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Build your own sales tax policy for Dayton's new budget

One of the largest and most controversial changes proposed in Gov. Mark Dayton's 2014–15 budget is a broad expansion of the state sales tax — collecting numerous new taxes on goods and services. The consolation for these new taxes? The governor proposes dropping the state sales tax rate from the current 6.875 percent to 5.5 percent (the national median is 5.85 percent). The net effect of these two changes would earn over $2 billion in new revenue during the 2014–15 biennium, assuming the sales tax changes go into effect January 1, 2014.

In the coming months at the Legislature, much debate will focus on just what goods and services should be taxed and how those changes will affect businesses and individuals in Minnesota. Below, you have the opportunity to design your own sales tax policy. Can you raise enough revenue to plug the budget gap while leaving your favorite services untaxed?

Click on the categories listed to exempt them from or include them in the sales tax revenue. Use the slider on top to adjust the overall tax rate. The totals at the bottom of the screen will change as you create your custom tax plan. (Note: Since sales tax changes will go into effect after January 1, 2014 — six months into the 2014–15 biennium — the amounts below reflect expected tax receipts over 18 months.)

Total dollar amounts are rounded to nearest thousands. Data compiled from the Minnesota Department of Revenue. Code, techniques, and data on Github.

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Comments (5)

Ginny

It would be helpful if you would provide more detailed information. How does it work out that there is 0 (zero) change from current revenues? Or is there? Or am I misunderstanding this?

Get to "no change"

You can get to the "no-change" state (if tax rate and items taxed remained the same), if you click on Current Tax Rate, then click on Select None, then click on the item marked "Items currently taxed".

Are we encouraging favoritism and cherry-picking here?

"Can you raise enough revenue to plug the budget gap while leaving your favorite services untaxed?" I have a bit of an issue with setting this sort-of goal when establishing tax policy. It doesn't seem responsible for me to ask other people to pay extra for the services they use most but to leave my personal favorites untaxed. And here you are asking us to do just that. We are all beneficiaries of our shared investment in Minnesota, and we should all pay our socially responsible share together when our tax system is restructured.
Overall, this is an interesting chart to get an overview of how much money would come from each sector of the service industry, but the interactive aspect does not feel very helpful as it unreasonably asks people to cherry-pick individual services that should be taxed or not taxed. All for-profit services should be subjected to the same sales tax, whether we decide that keep it at 0% or implement the new 5.5% rate as proposed.

Can we put farm machinery and agricultural inputs on the table?

Minnpost:

Though it is not discussed in the Governor's proposal for obvious political reasons - and he is something of a political animal - can you add "Farm Machinery" (see Revenue Department Sales & Use Fact Sheet 106) and "Agricultural Production Inputs" (SUT Fact Sheet 100) as separate categories.

From the 1999 Sales & Use Tax Newsletter:

"FARM MACHINERY, LOGGING
AND AQUACULTURE EQUIPMENT
Currently the tax rate on new farm
machinery and logging equipment
and new and used aquaculture
production is one percent.
Beginning July 1, 2000, they will
be exempt."

How would this consideration change the broader debate?

Also, note that there appears to be a dearth of discussion in both income tax and property tax (classification) where agriculture producers appear to benefit greatly from Minnesota's pro-ag tax policies?

In a 21st Century Economy and 21st Century Tax System, should these be on the table, fellow Minnesotans?

~Bob Helland
onemantaxplan @ gmail.com

Another excellent tool by the way: Minnpost rocks!

The further I can separate my local news and Facebook comments, the saner I will be and the more fulfilling my life will be. Thank you for providing these tools and this medium of conversation compared to your local competitors. But... your comment moderation could be accelerated as one constructive criticism.

~Bob