TPA Slams Minnesota Governor for Proposed Tax Increases

On Friday, January 18, the Taxpayers Protection Alliance (TPA) sent a letter to Minnesota Governor Mark Dayton urging him to not raise taxes in order to balance the budget in Minnesota (read the letter here).  Tax increases are the siren song of politicians across the country, as politicians look to fill budget holes.  The problem is that tax increases hurt taxpayers and consumers.  One popular tax increase has been tobacco and Governor Dayton is reportedly looking at raising that tax, a dramatic shift in policy considering that Governor Dayton once opposed a tobacco tax increase.  According to the Minnesota State News, “During Wednesday’s budget negotiations with legislative leaders, Governor Mark Dayton offered two new budget proposals, both featuring substantial tax hikes. Dayton’s options included a temporary 2% income tax increase on Minnesota millionaires or, alternatively, a $1-per-pack cigarette tax increase.”  The same article noted that “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues. In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year.  Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.”  TPA urged Governor Dayton to cut spending.  The Minnesota Budget Solutions Coalition has identified reforms that could save Minnesota taxpayers more than $6 billion, including eliminating all corporate welfare including corporate subsidies, incentives, and credits; abolishing ethanol grants; and reducing legislators’ and constitutional officers’ pay by 5%.

Full letter:

Office of the Governor                                                                   January 18, 2013
130 State Capitol 
75 Rev. Dr. Martin Luther King Jr. Blvd. 
St. Paul, Minnesota 55155

Dear Governor Dayton,

The Taxpayers Protection Alliance (TPA) urges you to not raise any taxes to balance the budget in Minnesota.  Instead, we urge you to focus your efforts on cutting wasteful and unnecessary spending from the state budget.

One area of particular concern for Minnesota taxpayers is your statement about raising tobacco taxes.  According to the Minnesota State News, “During Wednesday’s budget negotiations with legislative leaders, Governor Mark Dayton offered two new budget proposals, both featuring substantial tax hikes. Dayton’s options included a temporary 2% income tax increase on Minnesota millionaires or, alternatively, a $1-per-pack cigarette tax increase.”

Proponents of tobacco tax increases believe it could raise millions of dollars, but history has shown that proposition to be Fool’s Gold by not raising projected revenue.  The Minnesota State News pointed out that “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues. In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year.  Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.”

You made the argument best yourself when you once opposed a tobacco tax increase.  According to the Minnesota State News, “’That’s money out of the pockets of working people and poorer people, and that means kids don’t have as much to eat or don’t have the same quality of food,’ Dayton said of the cigarette tax.”

Instead of raising taxes, a better approach would be to cut spending.  The Minnesota Budget Solutions Coalition has identified reforms that could save Minnesota taxpayers more than $6 billion, including eliminating all corporate welfare including corporate subsidies, incentives, and credits; abolishing ethanol grants; and reducing legislators’ and constitutional officers’ pay by 5%.  This would be more than enough to address a $1 billion budget deficit.

TPA hopes that you will cut wasteful, unnecessary and duplicative government spending; the real culprit behind the $1.1 budget deficit.

Sincerely,

David Williams

President