GOP state representative John Angley who is challenging Governor Qui for the Republican nomination for governor next year agreed several weeks ago to appear on today's broadcast. But dude, what makes up in his campaign schedule he cancel the broadcast to appear with a group of supporters in Bemidji today. So we're happy to have with us to guests who were able to make their plans on a brief notice and come here today Revenue Commissioner Clyde Allen and the state senator, Jeanne Marion the dfl her it has of course been a very busy week at the state capitol.Dfl those who control both houses of the legislature put forward their proposals for balancing the state budget this week while the House and Senate dfl plans contain different elements. Their basic approach is similar and quite different from Governor quease frankly. None of the choices are very pleasant, either for the politicians or for the taxpayers property taxes will go up for certain next here somewhere around 30% The experts say regardless of what the legislature does now and the key question. That's the legislators are now grappling with is whether income or sales taxes should go up as well to help pushing the effect of cuts and state payments to local governments and school districts. The governor opposes increases in those Statewide taxes. Do you have Elders say it if those Jack says do not go up the burden of paying for local services will fall on the Fairly on property tax payers.Are Studio gangstas noon will help sort through some of those various ideas and the philosophy behind them Clyde Allen Lee Revenue Commissioner is responsible for collecting most of the state taxes that we pay he testifies frequently before a legislative committees on behalf of Governor Queens proposals state. Senator, Jeanne Miriam lives in Coon Rapids. He is a dear seller an accountant by profession and a respected member of the Senate tax committee, which of course will be drafting the tax bill later in the week. Do you have filters have a large majority in the Senate? Of course, they are likely to push through a bill that reflects their philosophy not that of the governors.Gemini like to begin by asking you why it is that it appears that the plans that both the governor have made and the dfl have made seem to strike at the very Cornerstone of each other's philosophies of the past 10 years by Adele on the dfl has consistently pumped more and more money from the income tax in the sales tax and local government budgets and School District budget send direct property tax relief all of that in an effort to keep property taxes low and the administration plan has made its deepest cuts in those particular areas. Now Center to Marion the governor by contrast is made income tax indexing the key part of his program yet. The dfl hers are both making major changes in indexing. The one thing the governor has said he will veto repeatedly said he will not accept that why is each side effectively trying to go or the others Ox lie down with start with you. Well, I think there are three basic reasons why we made the proposal we did. First of all of going way back to 1979. There was a general recognition that income taxes had gotten too high and they were causing a real competitive the problem for the state in terms of its economy and job creation and what have you so we made major changes which reduced those taxes dramatically last spring you may recall in view of a shortfall in Revenue. We were forced to undo some of that tax relief not all of it, but some of it now faced with another budget problem due primarily to the falling National economy. We felt it was not proper at this time to take away more of that tax relief legislative in 79 at the same time. We saw that over the last few years. There had been dramatic decreases in many people's property taxes particularly of the homestead type of property tax. We thought frankly that the balance had gone a little too far in One Direction and that that's where some of the adjustments should come this time. So that's what lettuce to the to the basic change that we proposed no changes in the income tax, but let's undo some of the property tax relief that had been granted the last few years. Saturday Miriam, why did the dfl go after indexing? The one thing that the governor has said is his most important program, I think correct you are you characterize it as a major change and indexing what we're proposing and we know how strong the governor feels about about indexing in the end. I have heard his veto threatened and recognized it indeed. We can expect a video for making major change in indexing but don't think that's what we have is is is our proposal we propose and when I say we know I'm talking about the dfl caucus states to raise price 165 million. From income tax the way you were doing that is to is to not to alter the ongoing effect of indexing not to put a moratorium on indexing but to spread the brackets back if you understand what indexing does it compensates for the effects of inflation by spreading brackets because the nature the progressive tax system is there's a moving to Ohio brackets for your marginal rate of income tax increases. And what we're proposing to do is to is to spread those brackets back. Let me explain why when we enacted indexing in an 79 proposed in the legislature passed in the law indexing. We did it being virtually the first state to do it. We did it in a way that essentially over-indexed and I think the governor agreed with that. I think the commissioner would probably agree with it. but we made a change to correct that indexing formula that goes into effect next year. 365 million that we're proposing at this time is simply to put in a place prospectively can of a retrospective adjustment indexing the amount that would have been raised had we made that correction that we made this position when your earlier Clarion I don't quite agree that that we need to go back and adjust the system. There are no perfect tax laws. We are always searching for the best approximation of what we think is a proper system in the end what we can get through the legislative process meaning the legislature and the governor. So when we talked about backing up, I guess I think we got to be looking forward. Let me make a point both the House and Senate bfl plans, which talk about backing up into starting this so-called adjustment of Correction couple years earlier rely heavily on the assumption that there was something wrong with indexing. Indexing was not perfect. Nor of the whole tax was perfect. They never will be but I don't think you can simply say let's back up and try to make them a little more perfect retroactively. If you were to fall that philosophy, then I would suggest that we back up all the way to 1971 which is the last time that our current tax Schedule was adjusted through legislative process aside from a few minor changes. The last time that tax Schedule was went through the legislative process was in 1971. We allowed it to sit in plays for roughly 10 years during a. Of time when inflation ran rampant and caused huge amounts of unintended taxes to be paid. So we want to start backing up to adjust things. Let's not just back up to the adjustment we made last year and set it up a year earlier. Let's back up and look at the whole system all the way from 71. If we do that, I think we will find that the system collect. Huge extra amounts that would never intended and where to look at it in that context. Junior and you want to final shot on indexing? Well, I just make the point of cannon that Bobcat the The Proposal that we now have that you know what it should come as a surprise. Nobody that the Democrats are supporting income tax increase in Republican Governors espousing property tax increases. I think that's a difference in philosophy of the two parties at 3 of it. But the point again is that I was surprised to hear the governor coming back so quickly with the threat of a veto and because I think it was done before they really understood what the proposal was, but it doesn't doesn't remove indexing. It doesn't put a moratorium on indexing. It just spreads the back at the brackets back. 13 minutes past 12 noon or talking with state. Senator Jeanne Marie on the dfl her and Minnesota Revenue Commissioner Clyde Allen. We would invite you or listening to call in with questions or observations. If you like on the state budget problem in the various proposals that are being talked about to solve it in Minneapolis-Saint Paul. The phone number to call 227-6002 to 276 thousand in the Twin Cities elsewhere in the state of Minnesota. Call us toll-free at one 800-652-9700 that toll free number again for people to live outside of Minneapolis-Saint Paul one 800-652-9700 I wonder to what extent both sides have box themselves in on this whole issue at this point. There is really a week maybe 10 days left to find a solution. Can it be done not like the time I believe it can and I believe it's going to take some compromise and we have to take make some compromises with it within ourselves as a group to come up with this proposal me personally. I feel that the cuts that we've still got a much better than the governor's proposal are too deep. I think that we have to have additional Revenue sources, but at the same time, I think it has to be recognized that it's going to take a balanced approach. Nobody's going to be happy. But there's got to be something here from everybody and I think it can be done. Bye-bye to think it can be done all I want to point out. One thing the real item that has to be solved in. This special session is our immediate cash flow situation. That was the real purpose for which the governor called the legislature into special session. And while I think it's quite proper that we be looking at the total financial problem and trying to deal with what aspects of it. We can know the less. I think to some extent the immediate cash flow situation has gotten lost in the discussion of the overall problem and I would like to call attention back to the fact that the real item we need to deal with in the special session is the cash flow situation, but I too am very hopeful that there is room enough to and negotiate some things that could indeed be settled by the end of next week. If you looked into a crystal ball what sort of shape would you see that final package taking Well, I think that. It's going to have to revolve more around the type of cut that the governor's proposed rather than revenue-raising measures. And the reason for that is that while I to recognize and while the governor certainly recognizes the need for for compromise, we do really feel like part of that compromise actually took place last session we had to raise taxes or take BART and take back part of the reductions have been legislated before and having done that. We now feel that the solution has to deal primarily in terms of cuts. So while I think compromise is necessary, I think we feel with part of that compromise has indeed already been legislated last session Saturday Miriam crystal ball is still pretty murky at this point. Hard to say exactly what the what we can expect are there so many different things being talked about this point that we think that the proposal we've got at this point while I'm not personally entirely satisfied. I think it's better than any of the alternatives are seen and hopefully it'll be something close to that. I'd like to make a point to hear that we sometimes set up the confrontation between property taxes versus income taxes. And while they certainly are two different taxes in many cases their paid by the same people in much of the property tax relief that has been given out over the last few years has indeed been paid through income taxes by those same people who then got the property tax relief know certainly there is some redistribution based on income and what have you no one will deny that but to a large extent much of the property tax relief that has been gained by people. They have paid for a literally out of their income tax pocket and I think we all Be very careful about pointing that out and trying to analyze that is a is a complete tax picture instead of setting up a confrontation between the two kinds of taxes. We have listeners on the line with questions for our two gas. Let's go to our first caller now. Hello, you're on the air. Yes, I have some really cool points to make our questions but one regarding the level of the property tax is not correct that it is. It is falling from a 2% of market value for the 1% range and wouldn't be a proper settlement of an issue of this kind to to decide at what level is the is the correct level and then and a lot of taxes to confirm accordance with that? My second part of my question regards to people who write Apartments it seems to me that has great concern over the impact of property taxes that something should be done for writers who don't answer all benefit from the homestead Provisions. I would guess that a study was done. It was a fairly new apartment and home. The gentleman has I think two very good points property tax levels for homeowners have fallen in the in the terms. He mentioned we have come down to about 1% of market value for our Homestead Property in a little less than 1% for Farm property and you might compare that with a Proposition 13 in California a few years ago, which was intended to try and get their taxes down to about one and a half percent of market value. So the gentleman is correct and I might give one example Homes, for example the average home in Minnesota in 1977 was paying $561 in tax if you take 1977 constant dollars. And look at what the average home would pay next year 1982 after the governor's proposals that dollar amount would be $397. So allowing for inflation there have been dramatic decreases and the gentleman is correct with regard to his point about apartments. There's no question, but what the taxes on apartments have increased the last few years because they had been treated a little differently in terms of the tax relief from some of the other property. Although on the other hand. I would point out the renters are eligible for a property tax refund based on 23% of their rent. And from studies that we have conducted we have found the property taxes on apartment property actually runs about 18% of rent. And so while the taxes are running high on the apartments there actually is perhaps a little more relief granted going to the doctor be through the property tax refund system and there's never some room for discussion in that area. Gene Raymond the observations. I agree with the commissioner of the renter's credit. We do have a different level of assessment for residential rental property. It's the it's not as low as though is the Homestead but it's lower than other types of commercial property. Would it be possible as He suggests to set arbitrarily and state law of percentage Market of market value for property tax and simply let that apply state line. The problem with that is that the any type of level of Taxation that you said is going to be dependent upon a lot of things. Are you you know, what other people say the opposite start with the income tax to decide what you want there and let everything else fall in place and in the process of putting together a 1/4 of all a budget that level address of the level of expenditure and then the level of Taxation. It's really a question that those two things are arrived at simultaneously. There is no magic formula the same thing within the the mechanism for collecting net revenue the proportionate share between the types of taxes income vs property vs. Sales together with the who within who among the taxpayers with any of those types of taxes are the appropriate level is he is extremely complex. I don't think you can say that will ideally that probably text would be X percent and everything else will fall in place after that. I agree very much with jeans comments on that. I referred to California earlier, California did have a form of tax limitation in place and it was based on market value really and it really did not satisfy the need Market values increased so dramatically that even within that limitation there was plenty of money and in fact much more money than the people ultimately decided they wanted in the past Proposition 13. So it's much more complex problem is Gene indicates them simply have setting a limit more callers what you more difficult to compare percentages of market value now vs. Some Prix in the in the past the assessment practices of change tremendously and instill within the state the level of assessment to market price very very significantly. So it's hard to collect the appropriate day that we do have formulas to do that to try to equalize all those factors, but it's still very difficult. Assessment still at a local practice. We have more listeners with questions and comments. Hello. You're on the air. And ask one question one of the gentleman. Big Rapids to going back to 1971 will now you're talkin Dave when the fake had a surplus and I want to know if either of the gentlemen would recommend giving out a $50 rebate again if we had a surplus or if they would take that Surplus and put it into they revenue-producing Vines and I have a question while I guess it's more of a statement. I think I would rather see more property tax. Then I wouldn't come tax and the reason for that is an income tax is kind of a pain with tax and that it only increases your paycheck by a couple of back a week and you can forget about it. Where is the property tax you pay at once a year and lump sum and it hurts five or six hundred or maybe $1,000. I think you're more inclined to pay attention to what the government is doing with your revenue of a surplus. We had in 1971 and indeed they had all the way through the the decade of the 70s certainly is good responsible government not to budget yourself into such a margin that a very small air and throw you into a deficit position because you can't run a deficit government program on a state level the Surplus is that we did have although you can talk about hundreds of millions of dollars and it was up in the 400 million that one time when you can trash that against a total budget of in the neighborhood of a billion, it's not a terribly significant number I think good business practice would dictate that you have a surplus of that magnitude that became a campaign issue. Certainly, if we if and when we get ourselves back in the position where we have a fund balance or a surplus or a rainy day fund. I wouldn't Advocate that that be returned to the rebates unless it gets to be a terribly excessive number. I don't think we ever approached that they just want to comment on the idea that the property tax hurts. I would agree with that. I'm not so sure that the income tax doesn't hurt people can see the withholding from their check people have to file a form that lays that number out very clearly. I guess it goes back to the basic question of your philosophy of of who should pay if it's based upon a billy to pay. Although the property tax is somewhat correlated because people with higher incomes tend to buy a higher price homes, not necessarily. So because of the factors of inflation that that put people into higher priced homes, perhaps after their income level has dwindled are certainly not kept pace with the level of inflation near the thing is that the property tax goes on whether you're making money or losing money employed or unemployed. I'd like to add to that. I agree with jeans comments basically on the Surplus. I think that this nation is a whole is in for some volatile economic times. And I think that makes it mandatory that government have some reserves built up and I distinguish between a reserve in a surplus is getting indicated surpluses have become campaign issues and perhaps they should have I Define the two different in this way Reserve is an amount that you think out very carefully and put into legislation and say that we can only estimate so accurately and we need a certain Reserve to protect ourselves and you provide for financing that reserve and being sure that that amount is there anything that develops over and above that then is a surplus and you have to give it back. Now the gentleman asked about giving it back in the form of a $50 rebate. I don't really favor that approach to it. That's dramatic perhaps but I think it's surpluses develop you look at what you have at the end of the year. Consider that with all the revenues you expect for the next. And see if you can't cut the taxes a little bit in a methodical way and give it back rather than through the rebate system with regard to the property taxes being visible to gentleman's point is certainly a good one. Although I think there's one exception to that in this sense the property tax relief that we have granted. The last few years has gone primarily to the Homestead Property and as we talked about earlier, we have decreased those Homestead taxes. What has happened really then is that the services and the cost of local government has increased but we have said to the voters. We're reducing the cost. We really weren't we were reducing that part of the cost that was paid through the property tax and thereby giving sort of an artificial picture in mean while we were providing the remainder of that cost through the income tax in through the withholding which is not quite so visible as the gentleman indicated. So I think while he's right the property tax is a little more visible some corrections need to be made to make it even a little more visible and that again is one of the reasons why we concentrated on some of the property tax changes in the governor's proposal. 28 minutes past 12 noon, I guess sir, Minnesota Revenue Commissioner Clyde Allen and state senator, Jeanne Miriam odfl her. We have some telephone lines open in the Minneapolis-Saint Paul area. If you have a comment or question, we invite your call at 227-6002 to 76 thousand and outside of the Twin Cities area toll-free. 1-800. 652-9700 caller is standing by hello. Go ahead, please. Thank you. For a both of your guests and one for Senator Miriam. The first question is a how regressive is the Homestead Property Tax given the circuit breaker and isn't Homestead Property of former. Well that should be taxed now particularly since we have nearly eliminated a state taxes. The second question is what's wrong with calling for public employees to take a temporary paper? I'd like Republic Airlines has asked its employees to do to help us get over this hump. And the third question is threat to the senator Miriam fly shitt only a third of the present shortfall come from budget cuts rather than 1/2 or 2/3. Thank you. All right, you've given us some Grist for the mill. Thank you for calling first of all on the status of the homestead tax given the circuit breaker. It's regressivity to Miriam. Show me the homestead tax get given the credits and given the circuit breaker. Mechanism is made more Progressive. No question about that. But those are exactly the things that are now being proposed by the governor. To be reduced the circuit breaker and they end the homestead credit on the question of of the of the public employees. I'm not convinced that we are to expect public employees to f after having negotiated a contract to. Be tax themselves for a problem that belongs to the whole state. It seems to me that what you do with the taxes. You make everybody Sharon the problem, but you do with a cut back on the salaries of the public employees you make you single them out for participating and everybody's problem. Well, first of all, I'm gonna lie part of the question about the regressivity of the of the homestead tax. I think we have taken much of the regressivity out of the property taxes particularly for home stairs and indeed I guess there's no perfect measure of what's regressive and what isn't but I think you could argue very convincingly that Minnesota has the least regressive property tax system in the country with regard to the property tax refund while indeed the governor has proposed some changes their mind. The standing of the Senate proposal is it is identical with the governor's so whatever he proposed. I understand that they think that's really good proposal in regard to the pay cut night. I agree with Jean. I think we need to do some things to try and slow down the growth of government and that means getting along with fewer people but I guess the philosophy that I think we ought to follow is to say to our government employees. Look we think there Good people here who know how to do a fine job. We want to see that they're paid correctly. And at the same time in return we want to say we want you to keep trying to perfect your own ability to do a good job. We want you to turn turn up more quality. We want you to turn up more quantity. I don't think they ought to be treated any differently than people in Private Industry. And if I were running a department in some company and Private Industry, I'd be exposing the same philosophy. I don't think they ought to be in a different situation. I recognize full well that in some Private Industry today there have been some cutbacks in actual Salvage but it also recognized that in some parts of the government particular state government. I think some increases in the past have not kept pace with some parts Private Industry. So just complex question, but my own style in that area would be pay well for the people you can afford and then demand a tremendous output from them. And I think his third to question directed to you Saturday Miriam was Wyatt just one-third cut in the in the budget. Why not make it half 3/4 or more? Correct. What I think is a common misconception when we hear talk about the Senate's one-third one-third one-third proposal. That means that the three items are being addressed Cuts tax and state tax increases and property tax increases. It's not a proportionate one-third one-third. The actual figures are cuts of 265 million tax increase the 350 million state tax increases sales tax and income taxes a couple other more minor taxes and property tax increases or reduction and state property tax relief programs to the extent of 144 million. If I could make one other comment about to acquire the Commissioners what I think you said was it the governor's proposal in the Senate Proposal with respect to the property taxes were the same or is it with respect to the circuit breaker portion of it the property tax refund? The jackery. Alright, let's move on to some other listen to those questions while you're on the air. Dunder Jasper gem go ahead. Nice to hear from you. We got the feeling you get before are from a different planet and not the real world. Out here in the real world free game planner area corn prices are down all prices are done beef prices. Everybody's taking a lick it and we're taking pay cuts. I had to cut the radio down so I could not find out what the answer was about employees taking pay cut. We know the people in in Industries are taking pay cuts. Just a hold on to their jobs some dipping into their savings. So why don't you people come up with an index to adjust Appropriations to income? Okay. Well, that's an interesting question because we are addressing that problem. One of the problems that state government has today is that we cannot guarantee our only income is the national economy fluctuates. The revenues to come to state government are going to fluctuate because Farmers incomes are down. They don't pay as much wage earners or sometimes unemployed and they don't pay as much so government cannot guarantee its own revenues, but at the same time we have developed a system where we have tried to guarantee the money we're going to pay out three-quarters of the money that state government takes in goes right back out to somebody else to individuals the local unit of government or what-have-you. So we don't spend most of it ourselves and we've tried to guarantee you what we're going to pay out even though we cannot guarantee what we're going to take him. Then I have to give credit to some of the local units of government because they can recognize this problem and they have said why don't we change the system a little bit Can make some of the payouts dependent on what the state takes in and I think that's a concept that got to be explored and indeed. We are working with that concept very intensely right now to prepare some proposals. So I think the gentleman has a good point and I think he's going to see you some suggestions brought forth along that line. Well, first of all, I'd like to suggest that most legislators live in the real world. We're very much aware of what's happening out there in the economy both respect to a corn price St. In the unemployment rates and everything else that makes very good argument for foreign income tax when corn prices are down and Farmers. Don't make him come they don't pay an income tax. I think that's hardly the time when we've got those types of problems out there with with high interest rates and with the low corn crop prices that we had to go jogging and terms about the 61% increases in farmtek a farm property taxes and yet that's what we're looking at with it with the governor's proposal. Secondly this conception about living in the real world. I guess I would really invite people to come and listen to the people that we deal with and we're talking about cats. First of all, we went through major Cuts in the last session of the legislature before we had this 700 million-dollar crisis we have now just to put the budget balance before that shortfall. We went through major Cuts. If you could hear the people or visit the nursing homes and see what cuts in those programs mean if you can visit the schools and find out what cuts in those programs mean. I don't think that anybody can suggest that we're treating the taxpayers money that we need to run those programs is some type of a deep. Well from which we can continue to draw very definitely not real Cuts have been made and are being made. But I don't think we can expect to cut the education programs in the state and cut the other program to take care of many many people in the state to sit to the to the full extent of this budget shortfall of 700 million and expect to have decent programs that we need and require in a society. 22 minutes before 1 dfl Senator Jeanne Miriam Minnesota Revenue Commissioner Clyde Allen Our Guest today answering your questions. Hello. You're on the air. Like the direct smile a remote to both gentlemen, and I'd like to give you some concrete situation that I would like you to address yourself to we moved to Minnesota Minneapolis in 1975. And we bought a house in the lake area twitch quite a few people on a fixed income and so are most of our neighbors paid taxes at that time where higher than what do they use to another state in the meantime, if you know the inflation at the value of the house considerably And consequently our taxes have gone up and particularly the last year since I was texting the limited market value was eliminated and we are no paying taxes on the actual a market value on the assessment and I'd like to tell you the amount has not risen to $3,500 paying like $2,850, which is enormous and some of the neighborhood very distressed to hear that. We may even have to pay much more than we have to paying so far. What what is really happening is we are living in a home that we could never afford to buy now and yet you're paying taxes. On this enormous 2500 of the house that is too much for us and tell me what we could do in a situation like that. It wasn't happens when my baby is come does not go up proportion of people in that situation. All right, let's get the response of our guests to that. Well, there are two responses. I would make first of all the way judging from the level of the tax. That is a home. I'm sure it was a fairly large market value and I think I probably know a proximately which is Lake area in Minneapolis that hits in I think when you have a home that the indeed has a a great deal of value, you have to expect to pay a fairly good property tax on it, but I want to make one of the point in this is a significant one. Young lady mentioned the limited market value that applied at the time that they bought the house in which no longer applies. The limited market value was a concept which was enacted in the early 1970s to try and hold down the taxes on homes and Farm property and some recreational property in many ways. It created two things that created a very faults picture of what the property taxes should have been had property been paying its fair share and secondly, it actually caused some increases in some property taxes. That's a long story. But the point is it was sort of an artificial device designed to hold down property taxes. The court decided that it was unconstitutional. In fact, it decided that the day I sat down in my chair is commissioner. So it was the first problem I had to deal with but the court decided it was unconstitutional and what then happened was that we had a tremendous amount of market value Unleashed essentially on which the property taxes then fell. Because Market values had gone up much faster in some areas than in other areas and on some types of housing. They have gone up much faster than other types of housing the burden of that Court decision fell disproportionately and homes in this Lake area that the young lady talks about where some of those that were hit hardest so partly what happened we gave somebody a false sense of security at the time they bought their house through really an artificial means of trying to hold the taxes down and I think we ought to learn some lessons from that and not let that happen again. It's painful this location that she's talking about to be sure Gina ran over. In fact that the lady's specific personal circumstance was almost exactly the hypothetical that's the regressive nature of a property tax. No matter what your level of income is based upon evaluation that that home which may have increased at a much more significant than your own personal ability to pay that text. That's the inherent problem with the property tax. I think people forget memories are short that a decade ago the major item that led to what we call the Minnesota miracle that we're now seeing dissipated or certainly reversed is a property tax payers Revolt in the state because of people literally being taxed out of their homes. In the not suggesting that were there yet, but we're moving in that direction. Once again, what is indexing was an income taxpayers revolt? I suspect to some extent was certainly. With more listeners with questions with go to my next caller. Hello around the air. Me and my friends and relatives have declined a salary increase because it would only push them into a higher tax bracket and not a real increased is this not the position to be taken to increase tax revenues keeper increase the number of jobs keep the state's oven and at the same time reduce the extremes between great wealth and poverty. Well, perhaps I can try that one Bob. First of all, I would have to point out that despite the fact that I think they were changes needed in our income tax system and I strongly support indexing the system is not such that you would lose money by accepting attack a salary increase indexing tries to be sure that when you get salary increases government isn't taking a larger share than it really intended to but it certainly is not going to leave you worse off. If you get a salary increase you are still going to end up with certainly a significant portion of that increase and 21 returns down increase thinking they're getting out of taxes that there's something wrong there. I hope I understood the question, right? Any comment on the regressivity definition that? Well, I think a regressivity can be can be defined very easily regrets every means that the degree to which the tax to be exact. It is not dependent upon the ability of the text. Pet. Or just need another way. I text based upon ability to pay is Progressive a text. It's not as regressive. It's not all black and white all the taxes are run the Spectrum different degrees of regressivity in progress City. I would agree with the definition on the other hand trying to come up with a practical tax system. Even after agreeing on the definition is not that easy. For example, there are many people who may have had a very good incomes and I may have purchased very very valuable property during that. Of time and now those incomes have decreased to do the retirement or whatever reason you may have and so those people still have great wealth tied up in their property and we're saying somehow that because they no longer have that income. They should have still very very low property taxes and there certainly is some good arguments to that but I'm not sure that you can simply make it a simple situation that it says the total property tax out to be dependent on the income. Would you extend that analogy to Farms is value have also gone up significantly and yet the land itself produces the same roughly amount of the food stuff. I try very hard not to get anybody angry at my answer. But yes, I would extend it somewhat to farms in this sense that I hear many farmers say G. I used to pay only so much in taxes, and now my taxes have gone up double or triple in some cases the amount of acreage. They hold has gone up dramatically. They have done a good job in managing their farms and they have built up additional wealth in terms of additional acreage. They've got a lot more than they started with and if someone indicated earlier that we have indeed made it a lot easier for those families when they do have to pay an estate tax. We made a lot of Leah lot of tax reductions in the estate tax area when when property passes from one generation to another that's just Help for those people, but with regard to the property tax, I think we have to recognize it when their acreage goes up. And when the value of that acreage goes up indeed. The tax does have to go up so much. change your view that well to a certain extent it's it's it's a it's a question of Degree, I think I think you got to be primarily dependent upon that ability to pay. I think you need some type of property tax. Dad to make our mechanism work system most of the state and local governments. But I think that the given my druthers I'd rather see that this problem dealt with through more Progressive forms of Taxation in the property tax with lots of college with questions. So let's move along to the phones. Hello. You're on the air. Bandit and the lotto store I have been very unhappy about State spending is the fact that state money has been actually used for evil person. birth control and feminism women's shelters I want to know is have such programs received at least a fair share of the back. I can assure you that those programs have received a fair share of cutbacks. Move on J. Clyde any kind of jeans, Okay. Hello. You're on the air. Go ahead, please. Dfl Tax Services Engineers advertising it legal services. It seems a bit ridiculous to me. One thing that concerns me very much and I happen to know that's all you're going to do is to drive these corporations to eat. Number one either hiring corporate console that don't have them or go out of state to hire legal service console. I don't I really don't understand this question driving so I can't see texting the people with problem marriage dissolutions Estates and tax problems. It seems that it's a very very very indiscriminate act against people with an Indigent positions in with legal problems. If I just think it's unfair, I really do sooner Miriam. Well, I guess the basic questions to be asked let me point out. It's not just Legal Services. It's engineering architecture and business services, which I might point out includes accounting fees. As well as a number of other services you are an accountant. I'm a little nervous about it moving this this quickly on and what's a major tax change again given my druthers. I'd rather see that come out of the income tax, but I think it needs to be raised in to question. Whether that's a a progressive tax or not I think that you know when I don't have studies to back it up, but just intuitively that people that can afford to pay hire accountants attorneys engineers and Architects Etc to a much greater extent than people that are poor and destitute is the is the color would suggest Is this done another state? I can guess I would defer the commission. I'm not sure what the there are a few other states that this kind of service but by and large of these services are not taxed in most of the states is this something that the administration strongly opposes or is willing to accept this is something I think that the administration is still looking at as a particular tax proposal. We still oppose the the idea of raising the taxes I think about a hundred and twenty million which is the estimated amount that would come in from the Senate dfl proposal. So on the grounds that we feel again, let the most of the budget problems should be solved by cutting we would oppose it simply as a tax increase. We have not finished analyzing it fully I guess if it was going to be a tax increase on its own merits but we we oppose it based on the fact that it's a tax increase we do not be. You should take place at all or listeners with questions for a to gas. Hello. You're on the air. But they seemed Overlook possibly purposely at the very basic problem comes from too much spending. So if you can cut this pending, he won't have to worry about text to choose now. I realize I've talked about certain things can't be cut too much too. But there is a certain amount of waste dishonesty inefficient. I needed programs that they should be able to cut out of their efficiency. For example on the state income tax. They could give an option of just a 1/2 sheet form where you pay X percent of your Federal Form and you're done with that. We could eliminate a tremendous expense in the state tax department there, but if you can't find enough sources Savings to buy these things, then you should go to the fairest way to tax and it is basic tax upon where it is used up on how much it's used for in Sim setting. The fairest actor is is the taxes related to the use of Highways such as license and gas tax. So change your property tax concept to strictly be expenses taxes for the expenses related to property such as fire and police for other things such as schools where the states and even the federal seem to want to set the requirements to provide the money for them. Let the state set the basic requirements for education in the state and provide the money for such them for anything over and above these basic required courses Let each district decide on its own whatever it wants them and then indeed to pay for them. We have salvations on that channel on. Junior am the first of all I dealt with a lot. The first thing is his idea for simplifying the Minnesota tax income tax by making an expert of the federal. I applaud because I have been carrying a bill to do that almost for the entire seven years that I've been in the state senate is a practicing CPA at the when I came into the Senate. I felt for a long time that are income taxes unduly cumbersome. And I think he makes a good point with that and I think that it could be done much more expeditiously by using a percentage of the Federal Form the idea of a fair tax being a user text on some things I would agree. That's basically the way we were hunting and fishing programs think like that. We like license fees and the people that participate in the programs funded programs. I wouldn't agree with that across-the-board and everything. Otherwise we get down to a head tax for sending kids to school and things like that. But to some extent of used text is appropriate Brandon gets minimally appropriate these schools what he describes as is pretty close to what we have now setting the basic requirements the amount of requirements that are that are set by the FED in the state. I think of large has been exaggerated and and become somewhat of a mess the basic the curriculum programs of schools are decided and appropriately Sue by local school boards, most of the money for General operating expense the right now runs in the area of 70 to 75% state-funded and about the 20% milk refunded and in the end I go to 5% federally funded. I don't think what he describes you're too far different. We have quite a gentleman did Cover a lot of items. First of all with regard to spending cuts Administration has concentrated heavily on spending cuts. 197 billion dollars out when we had a budget problem in August of 1980. We cut that well over six hundred million from the budget request in January. We could another hundred and forty million when we revise the budget in April and we have now proposed to solve the current Problem by cutting State spending at well over seven hundred million dollars that in turn we recognize causes an increase in local property taxes, but that again puts pressure on the local you want us to try and cut their spending. So I think we're speaking to the gentleman's question regarding the piggyback income tax. There's a lot of marriage to that. I simply point out that the federal government legislates for the country at large and we are going to have some policy differences I think in Minnesota and if those could be worked into a piggyback system or at least as much simplified system, that would be fine with regard to the final point. The gentleman made on state spending for schools believes and I think it's certainly I decide what is a good quality education for each child and they State how to finance at what combination of state and local taxes. But then beyond that we should give the Local District more freedom to raise an additional money. If they feel some other items of spending are what they desire trailer just about run out of time. Wish we could keep going but other other programs are coming up and we have to we have to leave but I want to thank you very much for coming in and sharing with us some of the arguments that will be going on up the capital next week some of the Year discussions that will be taking place both publicly and behind closed doors is you all try to come to some agreement on this whole mess Before Christmas holiday Our Guest Revenue Commissioner for the state of Minnesota and the FL state senator, Jeanne Miriam who sits on the Senate tax committee.