WASHINGTON – As part of its campaign to raise tax rates on the wealthy, the Obama Administration is touting a new report that says two million Minnesota families will each see their income taxes rise by $2,200 next year if no agreement with Congress is reached.
The study, conducted by the White House National Economic Council, also estimates that consumer spending in Minnesota would drop by $3.6 billion if tax rates rise on those making less than $250,000 a year as scheduled at the beginning of 2012.
In recent weeks following President Obama’s re-election, Republicans have dropped their longstanding opposition to additional federal tax revenue but have continued to fight to keep tax rates where they currently are, offering instead to find the additional funds through closing unspecified tax deductions.
Democrats and many outside budget experts argue that closing loopholes without raising rates will constitute a middle class tax increase and have continued to lobby for raising taxes on the wealthy.
Minnesota’s 10 member congressional delegation is split cleanly along party lines on this issue with Democrats backing higher rates and Republicans arguing to keep rates where they are and close loopholes.