Will new taxes change how you spend your money in Minnesota?

Smoke 'em if You Got 'em

Photo by Ed Schipul via Flickr

A range of changes in Minnesota tax laws take effect today, MPR News political reporter Tim Pugmire has the highlights:

* A new 9.85 percent tax rate will apply to taxable income above $250,000 for couples and $150,000 for single filers

* The taxes on a pack of cigarettes jumps from $1.23 to $2.83.

* The state sales tax will now apply to purchases of downloaded digital products such as books, music, videos and ringtones.

* The sales tax on car rentals increases from 6.2 percent to 9.2 percent.

* Large online retailers must now collect sales tax from their Minnesota affiliates.

* Pay-per-view movies on satellite TV are now subject to the sales tax.

* The labor costs for business-related equipment repairs, including electronics and machinery, are subject to sales tax.

Today’s Question: Will new Minnesota taxes change how you spend your money?

  • Randolph

    None of these new or changed taxes will alter my life. Of the tax changes listed above, the only one that will affect me will be the collection of taxes on online purchases and, once in a while, sales tax on equipment repair. I’ve long thought it was stupid to NOT collect sales tax on online purchases — it levels the playing field for local businesses, pure and simple — so no complaints there. All of these changes simply reflect the fact that we have to pay for the government services we receive.

  • Gary F

    I don’t smoke. But smokers! Keep smoking! The DFL has a spending habit and needs a fix. Have only bought one cigar since 2008 when The One, said he wasn’t going to tax the middle class then first thing did was raise tobacco taxes.

    I’ve gotten lazy and have been buying I tunes music. I need to get back to buying it from Cheapo again. Still a tax, but you gotta buy stuff from local businesses.

    The hidden tax we all will be having to pay is the warehousing tax. Just about every retail price will go up because the item was shipped through a distribution center.

    Marx Dayton said he was only going to tax the rich. Well, a lot of folks found out they are now rich.

  • Gary F

    And, just wait until your cost of daycare goes up.

    And, you local taxes go up because the DFL didn’t fully fund that all day kindergarten they promised. Imagine that, the media didn’t tell us about that until now.

    I hope you don’t work for a trucking/warehousing company or a store selling cigs near our state borders.

  • PaulJ

    Besides meaning that I’ll spend more of it on taxes; no. I’m not in a bracket where tax planning gets involved.

  • Gordon near Two Harbors

    Zero impact on my life. A few cents for a music download won’t put me to tears. Now, if we could only get the legislature to get rid of programs that pay able-bodied people who choose not to work…

  • Guest

    It might well affect my online purchases, and I suspect will affect local pricing which will not have to be as competitive. As it’s in our collective interest to sin-tax cigarettes, if only to cover public expenses, it may also be in our collective interest not to tax intellectual activities, such as reading. I’m not ready to marshal a defense for this in the moment, but it is a feeling I have that the download tax may be a mistake.

    • Gary F

      And if that product is warehoused in Minnesota, the price will also be going up.
      The warehouse tax is a hidden tax that taxes both the rich and poor.

      I don’t see many warehouses/distribution centers from either brick and mortar retailers or mail order staying around too long. The Super Values and Cotter and Co(True Value Hardware) wont be having a warehouse presence in Minnesota for long, and mail order/online people like Sportsman’s Guide, wont stay around much longer..

      These jobs are going boy, and they ain’t coming back, to your hometown….

      • JQP

        Durable goods & perishables have the same concern – consumers who want “it” today! Warehousing is how that is accomplished. Companies that move their product out of market may also see a reputation hit for being out of stock…. all the time

        • Gary F

          Hudson, LaCrosse, River Falls, Superior, Fargo, Sioux Falls, Brookings, Mason City…………..

          Many companies are already doing it and keep plenty of stuff on the shelf.

          • JQP

            “Many” do lot of things that are common sense good and business bad, rising fuel prices could kill that syrategy, or the cost of maintaining communication & customer loyalty. Driving business decisions off single issues is foolish at best

  • Jim G

    No these taxes won’t change my behavior, and I doubt it will significantly change anyone’s. Minnesota proudly stands among the best workforces in the entire world, educated citizens paid for by… taxes. Yes, taxes and other state revenues when spent prudently in educating our citizenry is a powerful force for good and that means profits. Minnesota’s high quality educational institutions have made a workforce that is the envy of the nation. It’s a real reason that businesses locate and stay here. Thankfully, reasonable leaders have put Minnesota in the forefront of state economies by planning to educate it’s people. This advantage was not bought on the cheap, but was paid for by our parents and their parents in the form of taxes. Now we have the voting powers to make decisions which will affect the future of our children and grandchildren. Do we have the foresight to provide Minnesota’s coming generations with the same educational advantage? Vote for people that will put educating our kids as the first priority because it’s just plain profitable for all of us.

  • Enough all ready

    A couple weeks ago I received an email from amazon.com cancelling my affiliate account. I almost can hardly blame them. Every state is rushing to tax online sales, which means every online retailer has to possible collect taxes for the state they are incorporated in, and taxes for the state the purchaser lives in. It’s a logistical nightmare that very small affiliate sites can’t afford to deal with. I keep hearing people say it levels the playing field but that’s just wrong. It drives out the smaller innovators who relied on the income from affiliate advertising to cover hosting and maintenance costs.

  • Ralfy

    I’ll be spending my tax dollars helping kids learn and achieve, and helping all of us breath cleaner air and drink cleaner water.
    Regarding the on-line sales tax – there are a number of apps that can do the calculation based on zip codes or address. It’s not that hard. And its fair to all the retailers that are willing to maintain an actual store and provide actual customer service in the form of advice and the ability to try out the product.

    • JustTom

      You’ve obviously never had to file multiple sales tax returns in multiple jurisdictions and then had the states continue to harangue you in following years, whether or not you still have sales in their state. Try getting out from under the thumb of California’s Department of Revenue.

      Also, there’s no app that does it correctly. How many different sales taxes are in effect in different regions of Minnesota?

      If I sell you software, is it taxable? Sometimes

      Is the delivery charge taxable if I ship it to you? Yes, even if the software was free.

      What if I make a modification to an existing program? It depends.

      What if I change the format of a file from .pdf to .jpg – taxable.

      What if I change the format of your data from PeachTree to QuickBooks – NOT taxable.

      Program installation – taxable.

      Program reinstallation – NOT taxable.

      Maintenance agreements – if required, taxable; if optional, NOT taxable, EXCEPT for the portion that pays for program upgrades.

      The whole thing is a cluster#~*%.

      • Mr. PB

        Is your complaint about the complexity of the tax code or having to pay taxes? If it is regarding the tangled snarl of taxables and credits, yes it is a mess. If it is about our taxes being to high, well nobody wants to pay them but we seem to like the idea of having police, fire, health care, education, sanitation, …

  • JustTom

    No State shall</b? enter into any Treaty, Alliance or Confederation; grant Letters of Marque and Reprisal: coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto law, or law impairing the Obligation of Contracts, or grant any Title of Nobility. ~ U.S. Constitution – Article I. Section 10

    Emphasis added to highlight that the U.S. Consititution prohibits the State of Minnesota from passing legislation during the current year that would affect taxes on income earned during the current year. Assuming I made over $250,000 taxable income this year, prior to passing this legislation, the bill was passed after I earned this income, and now the tax on that income has been changed after the fact (ex post facto).

    Now, if only I had that problem…

  • Jeff

    Taxes do matter, look at all of the warehouse businesses that are refusing to build here in Minnesota because of the warehouse tax. Oh yeah, then the Amazon affiliates that just lost their income, the income taxes lost are many times higher than the predicted sales tax that was to be raised through the sales tax increase. Yet we can’t get Sunday liquor sales…I asked my MN representative why she voted against the Sunday liquor sales and she said it was to protect small businesses…really? Until we can get legislators that can apply logic properly and equally then we’re going to be getting these bonehead laws for every little special interest group. I can’t wait until my legislator proposes bills to close gas stations on Tuesdays and grocery stores on Thursdays to protect all of those small businesses!

  • lindblomeagles

    This seems like a strange question to pose, and frankly, I’m not sure why MPR asked it. Some people, like smokers, will not change their spending habits. Others might. What’s important isn’t how will taxes direct or curb personal, individual spending. The role of the government is to do what is in the best interest of the state at large, and that interest is ensuring that its people live on into the next generation unencumbered by the problems, mismanagement, and fiascos of the last one. Our State has a large education gap and a budget deficit that can’t get any bigger. Moreover, our State STILL OWES SOMEBODY MONEY, even if we don’t think teachers deserve it. And ALL OF US should have learned from the 2008 Depression that each and every one of us needs to save money for harsher times, including the government. To angrily decry taxes at this point as disallowing individual frivolity is akin to a small child whining that his mother and father have no right to put his allowance in a bank account.