![\"\"](\"http:\/\/farm5.static.flickr.com\/4108\/4952020177_a626ccd1ff_m.jpg\")
<\/p>\n
The editorial starts out with a half-squib…:<\/p>\n
We urge Dayton to reconsider and the Legislature to reject a sales tax on business-to-business services, a tax idea the Star Tribune has long opposed. While expanding the consumption sales tax to a larger share of the economy and reducing its overall rate, as Dayton proposes, is sound tax policy, taxing businesses’ service inputs is anything but.<\/p><\/blockquote>\n
The lowering and broadening the sales tax is a fine idea, but broadening it to the point where it takes $2.2 billion more out of the state economy during a recession is just plain stupid.<\/p>\n
But taxing business services?<\/p>\n
Messinger<\/del> Dayton may have done the impossible: \u00a0forced the\u00a0Strib\u00a0<\/em>and me into a common cause.<\/p>\nWe’ll get to the common cause. \u00a0First, the Strib\u00a0<\/em>accurately describes the inevitable consequences of this tax plan in a way they never did with the Governor’s personal or political record, which shows, I guess, their priorities, but better late than never I guess<\/em>:<\/p>\n
A tax on business-to-business services would distort the choices businesses make about purchasing or keeping in-house accounting, legal and computer services. It would favor large companies with big back-office operations over small firms. It would put Minnesota engineering, architectural, scientific and consulting firms at a disadvantage. And it would turn the sales tax into a price inflator of every Minnesota-made product through a process economists call “tax pyramiding.”<\/p>\n
For example, a law firm would pay tax on its cleaning service, and add that cost to the legal bill it sends to a trucking company, which would pay tax on that bill and pass the cost on in its charges to a farmer, who would pay tax yet again on the whole accumulating amount. At that point, the state’s long-standing policy of not applying sales tax to food will have faltered.<\/p><\/blockquote>\n
To answer the inevitable question: \u00a0of course\u00a0<\/em>the\u00a0Strib<\/em>\u00a0editorial board is acting in its own enlightened self-interest:<\/p>\n
Consider the impact on one particular industry sector — one this Editorial Board serves and understands well — advertising, information and communications. Providers of those services together employ nearly 68,000 Minnesotans. Many of them serve clients outside Minnesota and compete with rivals around the country and the globe.<\/p>\n
The American Association of Advertising Agencies ranks the Twin Cities ad industry ninth-largest nationally and second-largest in the Midwest. It reports that none of the top eight markets have a tax commensurate with the one Dayton proposes. A cautionary tale can be found in Florida, where in 1987 a sales tax was placed on advertising and a range of similar services. An advertising boycott quickly ensued. So did a repeal of the tax, only six months after its passage.<\/p><\/blockquote>\n
It could certainly happen here. \u00a0Of course, the spending that’s being matched with that revenue under the
Messinger<\/del> Dayton \/ DFL budget won’t get repealed any time soon…<\/p>\nBut here’s the issue where, for the first time ever, I find myself on the same side of the barricade as the Strib<\/em>:<\/p>\n
More than large enterprises would be affected. Sole proprietor David Aquilina, a “strategic storyteller” whose PR business is based in Minneapolis, said he would be contractually obliged to absorb all of Dayton’s proposed 5.5 percent tax.<\/span><\/p>\n
“I will have to pass along the full cost of the tax to my employee: me,” Aquilina said. The proposed tax “would effectively impose a 5.5 percent cut in the top-line revenue of my business and in my income.”<\/p><\/blockquote>\n
The tax would apply to lawyers, accountants, cleaning services, networking jobbers, PR flaks like Aquilina – and freelance IT architects like yours truly, who frequently work “corporation to corporation”, and have nobody to pass the cost of the tax on to. \u00a0And it\u00a0will\u00a0<\/em>favor the big IT solutions shops, who can absorb the extra top-line costs and pass them on – although they won’t be much happer about it that…<\/p>\n
…I almost choke to say it…<\/p>\n
…the\u00a0Strib<\/em>\u00a0and me.<\/p>\n","protected":false},"excerpt":{"rendered":"
The\u00a0Star-Tribune\u00a0editorial board\u00a0brutalized\u00a0a key component of the Messinger Dayton and DFL tax plan over the weekend. The editorial starts out with a half-squib…: We urge Dayton to reconsider and the Legislature to reject a sales tax on business-to-business services, a tax idea the Star Tribune has long opposed. While expanding the consumption sales tax to a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117,144],"tags":[],"class_list":["post-34067","post","type-post","status-publish","format-standard","hentry","category-dayton-dustbowl","category-governor"],"_links":{"self":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/34067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34067"}],"version-history":[{"count":3,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/34067\/revisions"}],"predecessor-version":[{"id":34073,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/34067\/revisions\/34073"}],"wp:attachment":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34067"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}