Thursday, April 05, 2007

Minnesota Senate pases a 9.7 percent income tax above $250K per couple

Minnesota is in a tax policy debate as well. The Minnesota Senate just passed a bill increasing the highest income tax rate about 2 percentage points, from 7.85 percent to 9.7 percent on income above $250,000 per couple (or $141 from an individual).

That's the only way to make sure that everyone ends up paying about the same percentage of their income, since sales, excise and property taxes hit working and middle-class taxpayers much harder than wealthier taxpayers.

Illinois ought to follow suit and raise our state's 3% income tax to something like 5 or 6 percent on high-income earners to buy better teachers and invest in our public infrastructure.

From the Star-Tribune

How the tax would work

Minnesota now has three tax rates. Taxpayers pay the lowest rate -- 5.35 percent --

on the first strata of their income. They pay a slightly higher rate on the next strata. At the higher levels of income, the top rate now is 7.85 percent. Under the Senate plan, taxpayers with federally adjusted gross incomes of $250,000 per couple and $141,250 for singles would pay the new rate of 9.7 percent on the income earned above that threshold. For heads of household the threshold would be $212,500.

That would bring the tax burden for the state's wealthiest 93,000 tax filers more into line with middle class earners, Senate DFLers said. A recent state Revenue Department report showed that top earners now pay about 9 percent of their income in taxes while middle-range filers tend to pay closer to 12 percent.

"This is about investment, but it's also about fairness," Pogemiller said. "There is a basic unfairness to the system right now and we're going to correct that."

1 comment:

respectful said...

Raising the rate on higher income earners requires a state constitutional amendment. I suppose such a proposal could be debated if Illinois has a Con-cON