While Gov. Pawlenty won’t admit it, his own revenue department projects that property taxes will rise by $626 million over the biennium under the governor’s budget plan.

But is that the best tax to raise in a time of deep recession? Do homeowners facing foreclosure or who have lost jobs or income, need a bigger property tax bill? Certainly not.

For our money, the DFL Senate’s recent call for an increase in the top tier of the state’s income tax is the fairest and most reasonable approach.

Here’s why:

‰ In a time of recession, the income tax is the only tax that limits increases to those who can afford to pay more. Income taxes, especially when increased on the top tier, only affect those who are still doing very well. Minnesotans who have lost jobs or lost income will see their income taxes fall in response. That’s not the case for things like property or sales taxes, which aren’t based on ability to pay.

If we’re really concerned about helping those hit hardest by the current economic downturn, increasing the income tax is the best way to raise the additional revenue the state needs.

‰The wealthiest Minnesotans already bear the least tax burden, in terms of percentage of income. The average Minnesota worker pays about 12 percent of their income in state and local taxes. By contrast, Minnesotans in the top ten percent by income, pay just 8.7 percent of their paycheck in state and local taxes— and the top one percent pay just 7.4 percent. A fair tax system would tax every income level more or less equally, in percentage terms.

‰As the state Department of Revenue revealed in its latest tax incidence study, released last week, the only effective way to boost the relative share of taxes paid by the wealthiest Minnesotans is through the income tax. Increasing sales taxes or allowing property taxes to rise still further will only add to the relative tax burden of those Minnesotans who are already struggling.

‰ Refusing to increase income taxes for those at the top means higher taxes for the rest of us.

While Governor Pawlenty likes to tout his “no new taxes” pledge, the fact is that the governor’s policies, particularly his cuts in local government aid, have spawned the biggest runup in residential property taxes in decades. According to Sen. Tom Bakk, property taxes have increased by $2.7 billion under Pawlenty, or more than 50 percent. And those property taxes fall hardest on those very Minnesotans who are struggling in the current downturn. Those property tax increases are making Minnesota’s tax system far less fair than it used to be.

‰ Raising taxes on the wealthiest won’t undermine job growth, as conservatives so often claim. Most new jobs in Minnesota are created by small businesses, and the owners of only a tiny fraction of them would see any tax increase from a hike in the top tier. Most small business owners simply don’t make enough to reach the top tier of the income tax. And those few that do, by definition, have the income to pay a little extra. Anyone who argues that successful Minnesota businesses are going to shut down, or move elsewhere, because the top tier of the income tax was raised from 7.85 percent to 9 or 10 percent, simply doesn’t understand business. Most small business owners rank income taxes near the bottom of the list of factors that determine where they choose to operate.

Indeed, Minnesota experienced its best economic times during periods when its taxes on businesses and top grossers were higher than today. When those taxes are used to fund a strong public sector, it creates a skilled workforce and high quality of life, factors which are far more important to successful business owners.

In the end, it really will come down to what’s fair. A budget crisis of the magnitude we’re facing in Minnesota, can’t be solved without everyone pitching in. The governor and the Legislature have butted heads on this before. This time, DFLers should hold firm for fairness.