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Ted Mondale: Taxes
By Martin Kaste
August 3, 1998
Click for audio RealAudio 2.0 14.4
Part of Election '98

ALL THE CANDIDATES ARE PROMISING tax cuts, although some are being more specific than others. But Ted Mondale was the first to lay out a comprehensive tax cut plan along with details about how he plans to pay for the cuts. He says any talk of tax cuts has to go hand-in-hand with a plan to make corresponding cuts in government spending, and he says Minnesota politicians have a bad habit of promising one without the other.

Mondale: If you're a candidate and you don't have an answer of how we can control spending, and you don't have old programs you can cut, you're telling people that we can continue to spend more, and therefore your taxes are going to go down. Nobody believes that anymore. It's not the truth
Mondale has a ready list of spending cuts. First up are state employees. He says he'd instruct state agencies to stop replacing the employees that leave. He predicts attrition alone could save the state $230 million in payroll over four years. He says he could save hundreds of millions of dollars more by getting rid of overlap between agencies and slowing the growth of their budgets. He says those savings, along with a big cash infusion from the $6 billion tobacco settlement and continued budget surpluses, would free up enough money to cut taxes.
Mondale: My first proposal is to reduce the half-cent sales tax, which would be a billion dollars over four years tax cuts for the residents of Minnesota.
Mondale is referring to the half-cent increase the Legislature allowed local governments to add to the state's six percent sales tax. He was in the senate at the time, and he says he believes the Legislature increased the tax on false pretenses.
Mondale: In 1991, when that was put in place, I voted against it. But when it was put in place, the promise was that the new half-cent tax was going to reduce your property taxes. Well, it didn't reduce property taxes, so you got sales tax increases and property tax increases, and it's things like that why people don't trust government anymore.
A cut in the income tax is not part of Mondale's plans, even though the Legislature has made a tentative promise to start cutting income taxes next year if the economy stays strong. He says sales taxes should be first on the chopping block because they're regressive, while income taxes, he says, are progressive.
Mondale: I like the idea of people taxing based on income. I think it's a fair concept, and that people who have more should pay more, and people who have less should pay less. You can't always measure it accurately, but I think a sales tax taxes just about everything most families use, and it's progressive. I mean, when someone making $15 thousand a year goes to buy something that's taxed, they're paying the same as someone making a million dollars a year.
Unlike most of his DFL brethren, Mondale is not in a hurry to cut property tax rates, either. He says the Legislature was right to cut the rates on commercial property this year, but for now he says he'd hold the line. He says the state should not promise lower rates for homeowners, either - at least not until the Legislature finds a better way to do it. Right now, the Legislature lowers local property taxes by sending more money to cities and school boards, a process Mondale believes is counter-productive.
Mondale: I'm not advocating any new property tax cuts until we get accountability in the system. Some of my opponents say, "Well, let's shift taxes. Let's put taxes on clothing." Or, "Let's put taxes here, and then take taxes off the property tax rolls." Without accountability, in two or three years that tax cut will get right back to where it was before, and all you've done is it's a back-door way to continue the spend and spend policies, and we can't have that anymore.
Like his opponents, Mondale is counting on a continuing strong economy. If the economy turns sour, and if the budget surpluses of the past few years stop rolling in, it would be very hard for the state to give up a half-cent of its sales tax. Mondale says he could do it by making even deeper cuts in government services; in Mondale's words, he'd just have to "prioritize harder."