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I i I I I I I LEGISLATIVE INCENTIVES NEWSLETTER ~], Februar~ 11, 1985 For 200 Other Minnesota Legislators irom State Rep. John Burger All Minnesota legislators are cordially invited to join a newly formin9 LEGISLATED INCENTIVES PRACTITIONERS SOCIETY (LIPS). This society is for those who would like to help assure that all legislation accentuates positive and minimizes negative incentives for people who live and work in Minnesota. There are no required society meetings, no dues, no initiation fees, no application blanks, and no new member sponsors. Why join then, you ask? TO BECOME, AND HELP OTHERS BECOME, BETTER LEGISLATORS! Here are some details. Every law encourages or discourages behavior of the people it affects. Legislated penalties discourage criminal activities. Legislated subsidies encourage favored objectives. High sales taxes discourage sales. "Sin" taxes discourage sinning. "Tax (punish) what you want less of and untax (reward) what you want more of" is orthodox legislative carrot-and-stick motivation. So, LIPS suggests that proposed bills should carry not only fiscal notes to show what their implementation will cost in dollars, but also analyses to show what their behavioral impacts will be--the incentive impact, if you will. Careful identification of legislated incentive impact can assure better working and living climate in Minnesota by encouraging desired and discouraging undesired behavior in the state. To illustrate, here are summaries of two bills I have introduced, with impact statements that show why they should be enacted. "SHARE-THE-GAINS"INCENTIVE PAY BILL. This bill (HF 389) would provide a one-time bonus payment to all state government employees in any year in which the ratio between state government spending and total personal income of Minnesota taxpayers is lower than it was the year before. This proposal provides positive incen- tive for all state government employees, including legislators. We earn our reward by setting policies and performing effectively so that taxpayers retain more of their income for investing and spending. This, in turn, improves the economy, government image, and the living and working climate in Minnesota. Here's a win-win situation helpful in doing what a lot of people say we ought to do in Minnesota. PROPERTY TAX INCENTIVES STUDY. This proposal (HF 388) would extend and expand current efforts to understand and improve the Minnesota property tax system. There is considerable evidence in many places that uptaxing site values and downtaxing improvement values instead of taxing them the same decreases negative and increases positive incentives for better use of human and natural resources. Specific results include less unemployment, more and better job opportunities for the employed, increased productivity, less land speculation, improved equity and greater progressivity in property taxes, easier home acquisition and retention, lower property taxes for as many as 80% of homeowners-obviously a win-win situation for people working, investing, and living in Minnesota. Some study of the impact of such a dual tax rate system on current property tax payers has already been done, but we need more legislative encouragement and participation to produce all data needed. I plan to issue a series of these newsletters and speak to incentive/disincentive impact as we consider bills in committee and on the house floor. Meanwhile, your comments and questions are respectfully requested; we'll respond to them in future issues. Write, phone or stop by--411 State Office Building, 296-9188.