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 Response Page - Haveman  Interview -      


These comments are responses to the questions listed below,
which were generated in regard to the 
Mark Haveman  Interview of
06-22-2012.
 

 

Overview

Mark Haveman, Executive Director, Minnesota Taxpayers Association, asserts that any tax reform efforts should focus on structuring the revenue system to effectively deal with 21st century demographic and economic realities. He contends that two major themes currently surrounding tax reform—improving tax fairness and property tax relief—are both significantly overstated problems and should not be the focus of reform efforts. Rather, he believes that the combination of broader tax bases and lower rates through tax expenditure reform is an important strategy.

He suggests that the thinking behind local government aids and credits needs to be revisited, as does the state's rationale for taxing business. Any tax increase proposals should be conditioned, he asserts, on significant government reform and redesign to lower the rate of government cost increases and obtain greater return from the tax dollar.

For the complete interview summary see:  http://bit.ly/N3Iu4a

Response Summary:  Readers have been asked to rate, on a scale of (0) most disagreement, to (5) neutral, to (10) most agreement, the following points discussed by Mr. Haveman. Average response ratings shown below are simply the mean of all readers’ zero-to-ten responses to the ideas proposed and should not be considered an accurate reflection of a scientifically structured poll.

1. Retirees will lower revenue. (7.3 average response) Reform of Minnesota's tax system is needed to adjust for a drop in income tax receipts as more workers reach retirement age.

2. Corporate tax receipts uncertain. (7.1 average response) Reform is needed to adjust for growing uncertainty of revenue from the corporate income tax.

3. Tax fairness overstated.  (5.4 average response) Concern over tax fairness among income groups is overstated and shouldn't be the focus of state tax reform.

4. Property tax issue overstated. (5.1 average response) Concern over the property tax is overstated and shouldn't be the focus of state tax reform.

5. Broaden the sales tax. (6.4 average response) The state sales tax should be broadened to include many exempt items.

6. Confine local aid to capital projects. (7.8 average response) State aids to local government should be channeled mainly for capital improvements, not operating expense.

7. Cut deductions and credits. (7.4 average response) The state should move away from "tax expenditures", that is granting tax deductions that favor particular forms or uses of income, and tax credits that reward particular behavior.

8. Increase taxes only with redesign. (7.2 average response) Any tax increases in 2013 need to be accompanied by significant redesign to get more value per dollar.

Response Distribution:

Strongly disagree

Moderately disagree

Neutral

Moderately agree

Strongly agree

Total Responses

1. Retirees will lower revenue.

4%

0%

16%

64%

16%

25

2. Corporate tax receipts uncertain.

0%

8%

16%

56%

20%

25

3. Tax fairness overstated.

21%

17%

13%

33%

17%

24

4. Property tax issue overstated.

8%

36%

16%

32%

8%

25

5. Broaden the sales tax.

16%

4%

16%

36%

28%

25

6. Confine local aid to capital projects.

8%

4%

8%

28%

52%

25

7. Cut deductions and credits.

4%

0%

32%

28%

36%

25

8. Increase taxes only with redesign.

12%

4%

16%

24%

44%

25

Individual Responses:

Ray Ayotte  (7.5)  (5)  (5)  (5)  (7.5)  (7.5)  (5)  (10)

Dave Broden  (10)  (10)  (7.5)  (0)  (10)  (7.5)  (5)  (10)

1. Retirees will lower revenue. The reason for reform of Minnesota tax system is not the retirement age but the structure of the tax system to reflect the type of economy and economic participation today and in the future. It is seriously wrong to focus the cause of revenue shortage on worker retirement. Who(ever) coined that idea is way off base.

2. Corporate tax receipts uncertain. The issue is not uncertainty; it is making corporate income tax in Minnesota competitive with not only other states but internationally. This question also is off base, but the intent is solid if a strong and objective reform is defined.

3. Tax fairness overstated.  Fairness must be a factor but is sometimes definitely the primary focus rather than a key message.

4. Property tax issue overstated. All tax sources must be a focus in reforming Minnesota tax structure to generate revenue in a balanced approach that fits the economics, business, and citizen income and quality of life in Minnesota.

5. Broaden the sales tax. The evolving economy requires that more items be taxed as we become a more service and product based economy.

6. Confine local aid to capital projects. The priority must be capital improvement but not at the cost of failing to be able to fund public safety and sanitary infrastructure etc. There must be some flexibility for operating costs to benefit the public

7. Cut deductions and credits. Tax expenditures are recognized as a key area needing reform. That must be a priority without loss of the idea of the tax structure (offering) all citizens some form of incentive to do investments or purchases that will result in opportunity for the citizen and also benefit the state.

8. Increase taxes only with redesign. This is fundamental and must be a primary focus.

Bert LeMunyon  (5)  (7.5)  (7.5)  (7.5)  (2.5)  (10)  (10)  (10)

1. Retirees will lower revenue. I think more emphasis should be placed on getting more people back to work, which will increase income tax receipts

3. Tax fairness overstated.  In order for our citizens to take some interest in how tax money is spent, perhaps there should be a minimum tax for all who presently pay no income taxes.

Jim Lilly  (5)  (5)  (5)  (5)  (5)  (10)  (5)  (5)

1. Retirees will lower revenue. Clearly, it is an issue that needs clearer definition.

2. Corporate tax receipts uncertain. Stabilizing revenues is important.  However, a reserve banking system seems to be a better approach.

3. Tax fairness overstated.  "Fairness" means different things to different people.  Usually it means getting someone else to pay more than you do.  It is fueled by a combination of greed and envy, both of which are very toxic.

4. Property tax issue overstated. See 8.

5. Broaden the sales tax. See 8.

6. Confine local aid to capital projects. By capital improvements I would focus on infrastructure that benefits the entire state, not just the local geographical area.

7. Cut deductions and credits. While deductions (are) economic decisions in the short term, they definitely have value to create a long-term economy.

8. Increase taxes only with redesign. Overhaul of the tax system is a major undertaking.  Currently Minnesota uses the federal tax structure for income taxes, which is the largest part of revenues.  This means that the federal government should lead in regard to income tax.  It will take a bipartisan effort to revise the tax structure.  My personal constraint will be that it does not increase total taxes.  Also, final approval of any tax changes should be by a popular referendum.

R. C. Angevine  (7.5)  (7.5)  (2.5)  (2.5)  (5)  (2.5)  (7.5)  (7.5)

Joe Lampe  (10)  (10)  (10)  (10)  (10)  (10)  (10)  (10)

5. Broaden the sales tax. There are dozens of unjustified sales tax exemptions.

Chris Brazelton  (7.5)  (7.5)  (2.5)  (5)  (5)  (5)  (7.5)  (10)

8. Increase taxes only with redesign. Just as we need to stop demonizing business, so must we stop demonizing the working poor.  We recognize that many businesses would not be able to operate and pay workers a living wage; we must also recognize that those who do not earn a living wage will need subsidies for housing, food, child care, medical care and transportation in order to be able to survive, and those subsidies are paid via tax dollars in a progressive system in which those who benefit the most from our system pay their fair share.  Redesign to improve efficiency and effectiveness should remain a focus of our government.  But let's be honest about "growth".  Much of the growth in federal government has been due to the high cost of the wars in Iraq and Afghanistan, wars that have largely been fought by members of the lower and middle classes.

W. D. (Bill) Hamm  (7.5)  (5)  (5)  (7.5)  (0)  (10)  (7.5)  (10)

1. Retirees will lower revenue. While this is true it does nothing to address the steady increase in the spending on Minnesota's "Prison Industrial Complex". This excessive waste of tax revenue here has resulted in no benefit to society and has indeed cost us more in health and human services as well as education and healthcare.

2. Corporate tax receipts uncertain. As was said in the discussion, corporations don't pay corporate taxes, customers do. With that in mind it becomes simple to understand that a state that increases corporate taxes also reduces corporate competitiveness of its business community.

3. Tax fairness overstated.  While it may be overstated it always needs to be a consideration when the rich and middle class, (the upper 38%), control the tax policy debates.

4. Property tax issue overstated. From property tax comes local control and decision-making. All who are crying for replacement of property taxes with state monies are generally calling for an undermining of local control and authority.

5. Broaden the sales tax. No, this is Minnesota's most regressive tax because it bites an ever-increasing percentage of one’s income the poorer you get.

6. Confine local aid to capital projects. It fails miserably as a municipal welfare program.

7. Cut deductions and credits. There are many fairness issues here.

8. Increase taxes only with redesign. Start with an examination of the racist acts we are committing under the justification behind the present "Prison Industrial Complex". Attacking people of color 9 times as often for the use of the nontoxic herb marijuana now accounts for 2/3rds of all drug convictions and does nothing but undermine these families in ways that further cost the system far more money.

Ralph Brauer  (7.5)  (7.5)  (0)  (0)  (0)  (0)  (5)  (0)

3. Tax fairness overstated.  Anyone who can say, "Their [the highest bracket] burden relative to income is still equivalent to the middle class and well above lower income Minnesotans" clearly has no idea of what it is like to live on $20,000 a year.

4. Property tax issue overstated. When the top ten performing school districts in the state are also the top in terms of property tax base this notion is absurd. Someone's future should not depend on where they grow up. The inequity in property tax base between communities and its impact on education is the issue in Minnesota.

5. Broaden the sales tax. It has become comical how those who oppose raising taxes on the rich and who make legislators sign no new taxes pledges always go first for the sales tax as a way of increasing revenue. Maybe we need a sales tax on luxury items, but not on necessities some people already have trouble affording.

6. Confine local aid to capital projects. First, his position is inconsistent with the one recommended below. Second, from a systemic perspective, state aid should encourage a variety of new ideas and allow for local decision-making.

7. Cut deductions and credits. There is no question the deductions issue has gotten out of hand, but what one person sees as a necessary social need another sees as pork. Systemically there are other ways to deal with this problem.

8. Increase taxes only with redesign. I read the entire interview twice and still do not understand what this means in terms of specifics. The devil is in the detail.

Michael Martens  (7.5)  (10)  (10)  (2.5)  (7.5)  (10)  (7.5)  (10)

1. Retirees will lower revenue. The Minnesota income tax system needs to adjust to the fact that retiring baby boomers may change their state of residence to a low tax snowbird state.  Then use Minnesota services 5-plus months of the year without paying any income tax to pay for the services they use.  The Minnesota income tax system needs to change to reduce the incentive for retirees to change their tax residence state to a low income tax state.

2. Corporate tax receipts uncertain. Corporations don't pay taxes. They raise prices or lower wages to cover the income and property taxes they have to pay. Wall Street does not care if corporation is located in a high-tax or low-tax state. The corporation still has to meet the same earnings-per-share and other earning numbers.

4. Property tax issue overstated. In general Minnesota property taxes are reasonable.  But there is a big disparity in property tax rates between types of property.    Why should business pay 3 times the rate homeowners pay? Why should a small business or a neighborhood business (coffee shop) which is struggling have to pay its employees have to pay high property taxes compared to homeowners and businesses in other states (Wisconsin is 1/2 of Minnesota and other Midwest states are 25% of Minnesota)? Also high property taxes are a major negative for start-up/new businesses which have no income but still have to pay high property taxes. Under the discrimination doctrine of disparate impact, the fact that the tax rate for an apartment is double the rate for a homesteaded house is racially discriminatory.   60+% of blacks rent. 60+% of white own. So poor blacks pay high property tax rates to subsidize whites who pay low rates. The liberals perpetuate the lie that the rent rebate levels the difference, which ignores the property tax rebates white homeowners get.

6. Confine local aid to capital projects. LGA is a broken system that needs to be eliminated. Only half the cities in Minnesota get LGA. No one, and I mean no one, can explain why St. Paul gets $3xx per resident but Minneapolis only gets $2xx per resident. Some cities get over $400/resident, some about $100/resident and 50% of the cities get zero.

7. Cut deductions and credits. The fewer the tax deductions and credits there are, the fairer most people think the system is.

8. Increase taxes only with redesign. There should be significant state and local government redesign completed before any taxes are increased.  Consolidating all of the state's Information Technology functions into one department is an example of good redesign.

Scott Halstead  (7.5)  (7.5)  (0)  (2.5)  (10)  (10)  (7.5)  (5)

3. Tax fairness overstated.  Excessive amounts of income have been granted special privileges and are not taxed.

5. Broaden the sales tax. Including internet sales.  Consider a higher rate for Internet sales, as they do not provide Minnesota jobs.

8. Increase taxes only with redesign. Perhaps we need a statewide electronic suggestion box.  We need a 50% reduction in the size of our legislature.  They need to be paid for performance and term limits (should be) enacted.

Peter Hennessey  (7.5)  (7.5)  (7.5)  (2.5)  (7.5)  (7.5)  (7.5)  (7.5)

1. Retirees will lower revenue. The mistake is basing taxes on income rather than consumption.

2. Corporate tax receipts uncertain. Corporations do not pay taxes. They pass all of their expenses onto their customers, or else they burn through their reserves and go bankrupt. This would not be an issue if taxes were based on consumption rather than income. Then all sales taxes would be paid by the last consumer, whether retail or corporate.

3. Tax fairness overstated.  If taxes are based on income, tax policy is set by the politics of envy and class warfare, government assumes the role of a predator in search of the juiciest victims, and everybody loses. If taxes are based on consumption, government is necessarily a direct partner in society's prosperity and therefore readjusts its policies and actions to be pro business, pro prosperity, pro growth -- and everybody wins.  The key fact that everybody misses is that absolutely everybody at all times directly depends for his income on somebody making a sale, which is a voluntary, uncoerced transaction between a willing seller and a willing buyer making a win-win deal. The business owner can't pay his employees or pay his taxes if he can't sell his product, and the government can't pay its employees if no tax is collected on a sale that was not made. Why this simple fact is beyond the comprehension of most people, especially politicians and government economists, is one of the great mysteries of our times.

4. Property tax issue overstated. Entities with taxation powers must make sure that the property tax is not just an extortion or protection racket. If you think this is an unfair statement, consider what we would do if organized crime were to come around offering "protection." Everybody must live somewhere, and it is not "fair" or "just" to tax someone's home. Most retirees can afford to stay in their homes only because it's paid off and the only expenses left are utilities, repairs and taxes. In a "fair and just" society government would try to minimize their burden. However I am not advocating means testing; property taxes simply should be very low.

5. Broaden the sales tax. This should not be as difficult as people make it out to be, even though there is lot of room for debate and lobbying for favors when legislators try to draw a line between "basic necessities" and "luxuries." My personal preference would be to exempt fresh foods but tax anything processed and canned or boxed, for example. But people also like granola, yogurt, hot dogs and beer; so yes, there is room for debate and for some quite arbitrary decisions. There is no difficulty in accommodating a high level of complexity in the implementation of a retail sales tax, because practically every point-of-sale device is computerized and scans a bar code; it's all in the software.

6. Confine local aid to capital projects. Local governments must pay their own way. State aid must be limited to paying for state mandates imposed on local governments. And of course there should be very few, if any, state mandates.

7. Cut deductions and credits. The craziest concept is "tax expenditure." Deductions for any reason are not "expenses." We would not be engaged in debate on such stupid terms if politicians did not think all income belongs to the government, not to the people earning it; and again, if taxes were based on consumption rather than income. The government of a free and sovereign people has no business engaging in social engineering or the legal authority to use taxes as a tool of social engineering.

8. Increase taxes only with redesign. The priority must always be to reduce expenditures, long before contemplating raising tax rates or imposing new taxes. Government officials and employees must understand that they have a responsibility to minimize the government's burden on society, and therefore use the resources that taxpayers give them in the most efficient way possible.

Don Anderson  (7.5)  (7.5)  (2.5)  (7.5)  (7.5)  (7.5)  (5)  (7.5)

Mary Rossing  (0)  (2.5)  (0)  (2.5)  (0)  (10)  (5)  (0)

5. Broaden the sales tax. Here is where equity is needed. Why are townships exempt but cities are not? Many other nonprofits should be paying sales tax and property tax or at least making a payment in lieu of taxes to cover basic infrastructure and public safety.

6. Confine local aid to capital projects. Public safety is essential. Maintenance of roads is essential.

8. Increase taxes only with redesign. Local governments have cut. The State needs to do the same.

Anonymous   (5)  (5)  (7.5)  (2.5)  (7.5)  (10)  (5)  (0)

Josh D. Ondich  (7.5)  (7.5)  (2.5)  (2.5)  (7.5)  (7.5)  (5)  (7.5)

Fred Morrison  (7.5)  (7.5)  (0)  (2.5)  (7.5)  (0)  (10)  (5)

Fred Zimmerman  (7)  (7)  (na)  (8)  (9)  (10)  (10)  (9)

Tax fairness is bi-directional. Some of us object to the fact that large segments of the population pay no taxes at all -- even when their incomes are significant. Internet purchase should definitely be subject to sales tax. Extraordinarily lucrative fringe benefits (including retirement provisions) should also be taxed. In general, we should tax things we do not want to happen (such as electronic devices that interfere with school work) and reduce taxes on things we do want to have happen (such as inheritances where the capital remains employed in an enterprise that employs people or produces useful things such as food).

John Rollwagen  (5)  (7)  (10)  (7)  (5)  (10)  (10)  (10)

Thoughtful presentation.

Al Quie  (10)  (10)  (8)  (10)  (10)  (10)  (10)  (10)

John Adams  (9)  (9)  (9)  (9)  (10)  (10)  (10)  (10)

This was an outstanding interview.  Mark said an exceptional amount in a brief and clear fashion.

Carolyn Ring  (10)  (10)  (8)  (8)  (10)  (7)  (9)  (10)

Extensive overhaul reflecting today's society is needed.  How about zero budgeting for every government department to justify every expenditure?

Roger Johnson  (8)  (1)  (0)  (4)  (7)  (9)  (0)  (3)

Jerry Fruin  (8)  (6)  (9)  (9)  (10)  (10)  (10)  (7)

Terry Stone  (8)  (8)  (10)  (5)  (0)  (5)  (10)  (5

    

The Civic Caucus   is a non-partisan, tax-exempt educational organization.   The Core participants include persons of varying political persuasions, reflecting years of leadership in politics and business. Click here  to see a short personal background of each.

   Verne C. Johnson, chair;  David Broden, Charles Clay,  Bill Frenzel, Paul Gilje,  Jim Hetland,  Marina Lyon,
Joe Mansky,  John Mooty,  Jim Olson,  and  Wayne Popham 


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The Civic Caucus, 01-01-2008
8301 Creekside Circle #920,   Bloomington, MN 55437.  civiccaucus@comcast.net
Verne C. Johnson, chair, 952-835-4549,       Paul A. Gilje, coordinator, 952-890-5220.

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