts and the most important thing is to figure out what is fair for Minnesotans and that is what is at the core of the governor’s proposals.”

And while some small businesses have been protesting the plan, the governor is presenting large corporation with a break — reducing the corporate tax from 9.8 to 8.4 percent.

The question remains whether the governor can convince the DFL-controlled House and Senate to go along with his proposal as a whole or if legislators will try and cherry pick the controversial items they want eliminated.

For a list of all the news goods and services the governor would like to add to the sales tax, click here (.pdf).

You can watch WCCO Sunday Morning with Esme Murphy and Matt Brickman every Sunday at 6 a.m. and 10:30 a.m.

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