Don’t Let The Door…

Minnesota State Capitol building in Saint Paul...

Minnesota State Capitol

Close your eyes and imagine for a moment Minnesota‘s future — or any state’s future, for that matter — if the people who threaten to leave when taxes go up do in fact leave….

…enjoy that thought for a moment…

Wow…wasn’t that nice?  But hardly going to happen.  These people aren’t going to leave a great state until they ruin everything that’s keeping them here.  So back to reality.

The tax whiners are at it again making outrageous claims about the evils of taxes and it seems that these misleading claims constantly need to be answered. 

Let’s begin by being clear and fair.  Of course it is important that taxes are levied and invested responsibly.  Not wanting to waste money is admirable.  However supporting thoughtful and adequate taxes is not one and the same with supporting waste.  Responsible people understand this.  But the tax whiners don’t understand this; they don’t understand the wisdom of smart tax policy and condemn taxes across the board…almost. 

Even Republicans — perhaps especially Republicans (Gotcha!) — support spending on pet projects and interests.  Selfish?  Well, you judge. 

Speaker John Boehner, R-Ohio

How do you defend United States House Speaker John Boehner, Republican from Ohio, pressing his support for a multi-billion dollar investment in a military jet engine that the military does not want?  Billions for that, but cuts to programs for health care?  Someone should be crying “Hell no you can’t” now, but don’t count on it.

Hypocrisy is one thing, but failing to understand is another.  Perhaps therefore GOP leaders can be forgiven because they simply don’t get it.  (Humor me.)  Voters, however, shouldn’t be let off the hook.  The collective intelligence of the people should outweigh the charismatic and ideological stupidity of its leadership.   (Remember…In a democracy elections have consequences and, boy, do we have consequences.)

Sadly, it is hard to say which is more tragic, the dismal leadership conservatives offer or the pathetic butt kissing of the people who elect them.

At its most  fundamental level, conservatives don’t understand the costs of their tax proposals.  When they cut taxes more than they cut spending, for example, they increase deficits and debts; there’s a real debt-raising cost to doing that.  (That is essentially GOP  Paul Ryan’s approach to balancing our federal budget, by the way.  Odd, huh?)

Granted, thinking through these grown up issues requires application of facts and reasoning –together, at the same time — which is something that seems beyond the average conservative intellect, nevertheless you would think that individual self-interest would lead people to support better solutions.  Again, the answer here is a depressing one.  The public appears increasingly disengaged from both facts and their own best interest…and we all suffer for it.  (The “Invisible Hand” of economics might be better used giving today’s ignorant right a swift and firm spank.)

The GOP's Zellers and Koch. It looks like someone took away their ball.

Look at Minnesota, where whining is reaching an unbearable screech.  It is irrational, it is ideological.  Most notably and frustrating, it is the source of our problems, not the solution.

Minnesota’s conservative turn has cut away many of the benefits and advantages given to us by generations of progressive, hard-working Minnesotans.   We have gone from a state that wasn’t afraid to lead to one that cowers behind conservative pessimism.  We were given more, we should at least have the decency to protect what was given to us.

Rather than defend our legacy, we are being drawn down into a rat hole.  Increasingly, and almost exclusively, Republicans are at the head of the line leading us in decline.  In Minnesota, many of the GOP leaders are not old school conservatives, but people like our former Governor, Tim Pawlenty, who owe a great deal to Minnesota’s progressive tradition.  Becoming a conservative in Minnesota is a very pathetic way of saying thanks.

Conservatives failed to destroy us by creating hysteria over social issues.  Unfortunately they are having much better luck misleading the public through fiscal and economic issues.  And while in power they will take a few whacks at those social issues for good measure, all in the distorted name of the Holy Founding Fathers.

First, let me say that anyone wanting to move to South Dakota from Minnesota in order save a few hundred dollars a year isn’t a big loss, in my opinion.  In fact, I think we would be much better off if they did leave.  We keep hearing all of this brave talk about moving to take advantage of lower taxes, but unfortunately we don’t see many of these chickens following through.  A big disappointment, especially now. 

Here in Minnesota Governor Mark Dayton rolled out is budget proposal for Minnesota and the right wing is calling it a “job killer.”  (Michele Bachmann — who is a United States Congresswoman, but doesn’t always seem to know that — hasn’t weighed in yet, but she’ll surely claim that “our founders” would not stand for tyranny, loss of freedom, blah, blah, blah, blah, blah…What a fool.)  What the fanatical right does not understand is how the practice of underfunding our state’s government over the years has left us with no option but to start paying for neglect.  There is not enough government to cut to balance the budget!  This is what “starve the beast” anti-government thinking gets you. 

Let’s say you could cut taxes and government services more, would that make cutting governemtn and taxes the preferred route?  What would be the value of what we would give up?  If state revenues increased because of higher incomes, would we reinstate programs that are cut now in order for us to “live within our means?”?  (Forget that last rhetorical question…I almost used my first LMAO.) 

Let’s talk about tax increases killing jobs.  This is a primary GOP scare tactic and it recklessly applies basic Econ 101 lessons that reflect simple academic economic models more than it does the reality of today’s markets and economic situation.

First, many of the businesses that would be affected by Dayton’s budget proposal have no employees.  They are individuals who have formed LLCs, for example, and are paid personal income from their business revenues. 

But let’s say a business has employees.  Would a business choose not to hire if hiring would increase profits because they would get taxed more on those increased profits?  If the decision to hire an employee is profitable, a business will hire.  It is difficult to see how a marginal tax rate increase that might add a couple hundred or even a few thousand dollars to a tax bill would outweigh what would otherwise be a profitable decision to add a unit of labor.  For most small businesses that Republicans talk about, the tax is on income paid to the owners of the business from profits…and possibly regardless of profits. 

If a new employee generates profits high enough to push your income into the higher tax bracket, is that a bad thing?  Moreover, if you’re content with your current pay, wouldn’t higher earnings give you incentive to reinvest back into your business opportunities rather than increase your pay?  Most people raising issues with a higher marginal tax rate simply are not being honest about the math or they don’t understand taxes.  Maybe both. 

Second, sensible taxes do not automatically deter talent; people with money don’t go running for the border when tax rates rise.  Some of the highest taxed places in the United States attract the country’s most talented people.  Why?  Smart people look for more than a few extra dollars in their bank account when making quality of life decisions.  They appreciate strong public amenities, including good schools and public services that help maintain a stable community.  They recognize that public goods make economic sense, too.  Taxes reinvested in the community build these assets that smart, talented people find attractive.  Smart, talented people earn money, create jobs, and help sustain a strong economy.  When was the last time a Republican politician could claim ANY of that?

Finally, the idea that people will move a business to another city or state needs to be addressed.  This is true and it happens.  Businesses do move.  But conservatives fail to see that the real issue here is a global one, not a national, regional, or state issue.  On the more local level it does make sense to invest in public goods, in fact, in order to attract talent as mentioned above.  But conservatives act as if we are back in the 1950s with an economy sustain by the competitive advantages we enjoyed then.  That is not the case. 

We need two things:  Investment in new economies where our resources enjoy a competitive advantage and a focus on the health of local economies.

Perfect Competition

The first issue will be addressed in part by investment in solid public goods:  Education, health care, research…things in which the private sector will not invest because of difficulties monetizing and collecting profits.  We need something like a space race again.  We also need reinvestment in the social programs and infrastructure that gave America a productive edge.

On the local level things are a bit more like the old days.  If you own a home repair business and you choose to move because you don’t like the tax environment, someone else will fill the void.  A real supply/demand curve exists in local economies and they adjust to factors like taxes, which are much maligned by the right.  If demand exists for locally supplied — and needed — goods and services, someone will find a way to make it work.  It is hard to imagine an economy in which all the local dog groomers move to Sioux Falls to enjoy a tax break. 

So if you do want to pull up stakes and head across the border for a better tax deal, please, by all means go, especially if you have been voting Republican in recent elections.  We need to regain the forward-thinking edge that Minnesota once had.  Minnesota prospered and we can do it again, but that won’t happen until Minnesotans once again value the advantages that strong social programs and sound infrastructure bring to a state’s economy and culture.  If more naysayers choose to leave, all the better.  We will thrive again with positive and optimistic enthusiasm for the future.

Besides…negative thinking is such a drag.

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