Breaking: Tax cuts only benefit those who actually pay taxes
The Minnesota Senate passed a huge tax cut bill today, lowering the bottom income tax rate from 5.35% to 2.8%. Slashing the bottom rate nearly in half benefits all income taxpayers because all Minnesotans are taxed at that rate for their first $28,080 in income, no matter how much more they earn. The key words here are “benefits all income taxpayers.” Because if you don’t pay income taxes, you aren’t going to benefit from a tax cut.
That kind of logic doesn’t stand a chance sometimes against the predictable demagoguery from liberals on tax fairness. They skip the step where the state collects the money and move immediately to “we have a $9.3 billion surplus.” Liberals aren’t interested in passing a tax bill so much as they want to pass a redistribution bill.
Our friends at the Minnesota Budget Project quickly put out a report saying the Senate tax plan leaves out everyday Minnesotans.
The Senate Republican caucus has proposed cutting the state income tax rate in the first bracket from 5.35 percent to 2.8 percent. Despite being described as being for all taxpayers, this proposal provides no benefit for about 1 in 5 Minnesota households.
Those who are struggling the most to get by are the most likely to be left out. About two-thirds of Minnesota households with incomes below $30,000 would receive no tax cut from this proposal, and 3 out of 10 Minnesotans with incomes $30,000 to $51,000 would receive no tax cut. These Minnesotans do their part paying taxes to fund state and local services in Minnesota, they just happen to pay their taxes more through the sales tax and property tax, and less through the state’s income tax, which is based on ability to pay.
The Budget Project laments that 1 in 5 Minnesota households get no benefit from the Senate tax bill while admitting it’s because they don’t pay any income taxes in the first place.
By the way, the Minnesota Budget Project is a liberal policy organization funded by the Minnesota Council of Nonprofits. One of their goals is to create a “fair tax system that raises enough revenue to sustainably fund our priorities as a state.” Mostly they advocate for progressive tax policies and more government spending. If your favorite nonprofit is a member of the Council of Nonprofits, your donations are funding this liberal research.
The Minnesota income tax system is so progressive that it’s impossible to cut any rate without benefiting higher income taxpayers more than lower income taxpayers. Almost 20% of Minnesota income tax filers already pay no taxes at all.
We chose our words carefully when American Experiment launched the Give It Back campaign. The surplus came from taxpayers through over-collection. It should be returned in kind.