 | ‘Tax Freedom Day’: A tired, anti-government gimmick
4/11/2008 11:35 AMAttendance at the so-called “Tax Freedom Day” (TFD) events at the State Capitol in St. Paul varies from year to year, and it seems to be increasingly regarded as a tired old gimmick. It’s also a divisive gimmick, one that has served to undermine the lofty idea that we’re all in this together and that our governments are us.
The portion of our incomes that we allocate as a democracy to pay for public benefits and improvements does not represent a lack of “freedom,” or bondage in any form. Our roles as taxpayers should not be separated from our roles as equal partners in communities that derive enormous economic and social benefits from the great work that government does, with investments in education, transportation, public health, environmental protection and hundreds of other valuable public products.
Through a free and healthy democratic process, Minnesotans and other Americans decide how much to pool for common investments and how much to keep individually. This process has worked very well for us and we have among the lowest overall tax rates of the wealthy democracies. Many wise leaders, notably U.S. Supreme Court Justice Oliver Wendell Holmes, have said that taxes are simply the price we pay for civilization. Many thoughtful citizens do not resent this obligation.
Other pertinent facts about “TFD” in Minnesota include:
Statistics by the conservative Tax Foundation appear to distort Minnesota’s actual ranking on taxes, somehow giving us the 8th “latest’’ freedom day, which the League sets this year for April 27. The much more respected Census Bureau-based rankings, published every year by the business-supported Minnesota Taxpayers Association, recently ranked Minnesota 23rd nationally in state-and-local taxes. That ranking is a measurement of total state-local taxes as a percentage of total income. It’s very hard to argue with a straight face that citizens in low-tax states - which also tend to be states with low quality-of-life measures - are either freer or better off overall than those in high-tax states.
Don’t look now, but TFD will arrive roughly 10 days earlier for the most affluent Minnesotans. Like almost all states, Minnesota’s tax system is regressive, harder on the poor and on the middle than on the top, and especially so at the very top. Those with incomes in the top 1 percent pay about 3 percentage points less than middle-income taxpayers, according to the Revenue Department’s highly respected Tax Incidence Study. Growth & Justice was the sponsor two years ago of a statement signed by some 200 conscientious high-income individuals who said they would be willing to pay a higher and fairer income tax rate, and that the added revenue was needed to reinvest in higher education attainment, more transportation options and expanded health-care coverage.
Minnesota’s total effective tax rate has dropped significantly since the mid-1990s, from 13.0 percent of income in state-local taxes in 1994 to 11.7 percent in 2004, according to the Tax Incidence Study. In recent years, huge and unsustainable income tax cuts and draconian cuts in public-sector budgets have created real pain for real people, ranging from a deteriorating transportation infrastructure to crowded class rooms to lost health-insurance coverage for children of working parents.
For a more thorough critique, from a national perspective, of Tax Freedom Day, go to the Center on Budget and Policy Priorities for their research.
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