A couple of points that I could not squeeze into today's column on Minnesota Governor Mark Dayton's "post-modern" budget proposal.
First: Not a Wealth Tax
Typical of the local media spin on the proposal is sentences like this, "The wealthiest 2 percent of Minnesotans would be hit with a 2 percent higher income tax rate." Probably not. Dayton has not proposed a French-style "wealth tax." He is merely proposing to raise the marginal rate on the existing income tax.
This distinction makes a difference. The "wealthy" already have money. They choose when to take "income" by selling assets, etc. The high income taxpayer is not necessarily wealthy. More likely she is striving to become wealthy by working hard and earning a high income. Dayton is taxing aspiration. He already has his.
Second: Taxing Savings
The Governor's belief that the "rich" are not paying their "fair" share is based on a misreading (or at least an over-reading) of tax incidence studies. Back in May 2011 I wrote about Dayton's obsession with this talking point. Long story short, the "rich" don't pay more because they save money. Dayton is taxing savings and striving.
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