@MNGOP Defends the 7,700 Making $2,688,312 Per Year #mnshutdown

Rat brought up an interesting point regarding the revenue potential from creating a new top-tier tax rate on incomes above $1 million per year for the next two years as Dayton has proposed. While I pointed out that a person making $1,00,001 per year would only get hit with 4 cent bump to their tax burden, clearly someone would be paying a lot more than that to help close the budget gap.

Rat points out the scope of the revenue Gov. Dayton is proposing we collect from the 7,700 highest income earners in the State of Minnesota:

Maybe instead of wrangling over percentages, merely say this is how much additional money Dayton wants take in the form of additional taxes from 7,700 people over the next two years: $520 million.

Asking 7,700 people to come up with $520 million over two years sounds like a lot, eh? I thought it would be fun to look at how much that would hurt this group. For example, how much would they have to cough up per year, and how much do these people make in order to be able to fund half a billion dollars in state spending over two years? Here are the numbers I ran:

Average Incomes of top 7,700 Minnesotans

In a nutshell, Dayton is asking Minnesotans who make, on average, $2,688,312 per year to chip an extra $33,766 per year to the state. That’s not chump change, but it shouldn’t prevent many people making that kind of coin from taking the kids out to eat once in a while, but buying Kraft Deluxe Macaroni & Cheese for home.

Rather than limiting new income taxes to those who can most afford it, Rat suggested spreading the tax burden equally among all Minnesotans:

My solution to closing the gap between the two parties would be a temporary 1 percentage point bump in Every Tax Bracket. I’ve been told that would raise about $1 billion. We all use state services, we all have skin in the game. We all should share in solving the problem.

That’s an interesting way to look at it. For example, a person making 100 times less than the average of the 7,700 top income earners makes $26,688/year, or around $13/hour (assuming they manage to do it with one full time job rather than multiple part time jobs that pay less). A flat tax of 1% would save someone making $2,688,312 per year $16,883 but cost someone bringing home $13/hour an additional $266 in income taxes.

Rat’s proposal would increase taxes on $13/hr earners by 14.2% (7 to 8%) while increasing taxes on $1,300/hr earners by 12.5% (8 to 9%). That seems kind of regressive to me.

18 thoughts on “@MNGOP Defends the 7,700 Making $2,688,312 Per Year #mnshutdown”

  1. I hope you don’t mean I’m @MNGOP. i don’t recall if I’ve ever voted Republican in my life. I’m a loyal Blue Dog.

  2. @Rat, I didn’t man to imply that. By proposing any sort of tax increase to solve our budget mess, you clearly have displayed no loyalty to Tony Sutton.

  3. No new taxes period…so I propose we call it a “Luxury Income To Avoid Torches and Pitchforks Fee”.

    For my part–I pledge to give all my 2011 income exceeding $1 million directly to the state of MN–EVERY cent.

    Just to do my part and all.

  4. I’d say a $1 per pack cigarette tax on a pack-a-day man is more regressive than the state income tax bump, which, if they deduct they won’t even notice.

    These anti-smoking activists that favor one tax after another are happy to see additional revenue to the state, but they would never favor making this dangerous produce illegal? Of course not,

    I’d like to ask one of them “what’s it like to dance with The Devil in the Pale Moonlight?”

    I used to follow tobacco company quarterlies as part of my work. They make money hand over fist.

  5. @Rat, the cigarette tax would be quite regressive. I imagine that’s why Dayton started with proposing taxing people who can afford it more, but has moved toward those who can afford it less to appease the MN GOP.

  6. @Rat

    I am a PRO-HEALTH advocate who happens to believe that the effects of cigarette smoking are regressive and that price is another push that can help people cut back or quit.

    I have study after study that shows that an increase in the cigarette tax reduces the number of cigarettes sold. Even a reduction in the number smoked improves heart health. This is particularly true with people who have less money (low income smokers and kids).

    I’m willing to post links if you are willing to click through them. What do you say?

  7. And furthermore, Matt: Do you really think the state’s tax code — the purpose of which is to raise revenue — should be written to change peoples’ behavior into something you find more palatable?

  8. @Rat

    If I thought we COULD gather the votes to ban the sale of tobacco I would consider it. But I don’t.

    I fully support using the tax code to provide incentives. There are multiple exampes in the tax code of exemptions and deductions whose purpose is to encourage behaviors that serve broader public goods from charitable contributions to the purchase of energy efficient cars and appliances. Sales tax exemptions from the purchase of food and clothing prevent us from regressively pricing people out of basic necessities.

    What I find particularly “palatable” about attacking cigarette sales is avoiding the unnecessary loss of life and the medical care costs (public and private) that come with preventable chronic diseases. This is to say nothing of the lost productivity of employees who are out taking smoking breaks when they could be working or home sick with colds or respiratory illnesses that do not afflict non-smokers with the same severity.

    A tobacco tax is a user fee which has actually been shown to decrease utilization. And for those that want to quit, there is a free state quitline to hook you up with what you need.

  9. @Matt “What I find particularly “palatable” about attacking cigarette sales is avoiding the unnecessary loss of life and the medical care costs (public and private) that come with preventable chronic diseases. ”

    Well, based on that there’s very little that is NOT fair game for taxation. There are already sin taxes. But Ed puts himself in danger every time he rides his bicycle (probably more than consuming a pack of cigarettes). When I buy a Quarter Pounder with Cheese, people could make the argument I’m putting myself in danger. There’s little beyond sitting in a comfortable chair and staring straight ahead that doesn’t carry some kind of risk of “unnecessary loss of life and the medical care costs”….public and private.

    I’m not going to read your links. I know smoking is not a good idea. Tax cigarettes $100 a a pack (if you want to be reasonable $100 a carton) and all you’ll have to deal with is black market cigarettes. Strong arm the tobacco companies out of business.

  10. @Rat

    No worries, I didn’t really expect to win you over and I respect your right to disagree.

    That said, i want to point out that rather than disagreeing with me directly, you keep disagreeing with what you consider the logical extension of my arguments. For example, I’m not supportive of making “any” change to the tax code, it’s not because I find certain things “unpalatable” (implying I am a snob about smokers), it’s not that I fail to see that a “true believer” in my cause would be seeking prohibition.

    I never brought up fast food and I think it’s different. I’ve seen no evidence to suggest that raising the price of fast food will decrease obesity. So if you were hoping to draw me into that debate, I hate to disappoint you.

    You are presuming you know the basis for my divergent views and that leads you to debate me in a manner that is less likely to lead to conversation and more likely to pick a fight. Is that what you are hoping to do?

  11. @Rat

    Ok, I apologize. I accused you of baiting me and then my last line is a bait to you. Guilty.

    I’ll give you a little more to consider so that you can decide whether or not you want to continue talking to me.

    If you want to change gears on sin taxes, let’s switch from cigarettes (which I don’t smoke) to alcohol (which I do consume). I would support an increase in the alcohol tax.

    Personally I doubt that it would effect my consumption much. I prefer craft beers that are on the spendy side already and would likely continue to consume them even if the price went up 25 to 50 cents per drink. I pay a higher increase to drink them at a bar when I could save money buying them from a liquor store as it is.

    However, I can imagine that other people would cut back if that price went up, and I would see that as a net positive.

    So if the state raises a sin tax on me, particularly one that is likely to have an evidenciary impact on the consumption of a non-essential good that causes social harms, I could support that as well.

  12. @Matt: smokers aren’t actually a big drain on resources. Because they have a shorter life expectancy, they collect less social security. Every time somebody gives up smoking, we have to generate an extra $20k revenue for social security.

    http://www.nber.org/papers/w2234

    Fast Food, on the other hand, is much worse than smoking… obese people live long, unhealthy lives, with complications like diabetes. From a financial policy perspective, it makes more sense to tax hamburgers $1 each, and make cigarettes free.

    Just sayin…

  13. @Bex

    Obesity is definately a problem, but it is more complex than fast food. If you consume too many “healthy” calories, are too inactive or both you could be obese without ever stepping into a McDonalds.

    By contrast, smoking cessation is a far simpler problem. It’s hard to quit, but quitting immediatly improves health, reduces unnecesary sick days and smoking breaks that cost businesses lost productivity from less focused workers.

    If you don’t believe that smokers are a drag on resources, don’t take my word for it. Check out this analysis done by Blue Cross and Blue Shield of Minnesota:

    Blue Cross and Blue Shield of Minnesota. Health Care Costs and Smoking in Minnesota: the Bottom Line, accessed May 23, 2011,http://www.health.state.mn.us/divs/chs/tobacco/matscomptech07.pdf.

    But keep in mind that my primary interest is in the health of current or potential smokers. The health effects of smoking cessation are much more pronounced than most people know:

    20 minutes after quitting

    Your heart rate and blood pressure drop.

    (Effect of smoking on arterial stiffness and pulse pressure amplification, Mahmud A, Feely J. 2003. Hypertension:41:183)

    12 hours after quitting

    The carbon monoxide level in your blood drops to normal.

    (US Surgeon General’s Report, 1988, p. 202)

    2 weeks to 3 months after quitting

    Your circulation improves and your lung function increases.

    (US Surgeon General’s Report, 1990, pp.193, 194,196, 285, 323)

    1 to 9 months after quitting

    Coughing and shortness of breath decrease; cilia (tiny hair-like structures that move mucus out of the lungs) start to regain normal function in the lungs, increasing the ability to handle mucus, clean the lungs, and reduce the risk of infection.

    (US Surgeon General’s Report, 1990, pp. 285-287, 304)

    1 year after quitting

    The excess risk of coronary heart disease is half that of a continuing smoker’s.

    (US Surgeon General’s Report, 2010, p. 359)

    5 years after quitting

    Risk of cancer of the mouth, throat, esophagus, and bladder are cut in half. Cervical cancer risk falls to that of a non-smoker. Stroke risk can fall to that of a non-smoker after 2-5 years.

    (A Report of the Surgeon General: How Tobacco Smoke Causes Disease – The Biology and Behavioral Basis for Smoking-Attributable Disease Fact Sheet, 2010; Tobacco Control: Reversal of Risk After Quitting Smoking. IARC Handbooks of Cancer Prevention, Vol. 11. 2007, p 341)

    10 years after quitting

    The risk of dying from lung cancer is about half that of a person who is still smoking. The risk of cancer of the larynx and pancreas decreases.

    (A Report of the Surgeon General: How Tobacco Smoke Causes Disease – The Biology and Behavioral Basis for Smoking-Attributable Disease Fact Sheet, 2010; and US Surgeon General’s Report, 1990, pp. vi, 155, 165)

    15 years after quitting

    The risk of coronary heart disease is that of a non-smoker’s.

    (Tobacco Control: Reversal of Risk After Quitting Smoking. IARC Handbooks of Cancer Prevention, Vol. 11. 2007. p 11)

    These are just a few of the benefits of quitting smoking for good. Quitting smoking lowers the risk of diabetes, lets blood vessels work better, and helps the heart and lungs. Quitting while you are younger will reduce your health risks more, but quitting at any age can give back years of life that would be lost by continuing to smoke.

    http://www.cancer.org/Healthy/StayAwayfromTobacco/GuidetoQuittingSmoking/guide-to-quitting-smoking-benefits

  14. Rat says: “but they would never favor making this dangerous produce [i.e., cigarettes] illegal?”

    i, for one, would simply like to see cigarettes held to the same standards as other products that people consume. either make every product that is equally as dangerous or less dangerous than cigarettes legal, or make cigarettes illegal. are cigarettes really THAT much safer than unpasteurized almonds? it seems possible that in this scenario, marijuana might be legalized, and cigarettes might be banned. who knows?–let the science be the deciding factor. i also think it’s possible that tobacco itself should be legal, but that the chemical concoction known as the commercial cigarette should be banned. call me idealistic, but i’m not a fan of products’ safety being judged primarily on the basis of how well funded their industry lobbyists are.

Leave a Reply

Your email address will not be published. Required fields are marked *