" Growth & Justice is starting to ask a different question: How should state and local governments raise their revenue, and why? In other words, for any given size of government, what are the principles we should use to decide how to finance it, and how well are we living up to those principles?"
Growth & Justice Tax/Revenue Project assesses how Minnesota state and
local governments finance their operations, how this compares with good
principles of taxation, and how we could change the mix of revenues to better
support both economic growth and economic justice simultaneously.
Tax policy has enormous impact on people's economic opportunities and
the well-being of families. This impact is often underestimated, because we
don't examine the whole system together, asking who pays and which behaviors are
being encouraged and discouraged. Instead, public discussion focuses on
the simpler question: Should taxes be raised or lowered? And each tax is
considered alone, instead of as part of an overall package.
There are many principles involved in a good system of taxation,
including stability, transparency, horizontal equity, and public acceptance. But
Growth & Justice believes that two principles are critical for ensuring that
Minnesota remains a leader in creating and sharing prosperity in the age of
globalization:
1. The tax system should encourage the creation and
retention in Minnesota of good jobs.
2. The tax system should ensure
that the wealthiest Minnesotans pay at least their proportional share of the
taxes, and that people who are struggling to make ends meet should not be
burdened with high taxes.
These two goals are often seen as in
conflict. The business lobby pushes the first principle, liberal tax
policy advocates argue for the second, and there is almost never a change in tax
policy that both camps like.
The Growth & Justice Tax/Revenue Project aims to develop a
plan to revamp Minnesota's state and local tax regime to make it stronger on
both these principles simultaneously. We have framed the question as revenue
neutral: To raise the same amount of money we do now, can we restructure
the mix of state and local taxes to create more good jobs and share the burden
of taxation more fairly, with less being demanded of those who don't earn enough
to support a family?
At the same time, the proposals will consider other
important tax policy questions: Can we encourage more environmentally
healthful behavior? Can we increase the share of dollars we get back from
the U.S. government through federal tax deductions?
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