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Reading all the horse race-coverage of the 2010 campaign for governor, it’s striking to see how all the DFL candidates continue to use the same old playbook, with the same old directions: “Raise taxes, make the wealthy pay their fair share, and increase revenue to pay for government programs.”
Ten DFLers have either announced they’re running or are “exploring” a run; one would think that a field this large would produce a broad spectrum of ideas and policies. Nope.
This crowd is surprisingly united around the need to raise taxes. In fact, they’re tripping over each other to display their zeal for tax increases.
“Read my lips: Tax the rich - they can afford it,” says Mark Dayton.
Wealthy Minnesotans “have to pay a larger share of the burden. There is no question about it,” is how R.T. Rybak puts it.
Tom Rukavina, Margaret Anderson Kelliher, Susan Gaertner and Steve Kelley all favor softer language: “We need to raise additional revenue,” is what they say. But we all know what that means.
One would hope that we’d hear a more inspirational platform, especially in the midst of a global economic recession. Unfortunately, the DFL candidates for governor are all pushing for tax policies that will kill jobs and poorly position our state for the future.
One of the advantages of the U.S. having 50 different state governments is that we can learn from experiences across the country. And, indeed, we now have plenty of examples of what raising taxes does to a state economy.
It isn’t pretty.
Take a look at New York and California if you want to see what the highest tax rates in the country produce - record deficits, government shutdowns and high unemployment.
Maryland offers a glimpse of what a “tax the rich” move could mean. In 2008, the state raised by three-quarters of a percentage point the personal income tax rate for people earning more than $1 million, hoping the extra $100 million or so would help close a structural budget deficit.
And now, millionaires are leaving Maryland. (See the Wall Street Journal, May 27, “Millionaires Go Missing“)
Preliminary income-tax filing data show that 1,000 fewer people making $1 million or more had filed their income taxes by the end of April this year as compared to the same time in 2008.
So, people literally left the state of Maryland after it adopted a new millionaire tax bracket.
It may be hard to say exactly why so many fewer folks paid taxes in that state, but there’s no doubt about the result - the state is hurting even more: Maryland in 2009 had a larger deficit than before, in part because state revenues decreased by roughly $100 million.
Ouch. Sure looks like raising taxes backfired in Maryland.
As a cold state in the upper Midwest, Minnesota needs to work a little harder than other states to attract families and jobs. We need to win the battle for capital, investment, ideas and entrepreneurs if we are to prosper in a 21st century global economy.
The old DFL playbook will further strangle our economy and burden taxpayers struggling to survive this recession.
According to a March 30, 2009, report by Forbes magazine, Minnesota taxpayers already have the fourth highest tax burden in the nation. (Here’s the web link)
And according to data put together by the Washington, D.C.-based Tax Foundation, we have the third highest business tax rate in the industrialized world (among U.S. states and the 29 other countries that are members of the Organisation for Economic Co-operation and Development; see this March 2008 report).
So let’s learn from the mistakes of other states - and let’s copy programs that actually work.
California is now preparing for a special session to reduce and eliminate entire categories of taxes. After suffering through the largest budget deficit in the history of state budgets, with unemployment more than 12 percent, California is now considering proposals to reduce the income tax and eliminate certain business and sales taxes.
A bipartisan commission in California has concluded that only a growing economy can provide revenue for schools, roads and health care.
Minnesotans can only hope that the DFL candidates for governor set aside the old high tax playbook and take a look at what is happening in other states. You cannot be pro-jobs and continue to pile higher costs on job creators.
The campaign for governor, and the coming legislative session, should be filled with proposals and debate about how to position Minnesota for job growth once the recession ends.
State Sen. Geoff Michel, R-Edina/Bloomington, is an assistant minority leader and lead Republican on the Business, Industry and Jobs Committee. A priority of his is getting Minnesota off the list of the 10 highest-tax states. Michel has sponsored bills to phase out and eliminate the business income tax and plans to renew that effort in 2010. |
