Minnesota state, local taxes fairer than most, report finds

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Minnesota’s tax structure is among the fairest in the country, according to the results of an annual analysis of state and local tax systems released today by the nonpartisan Institute on Taxation and Economic Policy.The report, “Who Pays,” looks at how states generate tax revenue – and how much it costs taxpayers at different income levels.In Minnesota the wealthiest 1 percent of earners, with more than $498,000 in annual household income, pay 7.5 percent of their income, on average, in state and local taxes. That’s a lower rate than any other income bracket in the ITEP’s report, including:The rest of the top 20 percent of Minnesota earners, with household incomes between $102,000 and $498,000. On average, they pay about 8.5 percent of their income in state and local taxes.The lowest 20 percent, with less than $24,000 in annual income, who pay an average tax rate of 8.8 percent.The middle 60 percent, with earnings between $24,000 and $102,000, who pay an average tax rate of about 9.7 percent.Although middle- and low-income people in Minnesota pay more of their income in state and local taxes than the state’s highest earners, the same is true everywhere in the U.S. The good news for Minnesota is the gap between what middle- and low-income people pay and what wealthy people pay is smaller than the gap in 44 other states.In some states, the report found, the poorest 20 percent of taxpayers pay more than double the effective tax rate paid by the richest 1 percent of taxpayers. Washington is the country’s most regressive state, taxing the poorest residents at 16.8 percent and the top 1 percent at just 2.4 percent.Why does it matter if state and local taxes ding lower-income families more than upper-income ones? In addition to being a matter of basic fairness, regressive tax structures contribute to growing income inequality in the U.S., which has reached a level not seen since before the Great Depression.“In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else,” ITEP Executive Director Matt Gardner said in a press release accompanying the report. “Upside down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem.”Why are state and local tax systems unfair across the board? According to the ITEP report, it’s mostly because these governments tend to rely more heavily on sales taxes to raise revenue than income taxes.Minnesota’s tax structure is less regressive than most other states, according to “Who Pays,” in part because of its graduated tax structure, which assesses higher rates to higher income levels. Continue Reading

Brief Analyzes Political Impact of Projected Eligible 2016 Voters of Color in Key Battleground States

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The political implications of the nation’s changing demographics are already being felt in many states across the country. These implications are addressed in a new issue brief, “The Changing Face of America’s Electorate,” released today by the Center for American Progress, which examines 2016 election trends and patterns for voters of color.The CAP analysis identifies what the electorate is projected to look like in 2016 for key battleground states—including vital states such as Ohio, Florida, Colorado, Virginia, and North Carolina—and estimates the racial and ethnic makeup of the 2016 eligible voting population. Based on those projections, the brief demonstrates the potential political impact of electoral demographic changes through two election simulations.“Demographic changes have only become more acute in the United States since 2012,” said Vanessa Cárdenas, Vice President of Progress 2050 at the Center for American Progress. “As people of color become a larger share of states’ electorates, the political implications for both political parties are evident: To win the presidency and many of the U.S. Senate races in the 2016 election, candidates will need to substantially engage voters of color.”The first simulation explored in the CAP analysis looks at how the demographic shifts will affect the 2016 election if voters across all racial and ethnic groups turn out and have the same party preferences as they did in 2012. In the second simulation, CAP holds voter turnout rates constant from 2012 but assumes that racial and ethnic groups revert to party preferences they showed in 2004. Continue Reading

Move MN pitches 10-year plan to fund needed transportation improvements

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Unions joined businesses, non-profits and local governments today in unveiling a 10-year plan to finance improvements to the state’s highways, bridges and transit systems.Gov. Mark Dayton and legislative leaders have said transportation will be a top priority during the 2015 session. Move MN, a broad-based, transportation-focused coalition of more than 200 groups, jumped right into the fray, pitching its proposal at a Capitol press conference on the session’s third day.Move MN’s “10-Year Transportation Commitment Proposal” would generate an estimated $856 million annually with “modest increases” in fees and taxes that currently fund the state’s transportation system.The average Minnesota driver, according to Move MN, would pay about $1.60 more per week as a result of the increases, with Twin Cities residents paying an extra $1.30 per week as a result of a Metro-county sales tax hike, dedicated mostly to expanding public transit. Businesses would pay roughly $900 more per semi-truck annually under the plan.To justify the cost, transportation advocates pointed to Minnesota Department of Transportation statistics showing more than 65 percent of the state’s roads and 40 percent of its bridges will be more than 50 years old by 2025. Over the same time frame, freight semi-truck traffic is projected to increase by 30 percent, and the state will have 430,000 additional residents.State officials’ own estimates indicate Minnesota faces a transportation-funding gap of well over $1.5 billion annually.“Everyone agrees that an efficient, reliable transportation system is essential to Minnesota’s economic competitiveness,” Move MN co-chair Margaret Donahoe said in a press release. “But by 2025, Minnesota’s entire transportation system will be on life support as congestion, reliability and safety concerns put our state’s long-term economic health at risk.”Details of the proposal are available in Move MN’s full press release.Unions and labor federations supporting the Move MN coalition include the St. Paul Regional Labor Federation, the St. Continue Reading

Transportation, budget will be focus of 2015 legislative session

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The Minnesota Legislature’s 2015 session convenes Tuesday, with passage of transportation legislation and a state budget at the top of the agenda. Transportation – including mass transit as well as highways and roads – is seen as the major unfinished priority from 2014. Move Minnesota, a coalition of groups that includes organized labor, is pushing for a comprehensive transportation legislation that includes:

Reliable roads and bridges
Greater accountability and transparency
Better transit access
Safe, convenient bike and pedestrian choices

“If Minnesota does not fix its transportation system, our economy and ability to create and retain jobs will be at risk,” the coalition said. “Our economy is one of the fastest growing in the country, yet the cost of fixing and upgrading our transportation system cannot be met with current funding. Making smart investments in transportation will ensure Minnesota can compete for jobs and businesses.”

Lawmakers also must pass a two-year budget to fund health, human services, education and many other needs. Continue Reading