The current sales tax debate in Minnesota

Mark Dayton's 2013 budget proposal includes numerous changes to the tax code which include closing the loopholes on the corporate tax, giving some property tax relief while at the same time decreasing the overall sales tax.  The way in which he is able to achieve these goals is through increasing the taxes on the top 2% and expanding the current Minnesota sales tax.  His rationale is that property tax , income tax and sales tax should be more like the chairs of a stool in that they are "fair" across the spectrum of taxable revenues.
Dayton's Tax Reform

What is hardly discussed on the govenor's budget and his highly publicized is the reaction to the change in the tax code for the Mom and Pop type companies that might have to add sales taxes to any sale over $100.
Initial Star Tribune Article
Follow Up Article

It has become such a hot button issue that the proposal and the video that the star tribune created is currently the most watched.
Interviews at the Mall of America

So where do we go now?
Considering that sales tax is the largest revenue generator for the state, it would seem that if the increase in a sales tax's breadth makes sense for Minnesota but the public outcry against it might make it politically unfeasible even if it is the optimal solution for Minnesota's tax code.  Ironically this would actually move Minnesota down in the national sales tax from #7 (at 6.875%) to around # 29 (at 5.5%) at the overall rate.  The numbers I do not have is what is the percentage of revenue by tax base that Minnesota currently uses compared to the nation.

And just because I like the economic (not specifically the financial) theory behind why it is so hard to change tax codes, here is a bit on the status quo bias.
Super nerdy Econ Theory on why people hate change

Kick the Can: Considering the Soda Tax

Governments at all levels are looking under their collective couch cushions for every penny they can find. Creative revenue generating ideas range from taxing pornography, to building racinos, to (legalizing and then) taxing marijuana. These are all variations on the tried-and-true “sin tax” formula.

A family friendly, PG version of a sin tax idea has been recently kicked around in the form of a soda tax. The U.S. Senate considered the tax in 2009 as a way to help pay for President Obama’s health care initiative. Both the Mayors of New York and Philadelphia as well as New York Governor David Patterson sought soda taxes in recent budget proposals.

On the surface, the soda tax idea is a good one: Offset the costs of healthcare programs with the tax, while simultaneously battling the obesity epidemic. It’s roughly the same justification for the steep rise in cigarette taxation in recent years. One could make the argument that, in fact, the nation’s obesity epidemic is of a greater public health concern than are the impacts of smoking.

But, the issue isn’t so clear cut. Is the soda tax justifiable when there is no essential nexus between the tax and the programs it supports? If the soda tax revenue is simply funneled into a state’s general fund, is it still justifiable on public health grounds?

What of a state budget that purports to use the funds for health care programs, but also makes cuts to those same programs in the same budget, as this article points out? What if the soda tax did not actually reduce soda consumption, as some studies claim that it would not?

Considering that a sales tax is regressive, and considering that some studies show that the poor tend to consume more sugary beverages than the average citizen, wouldn’t the brunt of the tax fall disproportionately on the poor? Is the tax equity issue enough to undermine the purported health benefits?

The soda tax debate is representative of the type of dialogue we're likely to see in the coming months as Minnesota looks to fill its 6.2 billion dollar revenue gap with new and creative funding sources.

Please, anything but a pizza tax.