Duluth, MN (Northland's NewsCenter) --- Minnesota Governor Mark Dayton announced last week a $37 billion budget for fiscal years 2012 and 2013.
Included in that is a plan to raise more than $4 billion in additional revenue, in part through an increased income tax on the state's highest wage earners.
Here's how it would work.
Individuals earning more than $130,000 or joint filers earning more than $150,000 would pay a 10.95 percent income tax on any income over those amounts. Under that amount taxpayers pay a rate of 7.85 percent income tax.
There would also be a 3 percent surcharge on incomes larger than $500,000 a year.
Add it all up, those with yearly earnings greater than $500,000 dollars would be paying nearly 14 percent in income tax.
Some investment analysts in the area say that figure could drive small businesses away from Minnesota.
"What company is going to want to locate here when they know the top-end tax rate is going to be close to 14 percent?" local investment advisor Dan Urshan asked. "We just can't afford the largest tax increase in Minnesota history."
Some local businesses, though, feel the governor's plan is a step in the right direction, part of a balanced approach they hope will include both an increase in taxes and a cut in government spending."
"It needs to be a balanced approach," Cirrus Vice-President of Business Administration Bill King said. "We applaud the governor and the lieutenant governor for having the guts to stand up and say part of the solution needs to be additional revenue. By the same token, it can't just be about additional revenue and it can't just be on the wealthy. That doesn't make sense either."
King said it's somewhat of a slippery slope. Take money away from these business owners, and that could mean fewer new jobs available in their businesses.
However, he said he has confidence in Minnesota's lawmakers, particularly Lieutenant Governor Yvonne Prettner Solon.
"With her knowledge and background in the state Senate," King said, "she is ideally suited to be doing a lot of the shuttle diplomacy between the governor's office and the legislature."
The next step in the budget process will likely be an alternative proposal put together by Republican Senate and House leaders.
That's expected to be complete by sometime in late March.
Posted by Zach Schneider