Should ‘sin taxes’ be raised in Minnesota?

Is it time to raise the tax on alcohol in Minnesota?

Independence Party gubernatorial candidate Tom Horner thinks so. He included an increase in per-drink alcohol taxes in his announcement of a sweeping budget plan today. His plan would increase alcohol by 10 cents a drink.

He also propose a $1.50 increase in per-pack cigarette taxes. That should gin up some opposition from people who say cigarette taxes hit the poor hardest. But what about alcohol taxes?

Yes, according to the Tax Incidence Study from the Minnesota Department of Revenue. The tax impact for alcohol taxes is highest for lower-income Minnesotans. In this chart (click for a bigger image), the “decile” is a population segment ordered by household income with the lowest on the left.


Horner also proposed a Racino. Here’s the Tax Incidence Study breakdown of gambling taxes:


The chart for every tax in the state looks pretty much like these two. In fact, the Minnesota Budget Project a few years ago studied the tax system here and determined that only two taxes — the estate tax and the individual income tax — are the only two progressive taxes in the state. That raises the obvious question: Should taxes be raised if they most impact those least able to pay? Should it matter in cases of “sin taxes”?

Should taxes be raised in Minnesota, even if they are — by definition – ‘regressive’?customer surveys

Incidentally, in the first hour of MPR’s Midday on Tuesday (11:06 a.m. CT) , DFL Sen. Tom Bakk and GOP Sen. Julianne Ortman will take questions about tax policy.