Friday, February 01, 2013

Minnesota Snowbird Tax: Robbing St. Pete to Pay St. Paul

Taxaholic Democrats swept the table in a state where I spent four years of my life---albeit half a century ago---and still have relatives suffering in the snow there at this moment.
Details are sketchy, but the idea is to tax these nonresidents on their income from stocks, bonds, capital gains and dividends if they spend at least 60 days in Minnesota a year. Income earned in the state is already taxed regardless of residence status, but many retirees or vacationers own a home in the state and live there only for the summer.

The new tax would hit income not earned in Minnesota by those who don't currently spend the requisite six months and a day in the state to qualify as a taxable resident. So, for example, if you returned to the land of 10,000 taxes only for July and August, you'd suddenly have to pay the taxman in St. Paul on dividend checks sent to your main residence in St. Pete.

The state Revenue Department won't say how many snowbirders the new tax would hit, but it predicts the tax would raise $30 million over two years. That's barely an asterisk in Mr. Dayton's new two-year budget of $37.9 billion, especially since it may drive more residents to leave the state permanently.

The hassle factor will be enormous, with the taxmen presumably demanding proof of location during the year via the likes of airline tickets and golf or restaurant receipts. When revenue invariably doesn't meet expectations, maybe Mr. Dayton can require a GPS locator for grandma's cellphone.

But then as the Governor's line about "unfairnesses" attests, raising revenue isn't the point of this exercise. The goal is to punish people for the sin of being able to afford to travel south for the winter.
And escape the frozen north north, at least that part without Oil, Gas, or a first-rate NFL football franchise...!

BTW, Wisconsin & Michigan both elected totally Republican legislatures and governors.
The snowbird smackdown is part of a larger Dayton tax grab proposing to lift Minnesota's personal income tax rate to 9.85% from 7.85% on income above $150,000 for singles and $250,000 for joint filers. Congrats to midlevel corporate types in Edina—the Governor says you're rich. Minnesota's income tax rate would be the country's sixth highest.

Mr. Dayton says his plan would produce "fair, progressive and sustainable" tax revenue, by which he means everyone pays more, because he also proposes lowering the sales tax to 5.5% from 6.875% but collecting more money by expanding its reach to everything from clothing to over-the-counter drugs and business services. The $2.1 billion in additional new revenue would finance a nearly 8% increase in state spending.

Minnesota Republicans were wiped out in November's elections, so the Democrats who run St. Paul will have to decide if they want to define themselves as tax increasers the minute they get all the power. Then again this is what Democrats everywhere do these days.
So in the land of 10K taxes, you have to freeze to avoid a surtax imposed by Emperor Dayton. His Target Store chain makes him not worried about higher taxes on himself, much like Sen. Kerry, who docked his boat in nearby tax-friendly Rhode Island. Rich Dems are arrogant monsters, eh?

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