On the floor of the Minnesota Senate, Tax Committee Chair Sen. Julianne Ortman, R-Chanhassen, made this prediction about Gov. Mark Dayton’s income tax plan:
“The Senate fiscal staff has prepared an analysis, Madam President,” Ortman said on March 3, 2011. “It’s dated 2/24/11, and it shows that Gov. Dayton’s proposal would actually impose that 10.95 percent on all income earners in the state of Minnesota within 15 years, because the governor doesn’t index the top bracket.”
Ortman’s claim that all Minnesotans would pay higher taxes because Dayton’s plan does not account for inflation is an exaggeration.
Ortman is talking about is “bracket creep” – the movement of taxpayers into higher brackets when their income increases due to inflation.
As Dayton’s plan stands, the new tier would not be indexed for inflation, unlike Minnesota’s current brackets. That means more people would end up paying the higher rate over time.
But the Senate fiscal report Ortman refers to does not support the claim that all Minnesota taxpayers would be affected by the 10.95 percent rate within 15 years. In fact, it doesn’t even project that far. For all taxpayers to be captured by the new rate within the next 15 years would require an explosion in wages or a significant increase in inflation, say tax experts.
“The point is that everybody is going to be affected by this,” Ortman said of her claim. “Yes, it’s theoretical, but it’s there.”
It is highly unlikely all Minnesota taxpayers will be paying Dayton’s proposed top rate in 15 years.
Ortman’s claim does not pass the PoliGraph test.
Senate Fiscal Report: Analysis of Gov. Dayton’s 4th Tier Without Inflation Adjustment, Feb. 24, 2011
MPR News, FAQ: Making sense of Dayton’s budget proposal, by Madeleine Baran, and
Elizabeth Dunbar, February 15, 2011
Minnesota Management and Budget, Minnesota Biennial Budget: FY 2012-2013, accessed March 10, 2011
Supporting documents from Sen. Ortman, March 10, 2011
Interview, Sen. Julianne Ortman, Tax Committee Chair, March 3, 2011
Interview, Mark Haveman, Executive Director, Minnesota Taxpayers Association, March 10, 2011
Interview, Kit Borgman, spokeswoman, Minnesota Department of Revenue, March 9, 2011
Interview, John Spry, Associate Professor, University of St. Thomas, March 10, 2011
The Humphrey School