Scott Jensen provides more details about plan to eliminate personal income tax
Minnesota gubernatorial candidate Scott Jensen speaks to supporters at a rally at an Apple Valley Cowboy Jacks Wednesday, May 4, 2022. Photo by Nicole Neri/Minnesota Reformer.
Republican nominee for governor Scott Jensen says he wants Minnesota to become the tenth state in the U.S. without a personal income tax, which economists say would require steep cuts to education and health care and/or increases in sales and property taxes.
Earlier this month, the Chaska family doctor and former one-term state senator provided some details about how he would fill the $15 billion annual hole created by eliminating the income tax.
In a recording of a town hall obtained by the Reformer, Jensen floated an eight-year plan starting in 2023. He’d use the state’s current $9 billion surplus to fill gaps in the state budget, though he’d also turn to deep spending cuts.
The details are still vague. He would reduce spending by 10% by 2027 — though he provided no specifics about which departments or programs he would cut — and he would freeze state spending in the beginning years of his plan.
Education is nearly 40% of the state general fund budget. If he were to hold education harmless in his 10% spending reduction, he’d have to make deep cuts to other areas, including health insurance for low-income Minnesotans and people with disabilities; public safety, which would seem to fly in the face of his promise to reduce crime; colleges and universities; and highways.
In the first four years, Jensen would cut the individual income tax bracket amounts in half for Minnesotans in the top two brackets, which are the residents with the highest taxable income. He would reduce the bottom two amounts by 75%.
The GOP nominee said these cuts would pay off: “I think there’s a darn good chance that we will become such a sizzling, Midwest economic hub,” Jensen said in the recording. “That’s what we should try to do, because if you don’t try you’ll never know.”
Kansas tried something similar in 2012. The result was economically unimpressive, and a Republican Legislature was forced to raise taxes to prevent harmful spending cuts.
Minnesota’s wealthiest residents would overwhelmingly benefit under Jensen’s proposal. A 75% reduction to the state’s lowest two income brackets would still benefit high-income earners, as they pay those tax rates as well and they would still gain a substantial tax cut.
Even with Jensen’s proposed cuts and caps on spending, he would need to find more money to close the hole. If the state needs additional income, Jensen says it should dig into its $9 billion budget surplus.
The problem: Jensen is proposing permanent tax cuts, while the surplus could vanish.
“These surpluses are temporary, and those tax cuts are not,” said Neva Butkus, state policy analyst for the Institute on Taxation and Economic Policy. “That money is not going to be around forever. It’s not sustainable.
These new details about a Jensen tax cut plan are a reversal from Jensen’s previous statements that he’d used the sales tax to fill the hole left by eliminating the income tax, including taxing food and clothing, which are currently not taxed in Minnesota. Sales taxes are regressive, meaning an increase would put a larger burden on low-income earners.
His reversal may be a recognition of the political blowback he’s already received from proposing a sales tax increase. Gov. Tim Walz tweeted that the sales tax plan was “off the rails bonkers.” Jensen said he simply was “brainstorming” the idea to ignite conversation, which he’s said previously about controversial and shifting views on guns, marijuana legalization and abortion.
On Sunday, Jensen — alone on the debate stage hosted by KSTP after Walz turned down the televised debate — touted his tax plan. He said it works through “a spreadsheet perspective.”
Cynthia Bauerly, the former commissioner of the Department of Revenue under Govs. Tim Walz and Mark Dayton, said in an email that Jensen’s vague promises and programs could impede Minnesota households and businesses from planning their financial futures.
“That’s a pretty big gamble for Minnesotans’ personal lives and economy,” Bauerly said. “Some of us would like a little more certainty for our state’s future.”
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