Presentation Transcript

1. About Common Cents Funded by the Bush Foundation Share information and perspectives about Minnesota’s fiscal situation 50+ workshops around the state State budget balancing Tax reform
2. About the Citizens League Nonpartisan nonprofit for 60 years Vision is to create the common ground where “we the People” can achieve the common good Principle: People who are affected by a problem should have the opportunity to define it and weigh in on how it’s solved
3. Why we are here Better understand the trends and challenges of tax reform Share your vision and values Provide input on your priorities Inform the Governor’s tax reform proposal
4. Why we are here 5) Model meaningful civic discussion on important issues --expect disagreement --mixed views at tables --feel free to respectfully disagree
5. How the workshops will gather input Discussion and table exercises Written comments “Voting” to quantify and record views, making sure everyone is heard
6. How your input will be used Summarized and posted on CitiZing Provided to Minnesota Revenue Commissioner and legislators Provided to the Bush Foundation to inform its work
7. Workshop overview Warm up question Tax info and trends Discussion questions and “voting” Wrap up and evaluation
8. Q1. When you think about your overall state and local tax burden, how fair do you think it is? As fair as it can possibly be Mostly fair, but I’d like to see a few changes Not very fair—we need significant changes Not fair at all—we need a major tax system overhaul Not sure
9. Q2. What does “tax reform” mean to you? (select two) Scaling back government spending so we are taxed less. Making the system of who pays more fair. Making sure the rules are the same for all people. Ensuring that tax dollars are used wisely and efficiently. Making it clearer how tax dollars are used. Making the tax system simpler. Making sure that taxes don’t discourage economic and job growth Finding a way to increase taxes to support Minnesota’s quality of life. Other
10. Today’s discussion may challenge the way you typically think about taxes. Most people don’t like to pay taxes. But there are some things we need to collectively pay for. But how we pay and who pays matters. Who should pay? What does “fair” mean? What are the key questions in your mind?
11. Mostly we won’t be discussing: Whether to increase or decrease taxes How taxes are spent Instead, we’re going to create priorities for a “model” tax system for Minnesota.
12. Key questions about tax reform Who pays, and how much? Does the kind of tax matter? What don’t we tax? What’s most important for reform? Your questions! Ask them as we go along, they’ll improve the conversation.
13. Overview
14. MN state & local taxes Fifty years of Minnesota Tax History In 1000’s of 2011 dollars other corporate income property sales income
15. The Minnesota Miracle
16. Today’s Challenges Lower revenue growth Aging population Changing economy reduces sales tax growth Structural state budget deficit Tax burden shifting slightly to less wealthy Total revenue base becoming more volatile Economic growth
17. Slowed Revenue Growth
18. Population 65+ is increasing dramatically Source: Bush Foundation. MNCompass from U.S. Census Bureau and State Demographic Center Projections.
19. Middle-aged years are a time of paying more in taxes than you get back
20. 2012-2013 state budget State general fund budget 2012-13, $34 billion Source: Minnesota Management & Budget
21. Over Next 25 Years, State Spending Will Outpace Revenue Source: Budget Trends Study Commission Report, 2009. Source: Analysis from Minnesota Management & Budget (MMB)
22. MN ranked 14th in economic output per capita in 2010
23. MN personal income increased from 26th in 1950 to 10th in 2010
24. Who pays, and how much?
25. As a percent of personal income, MN taxes (state & local) were below national average 7 of last 8 years Minnesota U.S. average 2010
26. MN state & local taxes as a percentage of household income (2013 est.)
27. Tax rates look different by income (2008) increasing income Source: Minnesota Department of Revenue, Tax Incidence Study, 2011. Table 1-5.
28. How much do YOU pay? Find your family status Table 1: Married with children Table 2: Non-senior married without children Table 3: Non senior single person household Table 4: Senior married or non-married Table 5: Single parent household Find your income range 3. Browse through the tables Note: these are averages, for your family type and the average income for the range, individual circumstances could be very different
29. Discussion Look through the tax tables, and share your reactions at your table: Does anything surprise you? Does anything strike you as fair? Unfair? Why?
30. Q3. What do you think is most important in deciding whether a tax burden is fair? (select two) How much people can afford to pay Whether we get enough value for what we pay How much someone pays compared to others How much Minnesotans pay compared to other states Whether taxes are used by the people who pay them How much taxes contribute to Minnesota’s quality of life If it limits the role and size of government Other
31. Does the kind of tax matter?
32. Minnesotans pay many different taxes for a total of $23.7 billion in 2010, but three primary ones: income, sales and property
33. Non-senior family income paid in income taxes, Minnesota vs. U.S., 2007 Minnesota U.S. Average
34. What do other states do about income taxes? Highest top rates Flat tax No state income tax Five states have “millionaire” taxes
35. Seniors’ income is treated specially in many states. 27 states exclude all social security benefits 14 states (incl. MN) tax to some extent 10 states exclude all pension income 5 states allow no exemptions or credit for pension income
36. Non-senior family income paid in sales taxes, Minnesota vs. U.S., 2007 Minnesota U.S. Average
37. Sales taxes
38. Non-senior family income paid in property taxes, Minnesota vs. U.S., 2007 Minnesota U.S. Average
39. Property taxes
40. Who bears the cost of corporate income taxes?
41. How competitive is Minnesota’s business climate? Rankings Depend on What’s Measured: #43 - The Tax Foundation and the Small Business and Entrepreneur Council #10 - Forbes’ Best States for Business #5 - Beacon Hill Institute Competitiveness Report
42. Q4. In your view, how should the tax burden be shared? What we have now is about right Everyone should pay the same proportion of their income in total taxes Those who earn more should pay a greater percentage of their income. It doesn’t matter Taxes paid as a percentage of income isn’t the right way to look at it—total taxes paid is Other
43. What isn’t taxed?
44. Tax expenditures $27 billion without tax “preferences” $11 billion in credits and deductions $16 billion in net tax revenues
45. 296 different exemptions and credits,top 15, 2010 *in thousands of dollars
46. Who benefits from tax expenditures?—a few popular items % of tax savings Charitable contributions Marriage credit Home mortgage Social security income decile
47. Q5. In principle, which of these statements best reflect your view of tax expenditures? They should be significantly reduced or eliminated because they are unfair. They should be significantly reduced or eliminated because they make the tax system too complicated. The legislature should consider these just as they consider spending when balancing the state budget. Nothing– they seem appropriate. Nothing—they are not the highest priority for reform. Other
48. Tax Reform PrioritiesTable Exercise
49. Q6. In your view, what are the three most important features of a “good” tax system? The burden is distributed fairly It’s simple I know where my money is going It supports job creation and economic growth The revenues are stable over the long run The rules are uniformly applied to all people It doesn’t pass on burdens to the next generation It provides enough to maintain a high quality of life It provides only enough for a minimal government role Other
50. Common Cents Demographics (6 questions)
51. Q11. What is your gender? Male Female
52. Q12. How old are you? Under 18 19 – 35 36 – 50 51 – 65 65+
53. Q13. What ethnicity best represents you? American Indian or Alaskan Native Asian Black or African American Hispanic or Latino Multiracial White or Caucasian (non-Hispanic) Other
54. Q14. What best describes your political leanings? Conservative Liberal Libertarian Socialist Moderate Mix Other
55. Q15. Do you have any children under 18 living at home? Yes No
56. Q16. Which of these statements about income best represents you? It’s hard to make ends meet each month. I’m reasonably comfortable with my income—for now. I’m financially comfortable and have few worries about the future.
57. Thank you!www.CitiZing.org