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5 stories from 2011 that will keep giving us headaches in 2012

Tom Horner
MinnPost/Jana Freiband
Tom Horner

Minnesotans are entering 2012 with a public policy hangover — unresolved issues that will make our heads throb all year long. Get the aspirin out and take a moment to look at five stories from last year that will keep giving Minnesotans headaches in 2012.

At number five is the continuing erosion of Minnesota's small communities. Democrats put the blame on Republicans for cutting direct aid and property tax relief to local governments; Republicans blame city, county and school leaders for not having the discipline to reduce spending. Both are wrong. Minnesota lacks what small communities need most: a consistent, coherent and effective commitment to rural economic vitality.

There is evidence that parts of rural Minnesota are seeing early signs of a "brain gain." According to University of Minnesota Extension researcher Ben Winchester, some communities are seeing in-migration from educated 30- to-49-year-olds and their families. But it's hard to imagine small communities prospering if they have inadequate health services, limited or no access to high-speed broadband or two-year colleges — the cultural and economic engines in many small communities — that are becoming unaffordable. Yet, these are the challenges small communities face as a direct result of public policies coming from St. Paul.

Number four on the hangover list is the stadium debate — not a Vikings stadium itself, mind you, but the growing likelihood that political desperation will result in bad public policy on gambling. What should be avoided is exactly where more and more politicians are heading: looking at gambling as an easy fix to multiple problems, from correcting the mistake that is Minneapolis' Block E to education funding.

Gambling shouldn't be used to fund the services that are vital to our state's future, including education and health programs. Fair, transparent and reasonable taxes should fund essential services. Building a stadium with gambling revenue makes sense; avoiding taxes by betting our state's future on the turn of a card or the roll of dice is political timidity at its worst.

In third place on the list is marriage equality. The constitutional amendment to prohibit same-sex marriages will be voted on in November 2012. The stakes are huge. If voters approve the amendment, same-sex marriages will be illegal. Of course, if voters defeat the amendment, same-sex marriage also will be illegal.

What changes with the amendment is this: A thoughtful, respectful and honest conversation about the role of marriage in our society will be lost to a campaign that will divide, distort and deceive Minnesotans. Instead of asking ourselves what defines marriage — the love and commitment of two adults, in my opinion — voters will be subjected to a vicious campaign that threatens to make Minnesota an unwelcoming state and marginalizes many of our fellow Minnesotans.

Second place goes to the tax debate. Should Minnesota increase income taxes on the wealthy, as Gov. Mark Dayton keeps urging, or should we continue down the path of no new (state) taxes, as Republicans tout?  In fact, neither is an answer to what ails Minnesota's tax system. There are better solutions.

Consider, for example, the recommendations of Gov. Tim Pawlenty's 21st Century Tax Reform Commission. This panel — chaired by the person recently charged to craft a get-well plan for the state GOP's financial ills — proposed comprehensive tax reform that would reduce taxes on investment and job creation, increase sales taxes and simplify the entire system. Many of these same principles are starting to show up in the reform hearings sponsored by Myron Frans, Dayton's revenue commissioner. In other words, there is common ground if the hardliners among Democrats and Republicans would pull up their stakes-in-the-ground and starting building Minnesota's future on their areas of agreement.

And the number one hangover we take with us into 2012?  The inability of policy makers to fundamentally take government in a new direction. Rhetoric aside, precious little redesign was included in the compromise that ended Minnesota's government shutdown. There was some tinkering around the edges and a lot of borrowing to sustain the status quo.

Yet, all the evidence cries out for fundamentally different approaches to how we educate students, provide health and other social programs to those who are vulnerable, protect the safety of residents and maintain the state's infrastructure. The cost of these and other programs — and the outcomes we expect — will continue to grow as long as policy makers debate how much we are spending instead of asking, "What do we need to succeed?"  In other words, let's have conversations about outcomes, then figure out how best — and most efficiently — to achieve our goals.

The good news is that Minnesotans continue to be an innovative lot. We have a state budget surplus, a legislative session unencumbered by crisis (at least so far) and watershed legislative elections in the fall. We have all the medicine needed to cure 2012's hangover and to start 2013 in good health.

Tom Horner is a public affairs/public relations consultant and was the Independence Party candidate for governor in 2010.

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Comments (7)

I'm with you Mr. Horner, that is up until #1. Then you lose me. The other 4 points were spelled out specifically with action points and well reasoned substantiation. However, at #1 you suddenly get "fuzzy." No specifics, just kind of a general "let's agree to change" without stating the how or the direction. That is precisely why there is no change, everyone wants change to happen but no one has come up with credible and politically viable ways to do it.

The problem with the Pawlenty group's recommendation is that lowering taxes on investment income but increasing sales taxes is that it does what so many "solutions" do: transfers more of the burden to the poor and middle classes from the rich.

Income from investments is income and should be treated the same as any other kind. Those who invest in order to increase their incomes need no tax breaks to do what they would be doing anyway.

Just as corporations will hire new employees when they need the help whether or not they receive subsidies.. Government subsidies as rewards for hiring people are just gifts we don't need to give.

While I dont disagree with the points here, ok think the most lasting legacy of 2011 will be negativity and devisivness, evidenced by the points about and the theme of this article itself. Why not '2011s Ups and their legacy'

The great bugaboo of the sales tax is its regressive feature -- taking more from the poor than the rich. In the short run that's true, because the lower one's income, the higher one's consumption is as a share of income. Over a lifetime, however, consumption is roughly proportional to income, so a sales tax would also be proportional -- taking about the same from rich and poor alike in percentage terms.

The irony is that the sales tax is probably the ideal tax from a conservative point of view. As a broad-based tax on consumption it creates less economic distortion per dollar of revenue than any other tax--certainly much less than the income tax.

In any case, no sales tax will be introduced without substantial changes in other taxes and spending that could offset its regressive element.

Thanks for the article Mr. Horner and it provides some food for thought. You lost me on #2 however since Pawlenty's group merely echoed RW talking points from the latest ALEC meeting:

"Reduce taxes on investment and job creation, increase sales taxes and simplify the entire system."

1 obfuscation
1 false premise
1 regressive tax increase
1 warm snugly in which to wrap it all.

(I do like the warm snugly though.)

Seems Ms. Vetsch (#2) summed it up pretty well re: second place hangover.

Reduce taxes on investment? The last I heard, capital gains were already taxed at a lower rate than regular income.

As for raising the sales tax, I doubt that the think tank types ever listened to low-income Oregon residents when that state discussed introducing a sales tax. Through my volunteer work, I knew formerly homeless youth in Portland who worked minimum wage jobs full time and were just barely making it to the end of the month, with maybe a little to put aside. They understood, as the lawmakers and think tank types didn't, what a few extra cents on each dollar could mean to someone who has only a few dollars left at the end of the month, if that.

I'm tired of the right-wing lie that low taxes on the wealthy or on investment income create jobs. The top tiers are now paying some of the lowest percentages of income tax in living memory. For the past 30 years, their taxes have kept decreasing. So where are the jobs? The excuse now is that they're holding back because of "regulations" (although they're unable to name any regulations that would prevent them from creating jobs) and "uncertainty" (uh, business investment is always uncertain, unless you're investing in a casino, where the laws of probability ensure that the house always wins).

What we need is for businesses to retain or hire employees instead of paying bonuses or exorbitant salaries to their executives. (For each million dollars spent on the top management, they could hire ten to twenty rank-and-file employees--and remember, employee wages and benefits are paid with pre-tax income.) They need to tell their shareholders to grow up and accept that they can't demand that the company continue to help destroy the American economy by shipping jobs overseas, even if it means that their dividends will be lower.

When we no longer have double-digit real unemployment and currently employed people no longer see their colleagues being laid off en masse, then you'll see the return of consumer confidence.

Till then, we're in a classic vicious circle.

In good, old Minnesota capital gains are taxed at the same rate as ordinary income. A significant number of people set up residences in Florida to avoid such taxes. Sales taxes are regressive; funny thing is that it is supposed liberals who pass bills imposing those taxes. Remember a few years ago when the Democrats took over and their first item of business was raising the gas tax! They really can't complain about taxes they enact.