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Typical Pawlenty: Slash the safety net, raise property taxes, and cut taxes for the wealthy

The following is an editorial that appeared in the Ely/Cook/Tower Timberjay.

How typical.

The state of Minnesota faces an unprecedented budget crisis and what does Gov. Tim Pawlenty propose? How about higher property taxes for average Minnesotans, a shredded safety net for those at the bottom, and hefty tax cuts for big corporations.

It's utterly shameless, and vintage Pawlenty.

Just consider those big tax cuts for corporations. Pawlenty wants to slash the corporate income tax by 20 percent, ostensibly to encourage the creation of jobs. In reality, it's a big tax giveaway that will send desperately-needed tax dollars primarily to big banks and huge retailers, like Walmart, few of which are actually based in Minnesota. More than 70 percent of this tax cut will go to corporations that already make in excess of $2 million in profits annually. Our potential tax dollars will simply pad their bottom lines, and more likely contribute to bigger bonuses to top executives or payouts to shareholders, than create any new jobs.


A 20 percent cut in the corporate income tax won't help most Minnesota corporations. That's because only about 40 percent of them actually earn enough profit to incur any income tax liability. That figure, which dates from 2005, is probably lower today since most small businesses are struggling in the current economy.

And of those 40 percent that do pay taxes, most pay very little, because they don't make huge profits. In fact, Minnesota-based corporations (which are the small businesses most of us deal with in a typical day) pay just 7 percent of corporate income taxes in the state. Large corporations, mostly based out of state, incur 83 percent of tax liability in Minnesota, which means they will receive 83 percent of the benefit of Pawlenty's tax cut. Giving such corporations a hefty tax break has the effect of shipping our scarce tax dollars out of state. It may be a good plan if you're running for president and want to attract contributions from corporate big shots, but if you're trying to solve Minnesota's budget crisis, it's inexcusable.

That's not to say that tax cuts for businesses are worthless when it comes to job creation. But such incentives should be tied to actual job creation. Pawlenty's proposal provides no linkage whatsoever. Multinational corporations could slash their workforces here in Minnesota and still reap the rewards of Pawlenty's tax cut. That's just stupid.

If Pawlenty actually wanted to help small businesses, he wouldn't have spent the last seven years slashing local government aid. Look up and down the Main Streets of any of the communities in our area, and most of the owners of the storefronts you see will pay more in property taxes this year than they will in corporate income tax. Most of these businesses won't see any effect from Pawlenty's tax cut, but they will feel the property tax bite from his latest round of LGA cuts. Main Street businesses pay a big chunk of the tax bill in most small towns and as LGA is continuously cut, these same businesses end up picking up much of the slack.

Which is why this plan is so typical of Pawlenty. For his entire political career, Tim Pawlenty has believed in comforting the comfortable, and forcing the rest of us to pay the bill. His latest budget plan is just more of the same. Slash the safety net. Raise property taxes on struggling homeowners and small businesses. And lavish big giveaways on the biggest and most profitable corporations.

And to think he now wants to take his philosophy to Washington. Come to think of it, he should fit right in.

This editorial is reprinted with permission.

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Comments (7)

The governor proposed about six different business tax cuts that he said would help create jobs. Business tax cuts that will cost 20 million dollars in this biennium. The next biennium those tax cuts will cost 312 million dollars.

These cuts are essentially back loaded. The corporate tax cuts of 20% will cost 10 million now and then 150 million dollars in the next biennium. The small business cuts will cost nothing this current biennium and then 118 million dollars in the next one. The governor might argue that jobs will kick in and the tax cuts will pay for themselves. Although that is not the way the accounting process work. By not paying for the cuts is he not just creating more deficits for the future?

Of course Timmy is creating more deficits in the future! His hope is to create such a huge hole that when the next Democratic governor tries to work with the legislature and begin to fill that hole with necessary tax increases the increases required will be so large as to send the public screaming back to the Republicans in the near future and their destruction of the state will then be able to proceed.

I wish there were some other, deeper rational philosophy (or even theology) in what he's doing, but his desire to punish the less fortunate while protecting and further enriching the most fortunate and, at the same time, allowing the state to fall completely apart seems so visceral and so unthinking that it defies any logical explanation.

Sadly there are enough people with exactly the same visceral (and very destructive) instincts within the state and national Reb parties that Timmy will continue to have considerable support from key behind-the-scenes players, other Reb. politicians and a substantial minority of the general public (assisted by 3rd-party candidates).

For these folks, their world view, shaped as it is by this deep-seated, visceral view of the world is unalterable and unshakable. They will remain convinced that they are taking exactly the right approach to everything and everyone even if they destroy the state, the nation and the planet in pursuing it.

If the rest of us don't wake up and realize that these people are calmly, quietly, crazy and that their seductive promises that we can have the best state in the nation and the best nation in the world without paying for the institutions and infrastructure required are bogus and will take us down the sewer, we will be hard pressed to avoid becoming a very large third world nation.

It may soon be too late to prevent ourselves and our fellow citizens from being reduced to living under the worst kind of economic slavery under the lash of those who have money and means. Those like Timmy who are most loudly promising us "freedom" from paying, through taxes, for the government so many of us have been taught to loathe are secretly (and unconsciously?) working to enslave us all.

One problem with Pawlenty's promise to cut "corporate" taxes on small business is that most small businesses are Sub-S corporations which now PAY NO TAXES AT ALL. So Pawlenty is doing a lot of arm waving, with few if any true results. In a Sub-S, the profits accrue to the shareholders, who then pay individual taxes. Thus, if we wish to enhance revenue (badly needed now to maintain vital services and retain the "quality of life" we have enjoyed in our fair state), we are back to revisiting the personal income tax. And that is best done with progressive rates, and generally adding a bit more to the highest earners (many of whom have enjoyed strong compensation from their own Sub-S non-taxed corporation).

But, personally, I have pretty much given up on Pawlenty. He is easily the worst Minnesota governor in my lifetime, and all we can hope for now is that he will not do too much more serious damage to our state till he FINALLY leaves office.

And sole proprietorships are in the same position as sub-S corporations. The business owner subtracts expenses from revenue on Schedule C, and what's left goes onto the owner's 1040 as "profit from business" to be taxes at PERSONAL rates.

Cuts in the state corporate rate help sole proprietors like me...not at all. My taxes are already down, thanks to decreased income.

Anyone who thinks we are going to walk away from this pending train-wreck unscathed is delusional. Just do the math...GDP has been consistently overstated during the past ten years by 'rigging' the inflation indexes... Let's not even talk about the balance sheets...

The 'Consumer' based economy... a children's myth soon to be relegated to the history books... is in intensive care on a QE drip and the prognosis is grim.

Anyone got a "Green Shoots" story that doesn't involve "magical beanstalks?"

Greg K (#2). Deep philosophy? Well, of a sort.

Check out Grover Norquist's Americans for Tax Reform website (atr.org) and google the Leave Us Alone Coalition.

Grover, Tim Pawlenty's spiritual guide, separates us has removed a lot of past writings from the atr.org web site, but I made copies of some of it before he did so.

In early May 2009, for instance, he said: "My ideal citizen is the self-employed, homeschooling, IRA-owning guy with a concealed-carry permit. Because that person doesn't need the goddamn government for anything."

He sees taxation as theft and opposes his Leave Us Alone movement to what he calls The Takings Coalition, which "consists of the Trial Lawyers, the corrupt Big City Machines, the Labor Union Bosses and the two wings of the Dependency Movement - those who remain trapped in dependency and those who make $80,000 a year managing the dependency of others and making sure they don't get jobs and become Republicans."

We see his influence in the Congress (former Senator Norm Coleman, John Kline, somewhat surprisingly Jim Ramstad, and Michele Bachmann) and the states, including ours (Pawlenty, Molnau, 15 Republican senators and 28 House members - including Erik Paulson, who has now moved on to the US Congress).

This is a philosophy that has at its heart selfishness and the belief that if people are poor they must have done something to deserve it. The common good? What's that?

Looks like we choose between corporations keeping their money and using it as they see fit, or the government taking the money and using it as it sees fit. I'll take my chances on the corporations and possible jobs (not paid for by the public). Global economies take it easy on corporations and I'm afraid that to be competitive we should follow suit just to give our local businesses a chance.