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Thursday, March 17, 2011

Stop futzing. Tax the Rich. Restore fairness.

After eight years of Tim Pawlenty, Strib reports:

"Minnesota's tax system is more regressive than it was a decade ago," acting Revenue Commissioner Dan Salomone said Wednesday. "Despite a slight improvement over the last study, the system remains notably more regressive than the historical average since 1991."

The study found that 90 percent of the state's earners paid an average of 12.3 percent of their income in state and local taxes in 2008. The wealthiest 10 percent of households earning more than $130,000 paid an average of 10.3 percent.

The study also found the gap between top earners and the rest of the population has widened over the past decade and that local property taxes -- a highly regressive tax -- make up a larger share of the overall tax mix.

And that is with the rich owning higher valued land and living far more luxuriously than the rest of us, but with them paying the same rate on property and on sales that ordinary people pay.

The overall astounding rich-favoring percentage difference Strib reports means the rich really do game the system by playing the federal income tax credits, deductions, loopholes, and other perks that exist for the wealthy to game; so that with Minnesota income taxes geared to federal taxable personal income they skate from paying their fair share.

Minnesota should, for a start, change to taxing gross personal income and including stock options as such income, at market value when received, not when converted to capital gains with basis adjustment games allowed.

That would allow lower rates for ordinary people.

Also, Minnesota should substantially raise the marginal rate for the top income brackets; not making the rich pay any higher rate for their first $50,000 thousand than others pay; but when you get above annual gross income of say $150,000 you are more fortuanate in enjoying life and prosperity in the US and in Minnesota than others; and should pay more accordingly, percentage wise on that largess the system yields at the top end. Rates should be higher there than at lower marginal cutoff points. Indeed, rates at lower brackets could be lowered while making the other changes.

So again --- Remember, it is not all the income that's taxed at incrementally higher rates, only that part above the threshold level as each bracket threshold is reached.

Tax the upper margin at 50%, and still, most certainly, keeping and enjoying the remaining 50% not taxed would be incentive enough for the wealthy to keep earning as much as they can out of the rest of us, (remembering of course somebody's loss is their gain, since the overall economy is a zero sum game).