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Taxes and the Economy

In 2003 Minnesota experienced a record-setting budget deficit totaling $4.6 billion.

In order to solve the deficit, lawmakers drained our state’s reserves, increased fees and cut back assistance to local governments. According to the non-partisan House Research Department, these cuts forced local governments to impose record property tax increases, disproportionately affecting low-value and mid-value homeowners. And tax cuts have led to the loss of funds for essential local services such as police and fire protection.

Minnesota's huge budget deficits were largely self-inflicted when--during the boom years--the legislature gave permanent tax breaks to the wealthiest Minnesotans. When it became clear that Minnesota could not afford these tax cuts, the legislature used budget cuts and accounting gimmicks to close the gap. These irresponsible tactics were good for short-term politics, but bad for Minnesota's long-term financial health.

We need honesty in our budget discussions. Instead of balancing the budget with shifts, tricks, and gimmicks while proclaiming "no new taxes," and shifting taxes to the middle class, we need tax policies that are fair and transparent. The highest income-earners also received large tax cuts under President Bush, while the gap between the wealthy and the middle class gets wider and wider. In addition, a recent report by the Legislative Auditor's Office (the investigative arm of the Minnesota Legislature) says that about $1 billion in state taxes have not been collected.

We must bring tax fairness and fiscal responsibility back to Minnesota. We must close corporate tax loopholes and make sure that everyone—including the small group of people who earn over $500,000 per year--pay their fair share in taxes.