Minnesota's spending shouldn't grow faster than the economy

Saturday, April 13, 2013

John Spry, a University of St. Thomas economics professor, wonders if lawmakers realize that "what we're really talking about are income tax rates of more than 60 percent for some people," when federal taxes, state taxes at the proposed increase and FICA deductions are combined.

This may include middle-class professionals, perhaps a teacher or nurse whose spouse is an upper-bracket earner, maybe a physician or a small business owner. At the level of combined taxes lawmakers are considering, Spry said, "each dollar of public sector spending will cost the private sector more than a dollar."

You have the dollar that's collected and, at these rates, the extra cost of people "twisting their decisions" to try to avoid those rates.

The goal should be, he said, to have a tax code to raise the necessary revenue in a way that makes the cost to the private sector as small as possible.


Originally published: 04/13/2013, Pioneer Press