The 'pyramid' problem with Gov. Dayton's sales-tax hike

pioneer press ^ | 1-27-13 | john spry

[TurboZamboni]

Gov. Mark Dayton wants to tax the sale of food, clothing, and just about everything else you buy in the worst possible way.

His budget proposes a $2.1 billion, or 20.7 percent, sales tax increase.

Since everyone pays sales tax, everyone will pay Dayton's sales tax increase.

But it's worse than that.

Dayton's tax plan violates the basic principles of tax reform.

It intensifies the pain of taxation by imposing hidden taxes on intermediate business purchases. This causes "tax pyramiding," which is a big mistake.

According to non-partisan legislative researchers, "Standard tax policy principles argue that intermediate business purchases should not be subject to consumption taxation. This follows from the purpose of the tax, to tax consumption, and the principle of horizontal equity -- i.e., to tax taxable consumption on an equal basis or only once."

[TurboZamboni]

the author is an associate professor in the department of finance at the University of St.Thomas

[jsanders2001]

I’d say time to remove Dayton....

[E. Pluribus Unum]

Dayton's tax plan violates the basic principles of tax reform. It intensifies the pain of taxation by imposing hidden taxes on intermediate business purchases.

Isn't that pretty much what a VAT does?

[TurboZamboni]

sounds like it:

Europe’s VAT Lessons
Rates start low and increase, while income tax rates stay high..

http://online.wsj.com/article/SB10001424052702304198004575172190620528592.html

[Senator_Blutarski]

The great thing about being a limousine liberal is that results don't matter.

[Tunehead54]

He’s right. Just so you know. This is a VAT tax by another name. I wish the media would occasionally ask why gubmints can’t tighten their belts when we have to.

[BfloGuy]

According to non-partisan legislative researchers, "Standard tax policy principles argue that intermediate business purchases should not be subject to consumption taxation. This follows from the purpose of the tax, to tax consumption, and the principle of horizontal equity -- i.e., to tax taxable consumption on an equal basis or only once."

Just because Dayton exists in a prescription-drug haze doesn't mean he hasn't absorbed the European lessons of the VAT and the wealth it can unlock for the state treasury.

Minnesota might just surpass New York and California for business-punishment if this gets through.