More Proof You Can’t Tax Your Way To Prosperity – This Isn’t Sim City

Republicans tried to convince Governor Dayton & DFL Legislative Leaders to include repealing the Warehousing & Farm Equipment repair taxes during the Special Disaster Special Session. Al though Dayton agreed the Farm equipment tax was a mistake, he refused to consider this DFL caused disaster in the agenda. On the notion of the disastrous ware house tax – Minnesota is the only state in the nation to implement such a tax – he challenged Republicans with finding the offsetting spending cuts.

Dayton said he remains unfriendly to the idea, pushed hard by Republicans, of repealing the new warehouse tax during the special session. He said he has invited the GOP to come up with a new source of income to replace that tax but none have come forward.

Let’s recap the Dayton & DFL budget, shall we? They had a surplus (that could have paid back Dayton’s school shift) and still raised taxes by over $2 Billion to satisfy their spending appetite. Minnesota is required to have a balanced budget, meaning you have to rely on forecasts on tax collections to match spending.

Well what happens when – as common sense predicts as well as experts – you raise a tax on something specific and people stop buying it? The “investment” revenue from those products don’t come in to the state and there is a donut in the budget.

Minnesota’s tax increase on cigarettes has dampened sales since taking effect on July 1, just as tobacco sellers and anti-smoking groups predicted would happen.

Early state Department of Revenue figures show a sharp drop in demand for the stamps affixed to each pack of cigarettes, Minnesota Public Radio reported Thursday. The stamps are proof that state taxes have been paid. Wholesalers and retailers pin the dip on the extra $1.60 per pack tax, especially in border towns.

For July, stamp sales fell more than 35 percent over the same month a year ago. For August, the drop was 12 percent.

The department reports that tax collections are up by more than 56 percent anyway, though that figure slightly lags projections used when lawmakers built the tax increase into their newly enacted state budget. Tax collections on other-than-cigarette tobacco products such as ‘roll-your-own’ tobacco also are up.

So what will Dayton & DFL leaders propose to cut to offset the predicted shortfall in revenue? You see, they need ALL the predicted revenue to have a balanced budget.

Of course we all know that they will simply look for someone or something else to tax. They are addicted to spending. They are addicted to growing Government. They can’t fathom the idea of a Minnesota economy that doesn’t revolve around state bureaucrats and isn’t held hostage by the elected politicians who like to play Sim City with real lives and businesses.

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