Last week I spoke with my home state’s Commissioner of Revenue Myron Frans as he made his way across northern Minnesota for a tax reform discussion tour. I always like to see the ways in which bland-seeming statistics can be applied to real problems in our communities. Frans and I had an interesting chat and you’ll see the results in my Sunday column next weekend.
The picture above shows the visual aid Frans has used in his tour. Our tax dollars fund local and state government in three ways: property taxes, income taxes and sales taxes. For much of the 20th century the three taxes more or less balanced out at about 1/3 each. Recent policy changes and the evolution of our very economy from goods to services, however, have created an imbalance. Much more of government depends upon property taxes now and a lot less on the sales tax.
Because property taxes are regressive, which means they have nothing to do with your ability to pay the taxes, and because raising sales taxes would also be regressive unless counter balanced somehow, the state faces a real conundrum going forward.
If we want to maintain our current level of state services, something elected city leaders are insistent upon, something must be done. All the options are unpopular and political perilous. What will we do?
More on that Sunday.
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