Progress on Progressivity

Minnesota's legislature has taken an important step towards a fairer tax system. The state House and Senate both passed legislation that would introduce a fourth income tax tax tier which would be targeted to upper income taxpayers. The Senate proposal would add a new 9.7 percent tax rate for those with taxable income over $250,000 for married couples ($141,250 for singles). The House proposal would introduce a 9 percent rate on taxable income above $400,000 for married couples ($226,000 for singles). The editorial board at the Minnesota Star Tribune eloquently expresses its support for the legislature's plan. Governor Tim Pawlenty has threatened to veto any tax hike - but as one commentator points out, Pawlenty's "no new tax" stance could really just mean Minnesota will continue to increase its reliance on regressive user fees to fund public investments.