Wondering what revenue-raising options policymakers might consider this legislative session, how much revenue they would raise and what their impact would be on tax fairness?
I know many of you have been wondering, because you’ve been asking! And the information is available in our new analysis, Revenue-Raising Options to Help Close Minnesota’s Budget Deficit. This analysis is not a set of policy recommendations, but rather a summary of several revenue-raising ideas that have been discussed in recent years as a way to address the state’s ongoing revenue shortfalls.
Here’s a quick summary of what’s included in the document, and the estimated amount of revenue to be raised in FY 2010-11:
- Create new income tax bracket: 9.7 percent rate for incomes above $250,000 – $714 million
- Create new income tax bracket: 9 percent rate for incomes above $400,000 – $347 million
- Enact a 10% income tax surcharge – $1.6 billion
- Return income tax rates to 1998 levels – $1.8 billion
- Return top income tax rate to 1998 level – $361 million
- Eliminate business tax preferences – $144 million
- Corporate tax throwback rule – $66 million
- Raise business property taxes – $83 million
- Eliminate sales tax exemption on clothing – $728 million
- Eliminate many sales tax exemptions on goods and services – $2.9 billion
We’ll be updating those figures when we get a new state budget forecast in March, and it’s likely these estimates will all get smaller when we do, reflecting the slower economy. We may also include some additional options that we’ve heard floating around the capitol. In addition, we’ll be analyzing revenue-raising legislation that is introduced throughout the legislative session…so stay tuned.