Scott Jensen
Scott Jensen Credit: MinnPost photo by Peter Callaghan

Of all the ill-conceived ideas advanced in this year’s political campaign, few are worse than Republican gubernatorial candidate Scott Jensen’s proposal to phase out Minnesota’s personal income tax.

Jensen’s proposal would destabilize the state’s tax structure, make it more regressive (meaning that lower income taxpayers would shoulder more of the tax burden) and dramatically reduce resources available to fund vital state services.

The income tax is part of a three-legged stool – along with the sales and property taxes – that supports most state and local services. It is the most progressive of the three taxes, and this balanced tax structure helps our state ride out the ups and downs of the global economy.

Repealing or phasing out the income tax would have catastrophic effects. Revenues from this tax cover 53% of the state’s general fund budget. Replacing even a portion of this revenue would be nearly impossible, barring draconian cuts in public services.

Joel Michael, a retired tax policy expert who worked for the nonpartisan House Research Department for more than four decades, estimates that replacing 45% of the lost income tax revenue through a sales tax increase would require raising the tax rate from the current 6.875% to about 14%.

And spending cuts are unlikely to help fill the revenue void. As Michael points out, “Even in austere times, the Legislature rarely cuts spending.  It simply slows down or stops the rate of increase.” Much of the state’s spending is locked in place to provide state matching funds for federal social programs, or to keep state commitments to local governments.

About 40% of the state budget goes just to help fund K-12 education. If enacted, Jensen’s proposal would likely shift the burden from the state to property tax payers in each of the state’s 329 school districts. For many homeowners, it would mean dramatic increases in their property taxes.

Jensen’s proposal would effectively reverse the so-called “Minnesota Miracle” enacted in 1971 under DFL Gov. Wendell Anderson. That law dramatically increased taxes at the state level in order to reduce school districts’ dependence on the property tax and help reduce disparities in per-pupil spending among districts, rich and poor.

Talk about turning back the clock.

Moreover, do we really want Minnesota to be more like South Dakota, one of the seven states without an income tax?

Steven Dornfeld
[image_caption]Steven Dornfeld[/image_caption]
Every two years, the business-oriented Minnesota Center for Fiscal Excellence studies and ranks state spending for various purposes, using population and other factors. In its most recent study, South Dakota ranked 30th among all states in K-12 spending per pupil, compared with 15th for Minnesota. It ranked 24th among all states in spending for higher education, 42nd in spending for public welfare and dead last in spending for roads.

Michaels says fiscal reality is why the Jensen campaign is unlikely to release the details of how he would eliminate the income tax – or even attempt a major reduction. “The details would be ugly politically,” he says.

I will agree with Jensen on one point:  DFL Gov. Tim Walz’s proposal to send taxpayers a one-time tax rebate is a transparent election-year gimmick. It is all too reminiscent of Gov. Jesse Ventura and his “Jesse checks.” It would be much wiser to target this tax relief to people who need it most or use it for one-time investments.

Jensen’s father Carl Jensen, a lawyer from Sleepy Eye, served in the Legislature for nearly three decades. I covered the Legislature during part of that time and found Carl to be a thoughtful, progressive and independent-minded conservative. In 1986, he attempted a political comeback, running as a DFLer.

I can’t believe Carl would be pleased by some of the policy proposals and political rhetoric coming from his son.

Sons are not obligated to embrace all of the positions taken by their father (as I’m sure my own sons will be relieved to hear). But the ideological change from the elder Jensen to his son reflects just how far Minnesota’s Republican Party has veered to the right.

Steven Dornfeld, a retired journalist, wrote about state government and fiscal policy for the St. Paul Pioneer Press and the Minneapolis Tribune for more than three decades.

Editor’s note: This commentary has been updated to correct that South Dakota lacks an income tax rather than sales tax.

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39 Comments

  1. “But the ideological change from the elder Jensen to his son reflects just how far Minnesota’s Republican Party has veered to the right.”

    Exactly!

    Allen Quist
    Cal Ludemann
    Tom Emmer
    Jeff Johnson
    Jon Grunseth

    Definition of Insanity: Doing the same thing over and over and expecting a different result…

  2. Progressive taxation (the 2nd plank of the Manifesto) should be declared unconstitutional since it violates the equal protection clause under the 14th amendment. The purpose of taxation is to pay for the cost of government. We should pay that tax the same way we pay for a loaf of bread or a gallon of gas … without regard to income or current wealth. Everyone pays the same.

    The first thing the Russians did when they threw off communism was to scrap the progressive tax and implement a flat tax. A flat tax or a consumption tax would be much fairer form of taxation. Other states do it, why can’t we?

    1. Nice to see Dennis and Warren Buffet of a same mind.

      As Buffet has described, it is not right that he pays a lower tax percentage than his secretary.

    2. So folks with more to lose & more to again, should pay the same as folks with less to lose and less to gain, is that how our free market insurance works, everybody pays the same? Sounds like a socialistic manifesto you are proposing here.

      1. Progressive taxation is the 2nd plank in the communist manifesto. So there’s that. “From each according to his abilities …”

        1. Why didn’t you answer the question? I get your 2nd plank. How about some Adam Smith, “In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency. Fairness, in that taxation, should be compatible with taxpayers’ conditions, including their ability to pay in line with personal and family needs., ”
          There’s that!

        2. Should we oppose free public education and the abolition of child labor, because that was a part of the Communist platform?

    3. While a flat tax appeals to the very wealthy, it makes zero logical/financial sense.
      If you earn $60,000 and you’re a family of 4, you have no extra income. It all goes to stay alive, house your family and feed them…and let’s not ignore how unaffordable healthcare of any kind, can destroy their livelihood.
      A millionaire has an excess of funds available to them after taking care of the basic necessities.
      That is why we have the tax code we have.

      1. If you don’t have skin in the game by helping to pay for the cost of government, you have no incentive to ensure that tax money is being properly spent and you allow debacles like the recent revelation about the fraud and mishandling of hundreds of millions of dollars by the state’s DHS. It shouldn’t be left to the minority of people who actually pay taxes to be the watchdog of the government’s incompetence.

        1. But Mr. Tester what does that $60,000 family get from government? Do they get health care, disability or death benefits, day care, trade school or college tuition, athletic or wellness facilities, protection against long term layoffs? What the heck do they get for their taxes anyway?

          1. You could say they get protected from a Russian invasion by maintaining a standing army. But since Biden has given away about a half of our inventory of battlefield weaponry, maybe that protection isn’t guaranteed after all.

    4. When I pay a larger percentage of my income to pay for the cost of government than you do, it’s a violation of the equal protection clause.

      1. Malarky. Is your copy of the constitution missing pages?

        The CONGRESS SHALL HAVE POWER TO LAY AND COLLECT TAXES ON INCOMES, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. 16th amendment 1909.

        Your 14th amendment argument is inane and a slippery slope to boot. The law protects you (let’s assume you’re rich) and me (let’s assume I’m poor) the same. You could chose to earn less and pay less. I could get lucky, leverage my privileges, “work harder”, earn more, and pay more.

        Your position essentially argues in favor of an equality of income. I could as easily argue that, if there are those with more and those with less, those with less are denied equal protection of the law vis a vis those with more. Which of course they are, all the time.

  3. How about this thought – maybe our state is too dependent upon money period. Budgets and revenues, mainly run by DFLers, have been rising like the cost of college – which everyone complains about.

    1. I guess not all can follow the deficit busting, debt reducing discipline of Trump and his GOP majorities from 2017 to 2019.

      Oh, wait, never mind…

    2. What figures are you using? Are they inflation adjusted?

      Are you talking about spending on a per capita basis? Or as a percent of the state’s GDP?

      Can you name specific programs you’d like to cut, and the savings?

      Oh that’s right, you’ve only got rhetoric, and no facts.

  4. Steven Dornfeld is correct, and Dennis Tester speaking from the standpoint of a privileged ideologue. A flat tax always – always – places more of the fiscal burden of government on those least able to absorb that extra financial weight. A “consumption” tax sounds reasonable until you get into the weeds of what kind and how much consumption is going to be taxed.

    1. A consumption tax is just another word for sales tax. The more you spend (consume) the more you pay. Rich people end up paying more than anyone else because they spend more than anyone else.

      1. Why? I thought the common (read conservative) wisdom was that wealthy people are wealthy due to the fact that they DON’T spend money foolishly, and live within their means, and save for a rainy day blah, blah, blah… If your contention is that you don’t want to damage the lot of the poor, it would be very simple to only apply the tax, at an exorbitant rate, to those items primarily purchased by the rich. I don’t expect you have that in mind, do you? Per usual, for any policy worth it’s conservative salt, cruelty and pain, on those considered undesirable, is the POINT.

      2. This is just funny. Comedy of the darkest form. And wrong. So wrong.

        The rich spend the most because they *can* not because they must. The only thing a flat tax will do is ensure that every last penny that the least advantaged have is taxed while leaving the rich free to almost completely escape taxes by buying abroad and/or limiting local spending. That’s a surefire way to devastate the economy.

  5. This author offered no alternatives. Here are a few.
    1. Raise sales tax to 10% and include food and clothing. Provide a rebate to all households (based on family size and what a family of such size making x amount…say 2x poverty level… would pay in sales tax on food/clothing). For partial residents pro-rate the rebate. Sales tax revenue on all other spending is essential a sales tax on discretionary spending. In other words you can avoid the tax by choosing not to make the purchase.
    2. Raise the gas tax by 10 cents a gallon as long as it will be well spent. Which it probably won’t.
    3. Lower income tax rates to 4% on the low end and 8% on the high end for MN sourced income and to half those rates for non-MN sourced income (social security, capital gains, pensions including military, etc.). I like that my military pension wouldn’t be taxed if I were a resident, however it probably should be albeit at a favorable rate. Simply put, if the income has nothing to do with the individual being in MN or the source being from MN (I.e. rental property in MN or a business in MN) then take your (state of MN) hand half way out of the cookie jar.
    4. Then spend what you bring in and don’t spend what you don’t have.

    1. Golly gee Fred, looks like move the taxes from this bracket to that bracket, you know, where lower income folks spend every nickel they earn so tax every nickle, from wealthy people that don’t spend every nickle. Suppose you thought we missed that great stroke of genius tax manipulation on your part. Don’t spend what you don’t have last time we had a deficit was from the “R” folks and the great T-Paw financial and “R” wing.
      PS: Last check not an “R” folk that would support an increase in the gas tax, (for any reason) especially in rural MN!

  6. Loving your headline, MP … the part about a tax plan unfairly burdening the low-income.

    Gotta understand: this is what fascists do! Phasing out minorities is always Job One. Punish the unproductive — the ones who can’t keep up, who drag “us” down. I’m glad to have a history book delivered to your offices, if it comes to that.

  7. Repubs love to talk about fiscal responsibility while they cut taxes benefitting the wealthy and not the workers that has given us massive record deficits…and now Jensen is attempting the same.

    There is no fiscal responsibility with repubs.
    There is no moral majority with repubs.
    There is only nonsense and anti-democracy behavior.

    1. People who pay taxes, get a reduction when there’s a tax cut. People who don’t pay any taxes, don’t get a cut when there’s a reduction and shouldn’t be complaining lest they show their utter ignorance of arithmetic.

  8. When you’re running against a popular incumbent in the state with the lowest unemployment rate, you gotta do something to shake up the campaign.

    So you you pick a popular athlete (he went to Harvard!) as a running mate, and come up with a whackadoodle tax plan. Can’t blame the guy for trying, he’s in a tough spot.

      1. If you’re referring to the kstp poll that has Walz at 51, Jensen’s 33 is closer to that root canal.

        Thanks for helping make my point.

        KSTP-TV 8/30 – 9/4 51 33 Walz +18

  9. “In its most recent study, South Dakota ranked 30th among all states in K-12 spending per pupil, compared with 15th for Minnesota. ”

    2019 U.S. News and World report ranking education performance showed South Dakota at ranking 18th in the nation while Minnesota ranked 17th.

    So, South Dakota spends much less per capita than Minnesota, but ranks virtually the same in performance. It appears that simply spending more money does mean better results. And no income tax vs. very high income tax provides virtually no loss in education performance? Interesting.

    2. Ah, South Dakota….. where a family pays a 4.50% state sales taxes on the groceries that they purchase for their sustenance… and that is in addition to the county and local taxes that are tacked onto the bill. It has been shown that this family pays the equivalent of 2 weeks family groceries for sales taxes over a year.
      But hey, that’s not as bad as Mississippi where this family would pay a 7% state grocery tax.
      13 states tax groceries and surprisingly, all but two are Republican controlled states. Yup.

  10. My wife and I currently pay property taxes, sales tax, and income tax. We are not wealthy, but do OK. When we pay taxes, it is with the understanding that we benefit from the things our tax payments help support – the local schools, maintaining infrastructure, fire and police departments, programs that provide aid to the less fortunate, etc. Basically, I feel our local and state tax system is fair, and doesn’t need major changes.

    What I do get upset about is the way the overall tax system is rigged to favor the wealthy with a convoluted array of exemptions, and fine print. Obviously, there are those who aren’t wealthy who also abuse the system. It would be nice to see the IRS zero in on both groups, and Congress close loopholes so that our tax system is really fair to everyone.

  11. Shocking. 41 years of trickle-down economics says trickle down is bad for most.

  12. Dornfeld refers to the three-legged stoool; income tax, property tax and sales tax. Property tax and sales taxes are inherently regressive, which is why a progressive income tax is needed to make the system a little more fair.

    When your overall tax system is regressive, over time it acts to redistribute income (and wealth) upward. Conservatives claim to abhor redistributive policies. But actually, it just depends on whether the income is redistributed upward or downward.

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