# PoliGraph: An accurate claim on taxes by Dayton

“Tax the rich” is the mantra of Mark Dayton’s campaign.

The former U.S. Senator promises to increase taxes on the wealthiest Minnesotans if elected governor. To sell his plan, Dayton needs to convince voters that the richest aren’t paying enough.

Here’s a claim from his Web site:

“Minnesota’s wealthiest citizens pay only two-thirds of their fair share of state and local taxes.”

Dayton’s claim is more or less correct; in terms of percentage of income, the richest Minnesotans pay less in taxes than most.

The Evidence

Dayton’s campaign pointed to a 2009 study by the Minnesota Department of Revenue on how much residents pay in state and local taxes.

According to the report’s 2011 projections, the top 1 percent of earners in the state – those making more than \$480,000 a year – give between 7.7 and 8.8 percent of their income to the state. That’s compared to an average 12.5 percent paid by the bottom 90 percent of households, or those making less than \$136,954 annually.

After that, the math is simple: divide the average percent of income paid by the wealthiest by the average paid by everyone else, and it’s exactly two-thirds.

The Dayton campaign compares the top 1 percent with the bottom 90 percent, which leaves out a swath of taxpayers, said Paul Wilson, Director of Tax Research for the revenue department.

Comparing the top 10 percent – those making more than \$136,955 — with the bottom 90 percent would show that the wealthiest pay an average of three-fourths of what most pay.

Brian Klaas, Dayton’s policy director, said that their comparison aims to show how the very richest fare under Minnesota’s tax structure. Indeed, social scientists say that such a comparison is commonly used to measure income inequality.

The Verdict

Wilson agrees with Dayton’s overall analysis.

“Wealthiest is in the eye of the beholder,” he said. “The basic message of the statement is correct.”

As a result, Dayton’s passes his first PoliGraph test.

Sources:

Markdayton.org, Taxes, accessed May 12, 2010

The Minnesota Department of Revenue, 2009 Minnesota Tax Incidence Study, accessed May 12, 2010

MPR News, Fee – ‘it’s not a tax’ – could hit smokers, by Laura McCallum, May 20, 2005

Phone interview with Paul Wilson, Director of Tax Research, Minnesota Department of Revenue, May 11, 2010

E-mail interview with Gregory Joseph, Communications Direct for Mark Dayton for a Better Minnesota, April 29, 2010

Phone interview with Brian Klaas, Policy Director for Mark Dayton for a Better Minnesota, May 10, 2010

Phone interview with Tim Taylor, Managing Editor of the Journal of Economic Perspectives, May 13, 2010

Phone interview with Lane Kenworthy, Professor of Sociology and Political Science at the University of Arizona, May 13, 2010

More

• Point of interest:

The amount that those evil rich people (in top 10% of wage earners) already pay amounts to more then the other 90% combined. Looking at 06 #s from Rev Dept report. Top 10% pay \$3.8 Billion in taxes already out of the total of \$6.7 Billion of all wage earners.

So while as a % of income is, as Pat Kessler loves to so, technically true, your Fact Checking doesn’t tell us the rest of the story.

I’m sorry, but the rich are already paying the lion’s share of the income taxes. Its disingenuous to make it sound like they are paying none.

Plus if you add that they are likely to have more expensive homes and buy larger ticket items, they are paying more in total taxes then the rest of the population there too.

• Bill Prendergast

Welcome to Poligraph–independent fact-checking on claims made by Minnesota politicians and candidates.

Should help in shaking at least some of the BS out of the political dialogue.

• Eric Nelson

How can you apply an ostensibly objective “PoliGraph” test to a plainly subjective assertion as to what the “fair share” of taxes should be for high income taxpayers? The fact that “Poligraph” tries to do so, and then sides with Dayton, shows a clear bias.

• Percentage of income is the wrong way to know wether a person is paying “their fair share.” What matters is whether they’re paying for alot of the state’s budget AND whether they’re creating jobs so other people can share in the tax burden.

That’s before talking about whether the taxes are needed & whether there isn’t a more efficient way of providing gov’t services, aka reforming gov’t.

The DFL is the party that wants to fund a Twentieth Century gov’t. The MNGOP wants to build a 21st. Century economy.

That’s why it’s time for the DFL to step aside & let Minnesotans prosper again.

• Catharine Richert

For those of you wondering how much the wealthy pay in real dollars, here’s what the 2009 Minnesota Tax Incidence Study has to say:

In 2006, the state collected \$18.5 billion in state and local taxes from all Minnesotans combined. If you look at households divided by population — meaning ten groups of equal numbers of households — the top 10 percent paid \$7.1 billion compared to the \$11.4 billion paid by everyone else.

Another way to do it: If you divide everyone by their income, the top 10 percent paid about \$1.4 billion. From both perspectives, the top one percent paid even less than the top 10 percent.

Same goes for 2011 projections. All told, the state is expected to collect \$21.7 billion in state and local taxes that year. Divided by population, the top 10 percent will pay about \$8 billion of that total compared to the \$13.7 billion paid by everyone else. Divided by income, the top 10 percent will pay about \$1.6 billion. Again, the top one percent will pay even less than the top 10 percent.

So, even in real dollars, the wealthiest are paying less than everyone else.

• JeanJ

So I’ve been asked what is the defination of “income” for these calculation purposes?

Gross income or Adjusted Gross income, or something else?

• Chris

Is there going to be a follow-up post on how much revenue Dayton’s “tax the rich” proposals would actually produce if implemented?

I hope there’s going to be video of Poligraph bursting into flame when it tries to make Emmer’s budget numbers add up.

• Lindsey

I like this new PoliGraph feature! Thanks for your continued excellence in reporting!

• Jim

The claims are either disingenuous or stupid. I’ve never thought of Mark Dayton as disingenuous. You really need to find someone who can read numbers and data if you want your PoliGraph to work. Don’t rely on campaign staff and DOR public information officers to do your work. It took me about five minutes to find the first major disconnect between the campaign and the report.

You say:

“…give between 7.7 and 8.8 percent of their income to the state. That’s compared to an average 12.5 percent paid by the bottom 90 percent of households…”

The campaign seems to be misreading the charts on pages 14 and 20 of the study to make this claim. If you look at only the State percentages for the top 1 or 10% and both the State and Local percentages for the bottom 90%, you get those numbers.

The biggest distinction between the top 1-10% is in Local Taxes paid as a percentage of income.

Local Taxes are generally levied on the value of property. Apparently being rich doesn’t make your property worth more, so you have to find other ways to extract more revenue from them. Go to the table on page 45 of the study and look at the effective tax rates in the first column for 2011. Yup, the first 20% actually get money back. The top 10% pays the most: 5.3%.

In order to make up for the fact that “rich” people’s houses aren’t proportionately more expensive than “poor” peoples, you will have to, what?, triple that rate? That will produce about 2.02 billion additional revenue in 2011.

Too bad the deficit is over \$3 billion.

This PoliGraph feature is a GOOD idea as long as you’re willing to do a better job than Kessler does with his.