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Minnesota Showdown Over Tax Fairness

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Thursday, May 17, 2007

Minnesota Showdown Over Tax Fairness

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Increasing Democracy

by Nathan Newman

Minnesota Showdown Over Tax Fairness

With a stroke of his veto pen, Minnesota Governor Tim Pawlenty blocked one of the most progressive tax plans in the nation: tax cuts for 90% of the state's homeowners to be paid for by an income tax increase on the wealthiest 28,000 taxpayers in the state. 

Analysis by the Minnesota Budget Project had shown that the wealthiest 1% of Minnesota households (those married families making more than $354,758 per year) paid only 9% of their income in state and local taxes, far less than the 12% of income paid by most middle class families in the state. 

To rectify this regressive tax system (unfortunately all too common in states), the Minnesota legislature approved a budget that created a new income tax rate of 9% of income to be levied on incomes over $226,230 for single filers and incomes of $400,000 or more for married couples.  This revenue would be used to limit property taxes to no more than 2 percent of family income, returning the difference in refund checks.  Polls showed that 72 percent of voters favored the higher tax rate for the wealthy as a way to lower property taxes, but Gov. Pawlenty chose to protect his wealthy campaign contributors rather than allow property tax relief for the middle class.

Responding to Pawlenty's veto, the legislature is preparing a pared down budget without the income tax increase, but also without the property tax relief or planned increases for early childhood programs that had also been part of the program. 

It's unfortunate that Minnesota had a chance to enact model tax fairness legislation, but instead will likely end up with a status quo budget due to the Governor's veto.

More Resources

Rewarding Work

by Nathan Newman

Congressional Leaders Warn Against State Highway Privatization

The recent fashion for selling off highways at firesale prices took a big hit this week.  In a letter sent to governors, state legislators and state transportation officials, key House leaders on transit issues warned states not to rush into privatization deals involving national highways.

The letter, signed by the chairmen of the House Committee on Transportation and Infrastructure and the Subcommittee on Highways and Transit, James L. Oberstar (Minn.) and Peter A. DeFazio (Ore.), stated that many of the "public-private partnerships" (PPP) being enacted at the state level do not serve the public interest and that the "Committee will work to undo any PPP agreements" that fail to protect taxpayers. 

The letter follows a series of a hearings by the committees that raised deep concerns that "these deals make good business sense to the companies that are investing in the projects" at the expense of the public interest.  The chairmen specifically condemned Bush White House "model legislation" being promoted to encourage highway privatization.  The committees plan to outline better alternatives for states to consider for raising revenue to fund infrastructure improvements.

The hearings confirmed recent reports in Texas, New Jersey and Pennsylvania by state PIRGs highlighting financial and social problems in privatization proposals in those states.

More Resources

Increasing Democracy

By Adam Thompson

Health Care Progress in Connecticut and Oregon

While comprehensive health care reform proposals in CaliforniaIllinois and Pennsylvania are getting most of the attention, Connecticut and Oregon are host to their own debates which could influence reform elsewhere.

Connecticut: Surprising skeptics and despite being the insurance capital of the country, single-payer legislation - Connecticut Saves Health Care - continues to make it through legislative committees.  The Human Services Committee, for instance, sent it out with a joint favorable report by a vote of 12-7.  This followed favorable reports in two other committees. 

Elsewhere in the insurance industry haven are at least three bills making it through committees:

  • HB 7314 includes an individual mandate, an employer assessment of 11% of payroll, and the State Health Insurance Purchasing Pool, a "connector"-like entity that would act on behalf of enrollees by contracting and negotiating rates with insurers to offer aggressively subsidized health care for the uninsured. 
  • SB 1 is a collection of incremental reforms including SCHIP and Medicaid expansions, electronic health records, increased outreach and consumer education, and a commission to look at alternatives for covering the uninsured and under-insured with a report due for 2009.
  • Receiving significant bi-partisan support in committees, including a unanimous Appropriations Committee report, SB 1127 would create the Charter Oak Health Plan, offering health care to uninsured residents with sliding-scale subsidies up to 300% of poverty.

Working to build the political will for reform, Health Care 4 Every1 organized a rally in Hartford that brought thousands of people to the statehouse to rally for reform. 

Oregon:  The requirement to gain a three-fifths super-majority for any tax increase has derailed Gov. Ted Kulongoski's proposed "all-kids" expansion - Oregon Health Kids - which would be funded in part by an 84 cent increase in the cigarette tax.  This should caution any state considering such super-majority requirements.  Regardless, comprehensive reform is still moving in the state.

The Healthy Oregon Act, SB 329, which was created by a special senate commission, would offer every resident in the state a health card to obtain health insurance from approved insurers.  The Act includes cost control and quality improvement measures.  The Oregon AFL-CIO has endorsed the legislation, which is on its way to the Ways and Means Committee.

Additionally, the Oregon Better Health Act, SB 27, which is pioneered by former Gov. John Kitzhaber and his Archimedes Movement, made it through committee and will join SB 329 in the Ways and Means Committee.  SB 27 would seek a federal waiver to pool state and federal dollars, including Medicaid and Medicare dollars spent in the state, and reallocate the money in a way that provides quality health care to all residents. 

For his part, Gov. Kulongoski wants to focus on kids coverage and is wary of sweeping reforms, particularly ones that would end the employer-financed system of health care, as the Kitzhaber proposal would do.

More Resources

Research Roundup

Research Roundup

In comparison to other nations, the United States spends more than any other nation on health care without delivering universal coverage, yet consistently delivers worse health care results for patients, according to a report by the Commonwealth Fund that compared patient and physician surveys between the US and six nations (Australia, Canada, Germany, New Zealand and the United Kingdom).

In No-Vacation Nation, the Center for Economic and Policy Research finds that the United States is the only advanced economy that does not guarantee paid vacation or holidays to its workers- resulting in one in four U.S. workers receiving no paid vacation or paid holidays.

One out of five U.S. children lives in an immigrant family, a number that it likely to rise to 30% by 2015, according to new data by the Casey Foundation which highlights state-by-state data.  Eighty percent are U.S. citizens but, because of linguistic and economic isolation, often don't receive the public support they are entitled to that they need to succeed, highlighting the need for better public outreach to immigrant families.

Lower-income families saw their total debt burden increase 308 percent from 1989 to 2004, reaching a total of $481 billion in debt, according to Borrowing to Get Ahead and Behind by the Brookings Institution.  This explosion in debt reflects both positive expansions of credit opportunities for families historically denied credit, but also predatory companies exploiting "information asymmetries" that has left such families with more debt than they can afford.

A new report, Why a Future for the Nuclear Industry is Risky, backed by investor advocates and environmental organizations, emphasizes that a revived nuclear power industry is NOT the answer to our energy needs, since despite massive federal subsidies, neither the safety of new nuclear plants nor their economic viability can be guaranteed.

In a report on Pre-Kindergarten in the South, the Southern Education Fund finds that while Southern states generally rank at the bottom for education, income and well-being, they actually lead the nation in pre-K programs, with twice the rate (19%) of three- and four-year olds in state-funded pre-K and some of the highest standards for pre-K in the nation.  While this is a strategic advantage for these states, the report argues they need to build on it with stronger overall follow-up public school support.

Resources

Minnesota Showdown Over Tax Fairness

Minnesota Budget Project, What's At Stake: 2007 Revenue Proposals

Children's Defense Fund-Minnesota

Growth and Justice, Rethinking Minnesota Taxes

Congressional Leaders Warn Against State Highway Privatization

US House of Representatives, Commitee on Transportation and Infrastructure, Letter to State Leaders on Public-Private Partnerships

Progressive States Network, Ripoff Privatizations--And Why They Keep Happening

TexPIRG, Six Public Interest Principles for Considering Private Toll Roads

NJPIRG, Caution on Turnpike and Parkway Deal

PennPIRG, Potential Problems with Turnpike Privatization Identified

Health Care Progress in Connecticut and Oregon

Connecticut-based Health Care 4 Every1

Universal Health Care Foundation of Connecticut  

Oregon-based Archimedes Movement  

Hope for a Healthy Oregon 

Progressive States Network, California: The Health Care Debate is On

Progressive States Network, Health Care in 2007

Progressive States Network, Universal Health Care's Next Steps - PA & IL Plans

Eye on the Right

It didn’t take long after Oregon Governor Ted Kulongoski signed equal rights legislation for the pro-discrimination lobby to organize a response. The bill establishes same-sex civil unions and bans discrimination based on sexual orientation. Kulongoski, who introduced similar legislation in his first term in the state House over 30 years ago, glowed at the signing, declaring Oregon “a land of equal opportunity for all our citizens.”? But former state Senator Marylin Shannon (pictured) isn’t so hot on the idea, claiming it violates the spirit of the state’s 2004 ban on gay marriage. Joining Shannon’s fight for legal discrimination is the state’s Constitution Party Chair Jack Brown.

Ironically, these two think they are better tuned in to Oregonians thoughts on equal rights, despite both having been overwhelmingly rejected by voters in their respective Congressional races. In 1998, Shannon lost by a resounding 14% margin, while Brown barely made the radar with less than 3% of the vote in 2006. Nevertheless, they’re certain they know who deserves equal rights and who doesn’t. As Shannon said of her time in the legislature, “We legislate morality here every day, and it might as well be ours.”?

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The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
Mijin Cha, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Communications Associate

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Please shoot me an email at jbacino@progressivestates.org if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

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