Behind the headlines, an unfair spin on tax fairness

Surely, no one is this obtuse. The Minnesota Revenue Department's biennial tax incidence study is out, and, once again, Democrats, bureaucrats and the local press (let's call them the three amigos) have figured out a way to spin it in their pseudo-populist favor.

There are, it seems, two ways to compute Minnesota's onerous tax burden. One way is to take the total amount of revenue collected and see which households - rich and poor - are contributing the most. For instance, if someone invites you to dinner and he or she picks up 75 percent of the tab, it might be fair to say they're paying the most.

The other way - favored by the three amigos - is the "ability-to-pay" scheme. That is, instead of computing who is actually paying the taxes, they figure individual taxes paid as a percent of someone's personal income, and not as a percent of the total tax burden. So, for example, our dinner friend who paid 75 percent of the meal's cost should really be paying closer to 90 percent because his or her income is greater than ours. Sound fair? I didn't think so.

Then why is it every time the Revenue Department releases its tax study, the class warriors among us cherry-pick the data to suit their own redistributionist agenda? Measuring taxes as a percent of income is just plain silly if you really believe in the American Dream. It's no one's business in a free society what you make as long as you're paying your "fair" share of the burden. And if you don't think the so-called rich are paying enough, try running the government without their tax contributions. According to the 2004 data in the report, of the $5.8 billion the state collected in individual income taxes, just over $3.2 billion was paid by the wealthiest 10 percent (those making more than $105,450) of Minnesota households. That's a remarkable 55.4 of the total. Those lucky duckies also paid more than 27 percent respectively of the sales, business and property taxes.

As for the uber-rich, the top 1 percent of earners, at $354,758 and above, well, they really get off easy, paying a mere 24 percent of the total income-tax burden. Keep in mind these are the taxes that the DFL leaders hope to raise, you know, just to make things equitable.

By contrast, the bottom 20 percent of earners didn't pay anything at all when it comes to the income tax. In fact, they got back, collectively, $33.5 million in the form of refundable credits. But they do pay sales and property taxes, and that is precisely what has the politics-of-envy crowd champing at the bit.

Yet, even with such an "injustice," the Revenue Department's report reluctantly states that "because the progressive individual income tax accounted for over one-third of the total tax burden, it offsets most of the regressivity of the other state and local taxes. Hence, as a whole, the state and local system of taxation in Minnesota was only slightly regressive overall" (that's my emphasis on "slightly," since it seemed to escape notice before).

Regressive, that is, only if you believe that "progress" means taxes should rise disproportionately with income. Which, by the way, is at odds with every other facet of life. Including the tax policy of nine other states that don't tax wages and salaries at all. Pity those poor residents.

Household expenses (and why should taxation be any different?) as a percentage of income obviously fall as you earn more. That is what it means to get ahead. But not with this crowd. Their idea of tax relief is assessing homeowners a property tax bill based not on the government they consume but on the amount they earn. The bills to do just that are nothing more than crass attempts to gain more revenue from homeowners whose income is rising faster than their property valuations. They're likely to fail, hence the push for raising income taxes in an era of $2 billion budget surpluses.

In the real world, "effective" or "average" tax rates are of less importance when considering the effect of taxation; far more important are the marginal tax rates on the next dollar earned. And those are woefully biased against the well to do. Indeed, if these newfound flat tax proponents were serious about fairness and not just more government revenue, they'd be advocating for federal tax cuts on the highest incomes.

Finally, it should be noted that the above data and information were readily available in the Revenue Department study; they merely weren't cited in mainstream media reports. Why? As I say, surely no one could be that obtuse.

Jason Lewis hosts a weekday talk show from 4 to 7 p.m. on FM Newstalk 100.3 KTLK.

The mindset that accepts the liberal take on all of this also accepts the liberal intent that it all be viewed as if someone who is in the x percentile of wage-earners was in that same percentile last year and the year before and the year before that.

The mythical view you must have to accept the liberal position on this is that of minimum wage worker this past year, in the lowest income percentile, and they were a minimum wage worker in the lowest percentile last year, and the year before and the year before that; and thus, has not "progressed" and is being cheated because he's still only getting a lousy $1,200 refund.

But, the liberals don't want it understood that the minimum wage worker of ten years ago became a supervisor, and then a manager and then went to night school and then changed careers, and is no longer in that bottom percentile. How and why could he do that? Because there were "higher" positions to strive for. Why were there higher positions to strive for? Because we offered greater rewards for constant hard work, constant improvement of work skills and constant self-improvement.

They actually want to take all the rewards away and dictate one wage, one health benefit, one kind of education, one kind of car, one kind of home for everyone. When they are through, we will all live in caves.

That is, instead of computing who is actually paying the taxes, they figure individual taxes paid as a percent of someone's personal income, and not as a percent of the total tax burden.

Actually, I agree with this unconditionally.
The notion that anyone is allowed to have a say in how society is run (vote) without a cent of contribution (taxes) is appalling.

Here's where an alternative minimum tax makes sense, however small the percentage, so long as it's greater than zero.
And tax everything including non cash benefits (housing subsidies, free medical care, food stamps, school lunches, etc... )

Works for me!

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