Why is Dayton trying to screw the middle class?

Posted by: Barthélemy Barbancourt

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Here's a two-minute drill in soak-the-rich economics:

Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share." The Baltimore Sun predicted the rich would "grin and bear it."

One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

If Gov. Dayton passes a Millionaires Tax, millionaires will leave MN and the middle class will have to pay more taxes to make up for the lost income. Tax the rich really means screw the middle class.

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Jim ross
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written by Jim ross , June 27, 2011

I bet if Maryland hired Omar Little to collect taxes, revenue would triple. I wonder how much Stringer Bell's death brought down the tax rolls. Also, the disbandment of Avon Barksdale's drug ring left hundreds unemployed.


Sequel
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written by Sequel , June 27, 2011

They tried this scheme in Oregon with the same result.
Now there are far fewer rich people in Oregon, so that's much more fair.
Those rich people took a bunch of jobs with them too. But hey now it's fair!



Woody
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written by Woody , June 27, 2011

That article is pretty weak on statistics Bart and full of self-serving speculation which seems to fill the bill for your post and closing statement. let me get this straight, if the tax rate on upper income folks increase, they will sell their home in a down market, quit their jobs/relocate their business in order to save tax dollars and do what needs to be done to solve the states budget shortfall. I'm not sure I want these people living in my state. I'll pay my fair share to bid them adios. Send me a postcard from Texas!


TomC
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written by TomC , June 30, 2011

I love it when it just takes the half who pay nothing, along with a few other wealth-envy types, to vote to squeeze the 2% or .3%, in this case, who pay the most. The "willing and able" line makes it sound voluntary. It is extortion at the point of a gun and it is immoral.

We are headed toward Greece's economic situation at an alarmingly fast rate. Government is too big and growing. The producers are too few and shrinking--not a good economic situation.

Jim, Omar Little or whomever, you cannot collect taxes from people who are no longer there.

Woody, the wealthy--and the wealthy is not who we are talking about here--do not have to sell their homes in a down market. They can move to Texas without selling.

Ilinois has been hit hard in the last year as well. There have been a number of companies that are close to the Wisconsin border in both the Chicago and the Rochester areas that have just kid of sidestepped across the border to avoid the Illinois & Chicago tax increases.



Woody
half of whom?
written by Woody , June 30, 2011

Are you saying that half of all Minnesotans pay nothing Tom?

"The wealthy is not who we are talking about here"? Wealthy and/or millionaires are mentioned throughout this thread Tom. Who are we talking about. I realize this conversation lost its tempo due to a technical issue or over comsumption of liquor but let's get back on track here.



Elmer
explain?
written by Elmer , June 30, 2011

Tom, you may be confusing the Fed law with Minnesota law. Can you help me understand this document:

http://www.tax-rates.org/Minnesota/income-tax

It looks like everyone has some liability. But I may not understand the nuances.



Barthélemy Barbancourt
Rebates, renters credits, welfare, food stamps, etc
written by Barthélemy Barbancourt , June 30, 2011

Even in MN, the lowest quintile gets more back than they pay in as they receive far more in welfare, food stamps, subsidized housing, etc than they could ever pay in taxes. The last number I saw was a fully loaded welfare recipient needs to make over $24K a year with health insurance to equal what they receive in cash and benefits.

The second lowest quintile pays about zero, as they too benefit from a variety of rebates and breaks like renters credit, EIC and the like. They almost all get 90% of their taxes back and then they get some extra $$ from other programs.

You have to get into the third quinitle before any taxes are actually paid.

The top 40% of wage earners pay 86% of the taxes. The bottom sixty percent only pay 24% and the majority of this comes from the middle quintile.



Woody
quintiles maybe but not 50%
written by Woody , June 30, 2011

The top 40% of wage earners pay 86% of the taxes because they earn significantly more. *I'd fathom to guess they take in about 86% of total earnings also. The fact is the State needs to do something and quick by way of spending cuts and tax increases. This is going to hit me too but it is necessary in order to balance the budget. it can't be done on cuts alone.


TomC
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written by TomC , June 30, 2011

The last biannual budget was for $31B, and the maximum the legislature is willing to approve for the next biennium is $34B. The real numbers end up being a 7-8% increase. That should be well beyond sufficient in a biennium where inflation is considerably less than that 7-8%. During tough economic times, it is appropriate for the governemnts, at all levels, to extort less from the taxpayers.

Wealth has to do with assets, not income. That is what I was referring to earlier. Wealthy people, Warren Buffett, for instance, may have relatively small incomes to avoid paying high taxes. Where he makes most of his money is in capital gains.




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