The ‘Almanac’ debate: A man with a plan against two without

The first debate of the MN guv general election season aired on “Almanac” Friday night. Like many of the debates during the DFL primary season, it amounted to one candidate, Mark Dayton, who is willing to say how he proposes to deal with the $6 billion deficit and two candidates, Tom Emmer and Tom Horner, who are not.

Dayton’s plan, which relies very heavily on raising state income taxes on the wealthiest 10 percent or so or Minnesota taxpayers, is not everyone’s cup of tea. I assume the other candidates hope that voters will flinch from it (many surely will). And maybe vagueness can beat a specific proposal when the specific proposal is unpleasant. But, for me at least, you don’t get to complain about the other guy’s plan until you put your own on the table.

There is no pleasant way to address a $6 billion deficit. There are only three tools that will work. Immediate tax increases, concrete measureable spending cuts, and bookkeeping tricks, sometimes called “shifts” or “one-time measures” that get around the supposed prohibition on state government borrowing.

In the longer run, reinventing government, educating the next generation, stimulating the economy, even state-owned casinos, might help balance future budgets. But in 2011, the new governor needs things that produce immediate savings or revenue.

Tom Emmer, so far, says no new taxes, eventual tax cuts (it’s not clear whether he plans to propose tax cuts in his first year, but tax cuts are the goal), and huge spending cuts, billions and billions of dollars worth, that he has so far refused to specify. And he continued to refuse to specify them on Friday night, even while he claimed that he had begun to do so.

In the “taxes” statement of his campaign website, Emmer says: “The answer to deficits is not more taxes, but less.” This is part of the overall Repub wish/hope/belief that tax cuts pay for themselves through economic stimulation. But even if you believe that one, it takes time for the stimulus to work. The immediate effect of a tax cut is a decline in revenues. You can’t address the immediate deficit problem that will face the next governor with tax cuts. Only real tax increases that will raise immediate revenue, real spending cuts, or bookkeeping gimmicks. (I know, I already said that.)

On “Almanac” Emmer said Minnesota doesn’t need higher taxes. “We’re talking about new revenues from new jobs.”

The endpoint of the Emmer plan, by the way, is the elimination of the income tax entirely. Here’s the quote from “Almanac:” “Ultimately, you should not be taxing production and income.”

As for spending cuts, Emmer said he’s only talking about “getting the bloat out” of state spending. Emmer said he would not cut government services. Maybe he didn’t say that. Here’s the quote: “We’re not talking about cutting government services.” Maybe not talking about it and not planning to do it are two different things.

For now, Team Emmer is clearly counting on a rope-a-dope strategy — refusing to specify which of those three, and in what proportions and what specific taxing, spending and gimmickry categories will be in the Emmer plan — is politically better than the alternative. Maybe they are right, politically. But every time Emmer appears opposite Dayton, Dayton will ask him: Where is your plan.

Horner also disappointed on Almanac in the where’s-the-plan test. When asked whose taxes would go up under his plan, Horner replied “it’s not so much whose taxes will go up as how do we lower taxes.” Horner specified that he opposes any income tax increases because those “fall most heavily job creators.” He says he wants to both “broaden” the sales tax (which means extend it to clothing and “personal services,” (the example he gave of that category was haircuts), while reducing the overall rate of the sales tax.

Until you see the numbers on that tradeoff, this could result a net gain or loss of revenue. When I inquired of Horner spokester Matt Lewis, he emailed me: “There will be a net increase — both to pay for tax cuts in other areas and to offset some of the budget shortfall.”

Horner came into the debate apparently counting on Emmer and Dayton to engage in such unappealing bickering that he could turn to the audience and say, in various versions, “if you think four more years of left-right, Democratic-Republican bickering is what Minnesota needs, then go for it.”

He did several versions of this, until Dayton got slightly in his face, stating that he and Emmer were expressing their substantive differences, and fairly civilly, and then, sarcastically, that if this comment was all Horner had to offer, he should record it so it could be played whenever Emmer and Dayton disagree.

Horner’s overall message has to be that he is the man in the middle, free of the orthodoxy of both left and right, able to embrace common-sense solutions that will work. He tried to say that Friday night, but I can’t say that he had a magic moment where he mentioned one of his common-sense solutions and produced a reaction of “yes, that’s exactly the kind of common-sense solution that would work!” Maybe those are coming. Like Emmer, Horner is promising more details ahead.

Comments (61)

  1. Submitted by Paul Udstrand on 08/16/2010 - 11:22 am.

    I think someone needs to explicitly draw attention to the outright dishonesty of the the Republican platform. It’s a lie straight up. If this were 1982 the jury would still be out, but decades after Republicans started denying they wanted to cut services, and then delivered almost nothing but cuts in services along with record deficits we can no longer pretend that guys like Emmer are telling us the truth. This is a decades old calculated, deliberate bait-n-switch. There is no intention to deliver more with less, even the same with less, it is and always has been a less for less plan. We need to stop pretending that these deficits are accidents and that these tough choices are product of economic bad luck. You want to cut services fine, make your case. But stop lying about your intentions.

  2. Submitted by Ray Schoch on 08/16/2010 - 11:53 am.

    I’m a little confused.

    “…On “Almanac” Emmer said Minnesota doesn’t need higher taxes. “We’re talking about new revenues from new jobs.”

    The endpoint of the Emmer plan, by the way, is the elimination of the income tax entirely. Here’s the quote from “Almanac:” “Ultimately, you should not be taxing production and income…” ”

    How will the state generate “new revenue” from “new jobs” if we don’t tax production and income? Jobs – old or new – presumably involve production, and even if they don’t, they (hopefully) produce income. Does this mean Mr. Emmer’s “$100,000 servers” will be free of state income taxes? The Ford plant will pay no taxes because it makes trucks? MedTronic will pay no taxes because it produces medical devices?

    If that’s the case – or the ultimate goal, at least – I’d like to see and hear what’s being proposed as a viable revenue source for state and local government to replace taxes on production and income. If we eliminate taxes on production and income, what will take their place as a revenue stream? SOMETHING has to replace them – will it be taxes on property? That seems unlikely, given past positions, legislative and otherwise, by Republicans near and far.

    I’m not a fan of anarchy. I prefer paved roads, safe water and food, neighbors educated at good schools, and other signs of civilization, none of which are free. Unless and until I see a plan that lays out how these things will be paid for, I have to go with the guy who at least has a public proposal out there for people to see.

  3. Submitted by Bill Gleason on 08/16/2010 - 11:57 am.

    Very good summary.

    Emmer has apparently been watching too many of his own commercials. If he though Dayton was going to fold and that this would be a cakewalk, he is in for a heck of a surprise.

    The cuts Emmer will have to make are bound to be painful and the longer he waits to put them out on the table the more serious his problems are going to be.

    Although Dayton is no great orator, he is very smart and has planned this campaign exceedingly well.

    Dayton reaming Emmer a new one over the cop-killer bullet issue is just the start. And the cops have his back because of his past support of them. I doubt that we’ll hear from Emmer again about that one, unless his new handlers have the same bad judgment as the last ones.

    Horner needs to do his homework. He doesn’t seem to take Dayton’s needles very well, either. All Dayton seems to need to do is to mention Horner’s PR background and that he has no elected office experience and Horner pops his cork.

    Good times. Let’s keep up the dialog between the three so that the voters can make an informed choice.

  4. Submitted by John E Iacono on 08/16/2010 - 12:30 pm.

    Hmmm.

    How could I cut the budget for my department without cutting services?

    Maybe, if my staff is supposed to be working from 8:00 to 4:30 for eight hours pay, I could insist that they be at their desks at 8:00 instead of in the coffee room until 8:30. And maybe I could insist that the 10:00 coffee break be over at 10:15 instead of 10:30. And the lunch half hour be unpaid, and over in a half hour instead of an hour, and the afternoon 2:00 coffee break be over at 2:15 instead of 2:30. And I could insist that staff be at their desks until 4:30 instead of 4:00. With the two hours per person saved, I could lay off one in ten of my staff, with NO reduction in services.

    Next, I might actually do productivity studies on the nine remaining staffers, to be sure I lay off the least productive one.

    I might even encourage productive staff with performance bonuses, and still save money.

    Then I might start checking that people taking “sick leave” are actually sick, by requesting medical certification of illness. I might even have spot checks to see if “sick” employees are actually home when they say they are, and not out shopping.

    I might, with zero based budgeting, force supervisors to justify each position they have built up in their section, instead of routinely approving budgets that are “last year, plus 5%.”

    If I really wanted to dig in, I might even ask supervisors to justify their own existence and that of their section by explaining the NEED for what they are doing, and how it is not being done already by another department or section.

    And that’s just a start. Much maligned businesses do these things all the time, but in government the incentives are in the other direction.

    Government employees who objected to this treatment and jumped ship might find they have gone from the frying pan into the fire that (now barely) most of us live in.

  5. Submitted by Brian Simon on 08/16/2010 - 01:10 pm.

    John Iacono writes
    “Maybe, if my staff is supposed to be working from 8:00 to 4:30 for eight hours pay, I could insist that they be at their desks at 8:00 instead of in the coffee room until 8:30. [etc]”

    Cute. Does it add up to $6,000,000,000 in savings?

  6. Submitted by Paul Udstrand on 08/16/2010 - 01:30 pm.

    //Maybe, if my staff is supposed to be working from 8:00 to 4:30 for eight hours pay, I could insist that they be at their desks at 8:00 instead of in the coffee room until 8:30. And maybe I could insist that the 10:00 coffee break be over at 10:15 instead of 10:30. And the lunch half hour be unpaid, and over in a half hour instead of an hour, and the afternoon 2:00 coffee break be over at 2:15 instead of 2:30. And I could insist that staff be at their desks until 4:30 instead of 4:00. With the two hours per person saved, I could lay off one in ten of my staff, with NO reduction in services.

    If these imaginary government workers of yours actually existed to any significant extent you may be on to something John. My wife is not an imaginary government worker, and she’s got something like two weeks of comp time accumulated because: a) she doesn’t get paid overtime b). She works that many overtime hours. Her shift is from 8:30 to 4:30, and she’s there on time, never leaves early, and leaves late most days as do all of her co-workers. A couple weeks ago she spent her weekend, without pay, walking around the Powderhorn area trying to track down an outbreak. She works for the health department by way.

    These are real people, not Republican caricatures. They’ve been dealing with staff cuts, pay cuts, and budget cuts and public hostility that they didn’t earn, and don’t deserve, for ten years now. So if you think you can show em how it’s done John, I’m sure they’d be happy to have you visit for a week or so.

  7. Submitted by John Cricky on 08/16/2010 - 01:36 pm.

    @ John E Iacono

    Stereotypes are fun, aren’t they?

    And when the economy tanks and the private sector slashes its workforce, governments should do the same, right? Except while government budgets have continued to be slashed, demand for its services have skyrocketed, which now must be done with fewer workers.

    This tired, apples-to-oranges comparison of government and the private sector is ridiculous and worn out.

  8. Submitted by Greg Kapphahn on 08/16/2010 - 02:39 pm.

    If we’re going to compare government to the private sector, let’s consider how well all those well-experienced “private sector” managers brought in by the Bush Administration fared in managing government.

    Watching “heckuva job” Brownie, and all the other amazingly incompetent mis-managers during Bushco convinced me of two things:

    1) Crony-operated government with no-bid contracts and “privatization” of government services, which ALWAYS end up being far more expensive seem to function for no other purpose than allowing their rich friends to make a profit at public expense (i.e. siphoning taxes into their own pockets while loudly complaining about lazy, inefficient civil service workers who were consistently doing MORE with far less).

    2) If the top-notch managers brought in by Bushco were among the cream of the crop of American business leaders, it’s no wonder the rest of the world is eating our lunch when it comes to competition. Clearly the problem in American enterprises is not the cost of American workers nor high taxes nor regulations – previous generations of managers had no problem with those things and still consistently outperformed the world. The REAL problem with American business is the pathetic lack of ability in our management class, especially at the top.

    In fact, if you research the inside story on the way most businesses are managed, decision making is based so strongly on the preferences and predelictions of the top managers, with actual facts and evidence having so little bearing on the choices made as to make it ALL seem like some sort of faith based, “free market” vodoo.

    If you really want Minnesota government to continue to run the way it has under King Timmy, where “faith” in what the CEO says he wants trumps all mounting evidence to the contrary, where the CEO is guaranteed to jump ship with a golden parachute that bears him or her up and off to bigger, better things when the ship goes down, as it inevitably does, just vote Republican (Emmer or Horner, your choice). But don’t say no one warned you.

  9. Submitted by dan buechler on 08/16/2010 - 03:21 pm.

    Pawlenty vetoed a gas tax increase that even some republicans were for. That would have been a tax on consumption.

  10. Submitted by Richard Schulze on 08/16/2010 - 04:51 pm.

    A tax break/cut is never a tax break. It’s a tax increase for all the rest.

    I’m always interested to hear how adding to the unemployment rolls is good for Minnesota.

    Mr. Cricky #7 says it best….

  11. Submitted by Bernice Vetsch on 08/16/2010 - 05:59 pm.

    Dayton’s tax “increase” is not that as much as it is a return to the levels at which the wealthy were taxed before the cuts of 2000 and 2001.

    Emmer in previous months mentioned often a goal of 20 pecent reduction in government spending. And that would be just the beginning.

    Emmer would double the harm done to Minnesota by Pawlenty.

  12. Submitted by Paul Udstrand on 08/16/2010 - 08:20 pm.

    At any rate, you can see why Republicans can never balance budgets, do you really think you find 6,3, or even 1 billion dollars in lost efficiency by tightening coffee breaks and monitoring time clocks? Have you been to the Capital? You can’t get a decent cup of coffee without crossing the freeway and going into Downtown.

  13. Submitted by Paul Scott on 08/16/2010 - 09:27 pm.

    I’d like to thank Mr Iacono for laying out for all to see the utter lack of seriousness with which the GOP seems to understand our current financial problems in this state.

    Now put down that coffee cup and get back to work, all of you!

  14. Submitted by John E Iacono on 08/17/2010 - 09:21 am.

    (#6) Paul Udstrand:

    Your wife and her co-workers may be diligent exceptions. I note, however, that you do not say she is available to the public during those punched in hours.

    But, since we are talking about the state budget here, just try calling just about any state office at 8:00am, or 10:15am or 1:00pm or 2:15pm or 4:15pm. Nine out of ten times you’ll go to a machine, to on hold, or to voicemail.

    Or in city offices, your odds of going to voicemail at any time are about 6:1.

  15. Submitted by Paul Brandon on 08/17/2010 - 09:44 am.

    John–
    And how many times have you called a large private corporation and gone through phone menu hell?

  16. Submitted by John E Iacono on 08/17/2010 - 10:23 am.

    “There you go again”…as if “they did it too” makes it o.k.

    Of course, if “they” did it to the extent that government does it, they’d be out of business.

  17. Submitted by Paul Udstrand on 08/17/2010 - 11:16 am.

    //(#6) Paul Udstrand:

    Your wife and her co-workers may be diligent exceptions. I note, however, that you do not say she is available to the public during those punched in hours.

    Dude, you have a serious (and possibly embarrassing)problem with assumptions. My wife and her coworkers are always available to the public. They spend much of their time responding to public inquiries, as well those from health care professionals and the media. Furthermore you don’t have to make a single phone menu choice to get to her, although you do have to tell the receptionist (a live human being) who you want to talk to. My wife was just telling me the other day of a 20 minute phone conversation she had with a upset teenage girl who was afraid she may have acquired rabies (Google is not always a good thing). Of course these conversations are always stripped of any identifying information or details, there are very strict rules regarding information and state workers take those rules very seriously.

    Again, these are real people, doing real jobs, and providing real services. They are not cardboard cutouts from Republican campaign brochures.

    //But, since we are talking about the state budget here, just try calling just about any state office at 8:00am, or 10:15am or 1:00pm or 2:15pm or 4:15pm. Nine out of ten times you’ll go to a machine, to on hold, or to voicemail.

    John, you can expect a single state worker to do the job of three if you want, but it’s impossible for even these magic state workers to be more than one place at a time, or talk to more than one person on the phone at a time barring conference calls. You obviously have no idea how may calls the state gets every day. The state provides services to tens of thousands of Minnesotans on a daily basis. You cut budgets, fire thousands of state workers, and then expect to never have to leave a voice mail? My experience calling my wife at work is maybe six times out of ten she picks up, usually just long enough to tell me she doesn’t have time to talk.

    Of course it goes without saying that the private sector is a disaster in this regard. I call business people and return business calls every day and far more often than not have to leave voice mails and play phone tag. I once spent an hour and a half- I’m not exaggerating- on hold with Qwest. I typically spent at least a half hour hold waiting for a human being- in India, with ATT. I’m not complaining about human being in India, I’m just sayin…

    Now it is true that if you try to get through to a human being at the immigration service it’s very nearly impossible. But that service was privatized during the Clinton administration and now wants to charge $100.00 to answer any question that isn’t covered in it’s online FAQs. Private sector to the rescue eh.

    Seriously, this a huge problem in this country, Americans have no idea what their government is doing, or how it’s doing it. Most people have no idea that Epidemiologists even work for the state, much less what they do or how they do it. So it’s easy for these bogus notions of workers sitting around all day trying to provide services that no one is using to dominate the discourse. And frankly, I blame the media. My wifes unit has gotten some nice coverage the last couple years because they routinely solve big outbreaks that stump everyone else, but by and large unless your wearing a uniform of some kind the only media attention a government worker gets is negative attention. Like anything else it creates the impression the exception is the norm. If Highway Helpers worked for a private company instead of the state- I guarantee you you would have seen a profile on those guys who drive around all day providing assistance to motorists, and they even wear a uniform of sorts.

    Again for the umpteenth time, no one is saying government if perfect. Most workers like my wife would be happy to detail and discuss inefficiencies, and there is no shortage of ideas for better efficiency and improved service. This idea that budget cuts magically produce efficiency is just silly. The government that people like John describe simply doesn’t exist. The reason Republicans are so bad at running the government is they’re not trying to the run the real government, they’re running this government that exists nowhere but their own imaginations.

    By the way, Tim, if you’re still out there talking about how successful businesses increases efficiency while decreasing resources every day, tell me where you’ve heard this before: “Due the high volume of calls…”

  18. Submitted by John E Iacono on 08/17/2010 - 11:58 am.

    I haven’t tried the epidemiologists, so I wouldn’t know about that.

    But it surely is not typical. I know that.

  19. Submitted by Tim Larson on 08/17/2010 - 02:20 pm.

    Hi Paul U, ya I’m still out there. I never stated anything like John did and while I’m sure it’s true to a degree but that’s not the point I’m trying to make, as you can find those examples in any organization public or private.

    The point I’m was trying to make was that successful businesses are always looking to do things more efficiently. You stated that “there is no shortage of ideas for better efficiency and improved service.” Are there any programs to actually implement those ideas? Does the management of the health department actively solicit, act upon, and reward employees for those ideas? That’s what successful businesses do. I once worked for a company that gave employees 10% of any cost saving ideas they came up with. My kids are going to college on one of my ideas.

  20. Submitted by Paul Udstrand on 08/17/2010 - 04:23 pm.

    //The point I’m was trying to make was that successful businesses are always looking to do things more efficiently. You stated that “there is no shortage of ideas for better efficiency and improved service.” Are there any programs to actually implement those ideas?

    Thanks for asking. Yes Tim, they’ve implemented a variety of quality assurance programs and adopted a variety of efficiency standards and programs. They are constantly reviewing and re-organizing. Everything from shutting the air-conditioning off on the weekends to closing down the library. Two or three years ago they switched over to a whole new internet based phone system that’s integrated with their IT infrastructure and it’s supposedly saved a huge chunk of dough on phone bills. My wife frequently buys stuff for the department at Costco because it’s cheaper than getting it through the office supply outlet. Government workers are accustomed to working with limited resources so they’re constantly working out cost savings and efficiency. Listen, it’s important to remember that these deficits are not being caused by cost over-runs. Government departments get a budget at the beginning of the year and that’s it, that’s all they get, government is staying within that budget. The problem is revenues are falling short.

    Tim, intelligent people who care about what they do want to work as efficiently as possible, it’s got nothing to do with profit motive. You have an extremely high percentage of intelligent people who care about what they do working in the government.

    And remember, it’s not just about cost savings, it’s about service, and good service isn’t cheap, you just don’t want it to cost more than it should. Ya’ll better think long and hard about whether or not you want bargain basement transportation systems, health departments, educational systems, fire and police services etc. You get what you pay for. Republicans have been selling the myth that you can get a Cadillac for the price of a KIA. Now maybe we don’t need a Cadillac, and we certainly can’t afford one, but whatever you get you have to pay for it. You can’t just keep cutting budgets and expect government to magically appear when you need it.

  21. Submitted by Max Hailperin on 08/17/2010 - 04:30 pm.

    The two candidates who vaguely hope sales tax revenues can rise enough to offset income tax cuts and close a $6b hole are also failing to consider the relative size of the two revenue streams. Last I noticed, Minnesota gets about 62% more money from individual income tax than from sales tax. That means a 10% cut in income tax would take a 16% increase in sales tax to pay for. Similarly, raising $6b would take a much sharper upturn in sales tax.

  22. Submitted by John E Iacono on 08/17/2010 - 05:19 pm.

    Paul,

    Perhaps you can also speak to whether government agencies are actively working to redefine their core mission, and adjusting their work patterns and agendas to fit that mission, eliminating the “mission creep” that always occurs if this is not done. I would be interested to hear.

    Also, I am not clear: do you assert that the activity in your wife’s area is duplicated throughout all government agencies and functions, particularly at the state level (which is Emmer’s focus) or are you simply stating that “not all” government agencies are due objects of my complaints?

  23. Submitted by Paul Udstrand on 08/17/2010 - 06:09 pm.

    Max, you’re using “real” math. They’re using “magic” math. Magic math is better.

    I’m not a big fan of Bill Clinton but he did do a good job of managing the budget. Max’s comment reminds me of my favorite Clinton Quotes, he was asked once how he managed to run the budget so effectively, what was the special skill that he brings to the table? Answer: “Arithmetic”.

  24. Submitted by Paul Udstrand on 08/17/2010 - 08:23 pm.

    //Paul,

    Perhaps you can also speak to whether government agencies are actively working to redefine their core mission, and adjusting their work patterns and agendas to fit that mission, eliminating the “mission creep” that always occurs if this is not done. I would be interested to hear.

    No John, government workers don’t define or redifine their mission, those are policy decisions. Government workers don’t decide whether or not to build highways instead of light rail, or how much to charge for licenses. The Health Department can’t decide it’s suddenly going to open up schools or do building inspections. Your elected officials pass legislation that defines what government agencies do and don’t do. Agencies can only do what they have funding to do, and the legislature controls that funding. Emphasis and priorities are likewise above the pay grade of most government workers, those are determined by the political appointees that run government agencies. So if you have a problem with what your government is doing, don’t blame the guy behind the counter, blame your political appointees and elected officials. All government workers can do- by law- is adjust and their work patterns and agendas to fit whatever mission they’re given by elected officials.

  25. Submitted by Max Hailperin on 08/17/2010 - 09:10 pm.

    This insightful analysis includes a mention of Emmer’s web page about taxes. Another interesting point regarding that page is that it says “Minnesota’s tax system has become more regressive in recent years.”. Of course, that is true, and is precisely Dayton’s point. But if you read on further in Emmer’s page, you quickly get the impression that he doesn’t know what the word “regressive” means with regard to taxes. Far from genuinely complaining about the regressively, his complaints would be more accurately stated as a belief that the current tax structure isn’t regressive enough — that it should be made more regressive.

  26. Submitted by Tim Larson on 08/17/2010 - 10:00 pm.

    Paul U,

    Your wife should be commended for her smart shopping. But they’re no different than anyone in the private sector that gets a budget at the beginning of the fiscal year. As for VOIP, that’s great, what took them so long? I wonder if it’s done by the department and not the state as a whole who could probably get a better rate.

    I noticed you didn’t address my second question;

    Does the management of the health department actively solicit, act upon, and reward employees for those ideas?

    It’s steady, disciplined, continuous improvement programs that that provide the means for a reduction in costs. WITHOUT a reduction in the quality of services.

    The problem is that we’re getting a KIA for the price of a Cadillac, not that we want a Cadillac for the price of a KIA.

    There’s an old saying; Good, fast or cheap. Pick two.

    I pick good and cheap.

  27. Submitted by Tim Larson on 08/17/2010 - 10:17 pm.

    This insightful analysis includes a mention of Dayton’s web page about taxes. Another interesting point regarding that page is that it says;

    For now (without additional computer modeling information) I would say that an individual making over $130,000/yr. or a couple over $150,000/yr. would pay slightly more in state taxes; people making over $500,000/yr. would pay more in state taxes; and people making over $1 million/yr. would pay significantly more in state taxes.

    While I agree with Eric that Dayton has a bit more of a plan than his opponents. I’d like a definition of “slightly”, “more” and “significantly.” Especially when we’re talking about 3+ billion dollars that he wants from the top 10% before I can decide if it’s a viable plan.

  28. Submitted by Paul Udstrand on 08/18/2010 - 12:39 am.

    //I noticed you didn’t address my second question;

    Does the management of the health department actively solicit, act upon, and reward employees for those ideas?

    I’m not aware of any reward program. State workers get paid their salary according to contract, there are no bonuses. The whole idea of a reward kinda defeats the purpose in the public sector, the whole point of finding savings and efficiencies is to improve and maintain services, not put more money in someone’s pocket. Again the difference between the private and public sector is that the public sector isn’t trying to generate a profit. All “savings” go back into services, that’s why you get more bang for the buck with public dollars than you do with private for profit dollars in terms of service.

  29. Submitted by Paul Udstrand on 08/18/2010 - 12:48 am.

    By the way Time, I noticed you didn’t answer my question, when was the last time you heard: “due to high volume you phone call…”?

  30. Submitted by Paul Udstrand on 08/18/2010 - 01:39 am.

    //Also, I am not clear: do you assert that the activity in your wife’s area is duplicated throughout all government agencies and functions, particularly at the state level (which is Emmer’s focus) or are you simply stating that “not all” government agencies are due objects of my complaints?

    State agencies have different missions, but on a basic level I think the activity is duplicated throughout state government. At the local level things can get dicy because they can be a little less isolated from politics and nepotism, and city budgets vary considerably. In St. Louis Park I’ve never gotten anything but prompt and courteous service. The water guy came out on a Friday evening when I complained about my water pressure and actually took apart my water softener and found that the filters were clogged. He didn’t have to do that, he could’ve just said it wasn’t city issue and told me to call a plumber. When one of our dogs passed away the city workers sent us a nice card and extended the unused dog license to our remaining dog. A couple years ago I had a customer who wrote me a bad check and refused to make the payment good. Since this is actually a crime I took all of my paperwork (there’s all kinds of statutory stuff involved with that) over to the police station. I figured they’d just file the paperwork and issue an arrest warrant. Instead the cop actually called the customer at work and talked to her, she paid me the next week. The Public Utilities Commission resolved two issues we had with Qwest- first they suddenly decided a while back that after telling us for over a year that our new area code would be 952 they decided to make 763 instead. This would have cost me thousands of dollars because all my advertising, Yellow Pages ad etc. was already purchased and printed with the 952 number. Qwest of course wouldn’t budge for me, but within a week of filing a complaint with the PUC they announced they would be using the 952 prefix as originally planned. A different time Qwest changed our long distance plan, over charged us, and then threatened to cut off our service and send the matter to collections. After six months of trying and failing to get anywhere with Qwest, the PUC resolved this in about a week and a half, Qwest balanced the account and apologized. Back to the State, the Attorney General’s office wrote a letter to Sirius/XM radio on our behalf regarding a failure to issue a two radio discount and within three days I got a call form the president of the service department offering the discount for one year. What can I say, it’s my government and I use it.

    My dad gets into fights with the city all the time, but that’s a whole nuther story.

  31. Submitted by Paul Udstrand on 08/18/2010 - 08:11 am.

    //Far from genuinely complaining about the regressively, his complaints would be more accurately stated as a belief that the current tax structure isn’t regressive enough — that it should be made more regressive.

    Yes, Republicans believe in regressive tax structures, it’s the essence of trickle down economics.

  32. Submitted by Max Hailperin on 08/18/2010 - 08:44 am.

    I doubt it confused anyone, but in my comment #25 (also quoted in Paul Udstrand’s comment #31), the word “regressively” should have been “regressivity”. I apologize for letting a spell-checker get the better of me.

  33. Submitted by John E Iacono on 08/18/2010 - 11:37 am.

    On Taxes, Part A

    Taxes are generally leveled as “sin taxes (liquor, tobacco)” or as taxes on things you have to have (real estate, personal property), stuff you buy (sales taxes),or on income (wages, self employed earnings, investment income).

    >”Sin” taxes are pretty much optional: if you don’t want to pay the tax, you can skip the booz. They work because — unless they are prohibitive — people will buy anyway. These tend to be regressive in impact, in part because those with less wealth often consume more as a portion of their income. But no-one objects much, because they are optional.

    >Property taxes are really not optional, either as taxes on an owned home or as part of the rent. Everyone needs a home, and unless one is willing to live in a car, must therefore pay these taxes. The only “optional” part is that you can choose to live in a hovel or in a palace, depending on your means. These could be called progressive taxes because higher valued homes are taxed at a higher rate than the rest, but are really regressive, because even a poor person must have a minimal dwelling for basic comfort, and the average home bears the brunt of costs paid by the property tax.

    >Sales taxes are claimed to be optional, but it depends on what is taxed. If necessities like food and clothing are taxed, they are not optional because everyone must have them. So are expenses like repair services and (usually) tax filing. Dining out, buying a new car, going to a ball game on the other hand, are optional. To the extent that sales taxes are levied on things where folks have a choice, these taxes are neither progressive nor regressive. But where they are levied on things where folks have no real choice, they tend to be regressive, as the poor and the wealthy both need them equally, and the cost to the poor as a share of their income is higher.

    >Taxes on income are neither optional nor progressive in themselves, but have usually been made progressive by taxing higher incomes at higher rates. In our current system, income taxes are very progressive, exempting almost half the earning population from any income taxes at all. The top 10% of earners pay 60% of all personal income taxes.

  34. Submitted by John E Iacono on 08/18/2010 - 11:38 am.

    On Taxes, Part B

    >Some folks think ALL taxes should be progressive, in the spirit of “From each according to his means, and to each according to his needs.” These folks would impose higher and higher taxes on those with means to fund the benefits all share.

    This notion, however, has fallen on bad times as socialist societies like the Soviet Union and Greece have proven that in the end they leave governments impoverished, and most folks with next to nothing and little incentive to better their lives. “The government pretends to pay us, and we pretend to work” as the shrewd Pole once said.

    Some think all taxes should be regressive, and that each person benefitting from government services should bear his fair share of those costs. These folks would use sales taxes or value added taxes as a means of choice.

    In our society, we generally do not espouse this idea, believing in a moderate version of “those who have more should pay more. So we dispute over how MUCH more.

    Some, like Dayton, think “a whole LOT more.” They try to soften the blow by promising to the taxpaying majority that they will “tax the other guy.”

    It’s another version of “you can have your cake and eat it, too” for a promised majority of voters. It’s a false promise, as any taxation in any form eventually comes from the pockets of the majority directly or indirectly: the accountant or plumber or contractor will attempt to cover his tax “overhead” by raising his fees, paid by the lower income majority. The manufacturer or retailer will raise his prices, or — if he cannot – go out of business to conserve his wealth. This will free his competition to raise theirs.

    Some, fearing the exit of those who have the means to leave (in person, or with their wealth invested elsewhere), and fearing to “take the heart out of” those who might otherwise be seeking to better themselves while also benefitting many others with jobs and better goods and services, object to any added penalties on “the wealthy” and would even reduce their taxes as an incentive to stay and to produce.

    And ALL groups, it appears, object to perceived waste and inefficiency in the government they now have, and prefer to solve government income problems by cutting taxpayer supported expenditures. Government employees seem to be the only ones who object.

    >In the end, while Americans will probably support making the income tax somewhat more progressive, they DO share the fears of creating a socialist state and worry about taxing those who have the means to leave to the point where they actually do, leaving the government unable to give a free ride to the rest.

    I believe they will resist any increases in other taxes on necessities, and punish at the ballot box any politicians who raise them.

  35. Submitted by John E Iacono on 08/18/2010 - 11:47 am.

    On “Fair Share”:

    Mr. Dayton likes to say the wealthy should pay “their fair share.”

    Aware that “the wealthy” (the top ten per cent) already pay 60% of all personal income taxes, one has to wonder what on earth he means.

    Does he mean that top ten per cent should pay ALL the taxes, while the rest of us dine at the government table free of charge? That does not seem fair to me, although I am not one of that top tier and never will be and have no clients who are.

    What is the “fair share” of the bottom 40% or so, who now pay NO income taxes? To my way of thinking, especially in light of the fact that they are the beneficiaries of a disproportionate amount of government spending, $0.00 is hardly a “fair share.”

    All the lower 40% have going for them is that they represent a lot of votes.

    Could that be the real meaning of Mr. Dayton’s campaign? Hate your wealthy brother, while dining at the government table at his/her expense?

    If so, it seems to me Mr. Dayton is guilty of the most despicable and patronizing kind of pandering.

  36. Submitted by Tim Larson on 08/18/2010 - 12:18 pm.

    “due to high volume you phone call…”?

    Paul, It’s happened, but not very often. Honestly, I can’t remember the last time.

  37. Submitted by John E Iacono on 08/18/2010 - 12:28 pm.

    By the way, if we had a minimum income tax of $250.00, the 40% of 150 million taxpayers who pay no tax now would provide fifteen trillion dollars of additional tax revenue per year.

    I believe that would fix our current dilemma, even if NO cuts in spending were done.

  38. Submitted by Max Hailperin on 08/18/2010 - 02:15 pm.

    Mr. Jacobi, you might have a better appreciation of what “fair share” might mean if you read the Minnesota Tax Incidence Study. It makes fascinating reading in any case for anyone serious about these policy questions.

    The starting point is the recognition that state and local taxes need to be considered together in order to have a consistent perspective from which to examine historical trends. The state has consistently mandated that local units of government provide various services, but it has been quite inconsistent with regard to how much of the cost of these mandates it transfers to local governments from state-collected taxes versus how much it leaves for the local units to collect on their own (mainly as property tax). Likewise business and individual taxes need to be considered together because (as you point out) the ultimate cost always is born by individuals. The study takes all this into account.

    The big change over the past decade has been a shifting of some of the tax burden away from state taxes to local property taxes. The consequence of this is that the very wealthiest are now paying a significantly lower percentage of their income in total state and local taxes than are normal people. It used to be that deciles 2-10 all paid nearly the same percentage of their income. (The study explains that reliable statistics are not available for the lowest decile.). Even if you subdivide the top decile and look at the top 5% or top 1%, the total state and local tax burden as a percentage of income used to be about the same as for Minnesotans generally. But now, the top decile, and even more dramatically, the top 5 or 1 percent, are paying a significantly smaller share of their income.

    My understanding of how Senator Dayton used the phrase “fair share” is that he wishes to again see the top income groups paying the same overall state and local tax rate as the population at large.

    My underst

  39. Submitted by John E Iacono on 08/18/2010 - 02:57 pm.

    I’d go for each taxpayer to actually pay the same percentage. But I don’t think the 40% who now pay no taxes would like it much.

    And I DON’T think that’s what Dayton means — do you?

  40. Submitted by Max Hailperin on 08/18/2010 - 03:16 pm.

    First off, my apology to Mr. Iacono for renaming him Jacobi (with some technical assistance). Second, in referring to “the 40% who now pay no taxes,” he is badly distorting the truth. Remember the context here is the total state and local tax burden, not just the individual income tax. It is not true that the bottom 40% pay no tax. To the contrary, they pay a higher proportion of their income in state and local taxes than the wealthy do. Again, I urge you to read the Tax Incidence Study.

  41. Submitted by Max Hailperin on 08/18/2010 - 06:45 pm.

    Oh, by the way, Mr. Iacono, you should check your arithmetic. Billions and trillions are rather different.

  42. Submitted by Paul Udstrand on 08/18/2010 - 10:20 pm.

    //And ALL groups, it appears, object to perceived waste and inefficiency in the government they now have, and prefer to solve government income problems by cutting taxpayer supported expenditures. Government employees seem to be the only ones who object.

    Actually, several surveys have revealed that the majority of Minnesotan’s prefer a combination of tax hikes and spending cuts. Thanks for the compliment John but it turns out government employees don’t have a monopoly on common sense.

    http://www.startribune.com/politics/state/44029887.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUac8HEaDiaMDCinchO7DUs

    >In the end, while Americans will probably support making the income tax somewhat more progressive, they DO share the fears of creating a socialist state and worry about taxing those who have the means to leave to the point where they actually do, leaving the government unable to give a free ride to the rest.

    The fear of creeping socialism is not as universal as some seem to believe. Most people realize that simply paying taxes will not have the effect of nullifying our constitution and replacing our liberal democracy with a socialist state. For over 30 years we had income tax brackets as high as 90%, almost three times what they are now, and much higher than anything Dayton is proposing. You’ll not find anything in the history books about the “Socialist Period” of American history from 1950- 1982. On the contrary, small government Republicans look upon the 50’s and early 60’s with an almost pathological sense of nostalgia.

    It turns out that intelligent people, wealthy and otherwise don’t make all of their career or geographical choices based on tax rates. We saw no flight from MN when our rates were higher, nor did we experience an unprecedented wave of immigration when we lowered tax rates. As many have already pointed out, MN’s economy outpaced the national economy when we had higher tax rates. Economics are a lot more complex than simplistic tax rate concerns would suggest.

    None of this in and of itself provides a rationale for raising taxes, but the plethora of fears John refers to are driven by ideology, not rationality. We’ve had over thirty years of fear-based, magic plan (cut taxes and wait for the magic to happen)Republican economics; I think it’s safe to draw some conclusions at this point. I know some people want to re-live the golden era of Ronald Reagan, but this isn’t 1984. Every time anyone has ever followed Emmer’s anti-plan strategy we’ve gotten budget crises and recession for our troubles.

  43. Submitted by Paul Udstrand on 08/19/2010 - 08:46 am.

    #33 & #34,

    Thanks John for this long and detailed explanation as to why Republicans believe in regressive tax structures.

  44. Submitted by John E Iacono on 08/19/2010 - 09:54 am.

    (#41) Max Hailperin says:
    Oh, by the way, Mr. Iacono, you should check your arithmetic. Billions and trillions are rather different.

    Here it is, friend:
    Number of income earners: 150,000,000
    Times 40%: 60,000,000 (Est. # paying no inc.tx
    Times $250.00: $15,000,000,000.00

    If you count the zeros you’ll see that its TRILLIONS not Billions.

    Not a good idea to question an old cpa’s arithmetic, or his Excel workbook, which can calulate beyond the capacity of an 8 column mini calculator, which gave me the same result you claim, because I had to leave out zeros on it.

    I suspect that’s the sort of thing that confused you.

  45. Submitted by John E Iacono on 08/19/2010 - 10:02 am.

    (#42) Paul U says:
    “Thanks for the compliment John but it turns out government employees don’t have a monopoly on common sense.”

    Your comment really struck me as just the kind of thing David Warren is talking about in a recent article:

    http://www.davidwarrenonline.com/index.php?id=1169

  46. Submitted by Paul Udstrand on 08/19/2010 - 11:32 am.

    That’s some fancy math John, but the question is how do conclude that 40% of income earners pay no MN income tax?

  47. Submitted by John E Iacono on 08/19/2010 - 12:49 pm.

    Good point, Paul.

    However, one must keep in mind that the Minnesota tax return starts with the federal taxable income, which comes after all the federal exemptions and deductions, so that most often if there is no federal tax there is also no state tax.

    Certain state adjustments to this taxable income can sometimes make a minor difference, but our experience is that so far as tax libility is concerned the two run pretty much parallel.

  48. Submitted by Max Hailperin on 08/19/2010 - 02:47 pm.

    Paul may be right in comment 46 that John’s math in comment 44 is fancy, but it also is wrong. The problem is the step of counting the zeros and giving a name to it. I’m not an old CPA, just a middle aged PhD. But I know that nine zeros to the left of the decimal point makes it a billion, unless you are British, in which case it could be milliard. For the metric, we are talking gigadollars. But that isn’t trillion. To get to trillion you need 12 zeros. Look it up if you don’t believe me.

  49. Submitted by John E Iacono on 08/19/2010 - 04:48 pm.

    Max,

    Start at the decimal point.
    The first three zeros represent thousands.
    The next three zeros represent millions.
    The next three zeros represent billions.
    and the 15 to the left of the billions are trillions (part of that fourth set of zeros you refer to).

  50. Submitted by John E Iacono on 08/19/2010 - 04:59 pm.

    Woops! I DID look it up and it appears a Trillion is 1 million billions, according to Wikipedia anyway.

    I wonder what the numbers between 999 billion and one million billions are called?

    I forty years in accounting, I confess I have never had to go there. But this wikipedia entry seems suspect to me.

  51. Submitted by Paul Udstrand on 08/19/2010 - 05:56 pm.

    You people and your “math”. I just think it’s interesting that John is making up percentages of people who don’t pay income taxes and calculating revenue or lost revenue. Even if the math were correct it’s a garbage in garbage out situation.

  52. Submitted by Tim Larson on 08/19/2010 - 10:11 pm.

    “Even if the math were correct it’s a garbage in garbage out situation.”

    But I bet you believe in global warming don’t you.

  53. Submitted by Max Hailperin on 08/19/2010 - 11:43 pm.

    The 40% is in the right general ballpark such that it wouldn’t make the number be 1000 times to large the way the confusion over place values did. A factor of 2 (for example) is a lot less fatal to the general drift of a policy argument than a factor of a 1000. John thought there was a lot of additional revenue that could come from the lower middle class if they weren’t being coddled so much for political reasons. Quibbling over the 40% isn’t going to change his mind about that. But if he is the kind of rational person I expect a CPA to be, he will admit that he is wrong and the money just isn’t there, upon learning he is off by a factor of 1000.

    So back to that. Where he goes wrong is right off the bat in saying that the first three zeros are the thousands. They are actually the ones, tens, and hundreds. — zero of each of those. What makes it perhaps sound reasonable is that anything placed to their left would be thousands. So for example 15000 would be 15 thousand. This pattern continues through the rest of his description. So with three more zeros 15,000,000 is 15 million and three more is the number he was talking about , 15,000,000,000 or 15 billion.

    I didn’t check wikipedia but suspect the bit about a trillion being a million billion is a description of the alternative, European, nomenclature. In our language a trillion is only a thousand billion. Wikipedia probably lists that too. Not that it matters. John had the correct progression from thousands to million to billions (and then trillions) but was counting one too many of them.

  54. Submitted by John E Iacono on 08/20/2010 - 11:12 am.

    Max,

    You are exactly right, and that is indeed what I was doing. Significant goof.

    Please be kind and don’t pass the word to my clients?

    Sorry for misleading with my post. I guess we’d have to settle for 150 billion over ten years, not enough to solve the fiscal problems we face.

  55. Submitted by Paul Udstrand on 08/20/2010 - 11:23 am.

    I’m still hung up on the 40% of wage earners. Maybe 40% of the bottom decile pay no income tax. If you think your going balance the budget by trying to squeeze money out of people making less than $20,000 a year you’re really doing some magic math.

  56. Submitted by Max Hailperin on 08/20/2010 - 05:11 pm.

    Paul according to the Minnesota Tax Incidence study, using the projected numbers for 2011, the four lowest deciles of households pay -1.6, -0.7, 0.2, and 1.6 percent of their income in Minnesota state individual income tax. The reason the bottom two deciles can have negative rates is because of refundable credits, especially the Working Family Credit. Note than even these lower deciles are still paying substantial portions of their income in other state and local taxes, such as sales tax and property tax. Their total state and local burden still comes in over 11% even with the credits subtracting off. But as far as income tax alone goes, they are paying none, in fact getting some out. The 40% number does seem a bit high based on this data — the data suggest that the truth lies between your intuition and John’s.

  57. Submitted by Tim Larson on 08/20/2010 - 11:31 pm.

    //The 40% number does seem a bit high based on this data

    Max, Is there enough information in the study to figure out the exact number on a net basis?

  58. Submitted by Max Hailperin on 08/21/2010 - 10:22 am.

    Tim, I don’t inderstand the question. Could you be more explicit?

  59. Submitted by Tim Larson on 08/21/2010 - 10:28 pm.

    Max, the numbers you posted, IF, the deciles were equal that would indicated that on a net basis, receipts – refundable credits, the 40% number is pretty close. I was wondering if there’s enough detail in the report to figure out what the actual number is. I’ll try and look at it myself when I get more time.

  60. Submitted by Max Hailperin on 08/21/2010 - 11:24 pm.

    Tim, your idea of looking at it yourself sounds good to me. I’m still not understanding your question. Based on my experience teaching, the usual reason for that would be that I haven’t inferred the set of assumptions that are shaping your statement of the problem — the issue isn’t with what is said, but rather what is unsaid. That makes it an interesting, challenging puzzle for me to figure out what is going on and offer appropriate advice. Often I enjoy that challenge, but if you are willing to engage with the primary source yourself, that’s surely an even better approach. Best wishes, to you and to anyone else whose fad the patience to see this comment thread through to what might well be it’s end. I plan to stop following it, though I’d welcome email fr anyone. I think it is noteworthy that the “debate” in this thread started out as acrimonious as the one on Almanac but wound up quite substantive. Perhaps our candidates ought to take part in a blogging debate where they were challenged to respond to each other in some depth, with time to look up facts.

  61. Submitted by Paul Udstrand on 08/22/2010 - 09:09 am.

    //Paul according to the Minnesota Tax Incidence study, using the projected numbers for 2011, the four lowest deciles of households pay -1.6, -0.7, 0.2, and 1.6 percent of their income in Minnesota state individual income tax.

    The bottom two deciles show a negative revenue on income tax, that would indicate 20% roughly. It’s already been pointed out that this group is still paying all of their other taxes, so they cannot be said to be paying no taxes.

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