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Minnesota 2020 Journal: The Same Old Conservative Same Old

March 07, 2014 By John Van Hecke, Publisher

Around this time last week, the State of Minnesota released its revised state budget forecast. Minnesota is currently $1.23 billion ahead of projections. That’s for the present budget period. Surplus projections for the following biennium increase to $2.6 billion. Rather than acknowledge the state economy’s growth combined with a return to sensible tax policy as the surplus’ source, Minnesota’s conservative state legislative minority caucus leaders gamely insist that Minnesota needs tax cuts.

Reliably since the Reagan Administration, conservative policy advocates have preached the low tax, no tax gospel. Every circumstance is improved by tax cutting. Every budget narrowed is a budget improved. Every dark cloud’s silver lining is a tax cut. Every rainbow is enhanced by a tax cut. Every unicorn ride through gumdrop forests is eased with a tax cut.

Were it only so.

The tax cut and its cousin, the public budget reduction, shortchange broad swaths of Minnesota. Conservative tax policy overwhelmingly aids Minnesota’s highest income earners at the expense of Minnesota’s low and middle income earners. From 2003 to 2013, a period encompassing conservative Governor Tim Pawlenty’s tenure and Governor Dayton’s first two years, the first time in nearly 40 years that conservatives controlled both state legislative chambers, Minnesota policymakers embraced conservative public policy initiatives. That period could be charitably referred to as Minnesota’s downward slide.

As public revenues plummeted, state policymakers cut budgets, slashed state revenue sharing and compelled local property tax increases. Launching the whole moment, then-House majority leader Tim Pawlenty helped shepherd through Governor Jesse Ventura's tax overhaul that carved stunning tax cuts for Minnesota’s highest income earners. Even as Minnesota’s economy veered wildly, conservatives refused to yield. Despite successive, rising state budget deficits, conservatives refused to yield. And, through not one but two conservative-forced state government shutdowns, conservatives refused to yield. Protecting tax cuts for Minnesota’s highest income earners was a greater priority than education, affordable healthcare, roads, bridges, public services and local property tax relief.

Finally, voter discontent in 2010 and 2012 changed state leadership. Last year, in a new tax package backed by broad public popularity, Minnesota policymakers raised income taxes on Minnesota’s highest income earners. The anticipated generated revenue largely went to school funding and local property tax relief. Most Minnesotans didn’t experience the expanded tax increases. Now, with Minnesota’s newly resurgent economy outpacing, I’ll note, conservative policy poster child Wisconsin’s economic performance, Minnesota’s conservative legislative policymakers insist that Minnesota desperately needs a tax cut.

“Our priority, number one, is the tax relief,” said House Minority Leader Kurt Daudt, (R-Crown). “What this shows is that Democrats have collected too much money from the taxpayers. Let’s send it back.” This is the conservative answer to tentatively restored financial prosperity. It’s also the answer to the declining economy question, suggesting that it might not be a useful response to any circumstance.

Daudt, joined by Minnesota State Senate Minority Leader David Hann (R-Eden Prairie), wasted little time after the Friday budget forecast presentation, demanding that Minnesota’s legislature repeal the 2013 tax increases.

Announcing a “Give It Back” Act plan that would repeal several business-to-business taxes, it principally proposes reducing the tax burden on Minnesota’s highest income earners. Here’s where their plan gets interesting. Minnesota’s newest taxes, despite the improving economy, haven’t been fully phased in. When conservative policymakers suggest “giving it back,” they’re evoking the Governor Ventura-era tax cash rebate. Daudt and Hann would like us to believe that Minnesotans would literally receive a check from the state. In retrospect, the Ventura rebate was exceptionally poor public policy but its still not the Daudt/Hann proposal. They want to repeal tax increases on the richest Minnesotans. They’re asking, in effect, for a 2013 tax deal do-over, letting the wealthy pay a lower overall tax burden than low and middle income earners.

Let me say this one more time. The tax increase on Minnesota’s highest income earners doesn’t ask them to pay the same tax burden that low and middle income earners pay as a percentage of income. No, it just increases the highest income earners tax rate. When you hear conservative policymakers stating, "the state surplus is proof that Democrat policies are over-taxing Minnesotans; rather than increasing state spending even more, we believe the surplus needs to be returned to the taxpayers who created it,” they’re asking less rather than more of Minnesota’s highest income earners.

Whether conservative policymakers command battlements or have their backs pushed against a wall, they articulate the tax cut message. It’s not smart nor effective public policy. Pawlenty-era tax policy reinforces and exacerbates structural inequality, making it harder for people of few or modest means to realize financial prosperity. Undermining the middle class in a state composed almost entirely of middle class people proves to be an unsuccessful political and policy strategy. It may take six, eight or ten years but citizens figure it out and act accordingly.

Conservative policy posits economic advantage for Minnesota’s lowest 98% of income earners that doesn’t exist. “Tax relief” is code for asking less of rich folks than Minnesota asks of middle income earners. But, what hasn’t worked in the past isn’t going to work any better in the future. Keep that in mind when conservative leadership predictably responds to the April forecast.

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  • KJC says:

    March 10, 2014 at 8:15 am

    Yes “tax cuts” are the fix for everything.  This was part of Reagan’s “government isn’t the solution, government it the problem” mantra.  Except that it says “We The People” in our founding documents.  So?  That means when anti-government rhetoric is a mantra… let’s be clear who they’re criticizing: you and me.  We The People.  How about adding a few charts and graphs to this great work to bolster the math that’s referred to?  Thanks.  KJC