Dayton offers facts and logic defending his tax plan

If you are someone who wants to see the state budget deficit addressed mostly or entirely through spending cuts, or if you believe that raising taxes on the wealthiest Minnesotans will destroy the state’s business climate/economy, you won’t be considering Mark Dayton’s candidacy for governor no matter how clearly he explains what he wants to do. But if you value straight talk about what a candidate plans to do, based on facts and logic, DFL guv nominee Mark Dayton demonstrated again today at the Humphrey Institute that he is in a class by himself.

Dayton spoke and answered questions for an hour Monday noon at the Humphrey. Republican nominee Tom Emmer will do the same on Wednesday and Independence Party nominee Tom Horner will follow next Monday.

After Dayton’s opening presentation today, moderator Larry Jacobs of the Humphrey joked that if there was an award for the most detailed and fact-based presentation by a candidate, Dayton would have won it (although, of course, Emmer and Horner could make a run at the award in the week ahead). 

The essential plan — and facts and arguments on which Dayton is running — have been on the table for many months. He wants to extract about $4 billion in additional taxes on the rich. He thinks the pain those tax hikes will inflict on to those folks or to the economy are less than the pain and suffering that would be caused if all or most of the deficit will was addressed through spending cuts.

(Dayton routinely challenges Emmer — and did so Monday — if he doesn’t want to raise taxes, to specify the cuts he will propose instead, so Minnesotans can decide which is more painful.)

On Monday, Dayton said voters have a choice between one candidate who wants to make the state tax system more progressive and two that want to make it more regressive. Horner has proposed to extend the state sales tax to clothing and services that are now sales-tax exempt. Dayton challenged Horner to be more specific about which services will be covered, and he gave Horner credit for at least indicating a source of new revenue. But sales taxes are regressive.

Emmer says he doesn’t want to raise taxes on anyone and has proposed some new tax cuts for businesses. But Dayton says the Emmer plan will inevitably lead to higher property taxes, which are regressive.

Charts and graphs

Dayton argued, and then attempted to demonstrate with charts and graphs, that America and Minnesota have prospered most during periods of relatively progressive taxation. He adopted an unfortunate mixed metaphor, in which taxes played the role of both the lubricant and the fuel of the economy, to support his summary statement that “progressive taxes constitute a higher quality fuel for our social engine.”

Monday at the Humphrey, Dayton gave a lecture-style presentation that amounted to a rebuttal to the most common criticisms of the plan. There was a three-page handout with three tables and a graph.

Table 1, lifted directly from the official state Tax Incidence Study, confirmed what Dayton has been saying all year. On average, Minnesotans pay about 11.7 percent of their incomes in all state and local taxes combined. When the tax bill is expressed as a percentage of household income, this burden falls most heavily on the lowest-income decile (the tax bite takes 19.3 percent from the poorest 10 percent) of Minnesotans and least heavily on the highest-income decile (10.8 percent). The wealthiest 5 percent pay just 10.4 percent of their incomes in state and local taxes. The wealthiest 1 percent pay just 9.3 percent.

(Some people have expressed skepticism that this could possibly be so. It’s not because the state income tax is regressive. It is not. It is progressive. But most state and local taxes are generated by sales and property taxes and these have a sufficiently regressive impact to shift the total to regressive.)

During his discussion of this issue Monday, Dayton said that average Minnesotans pay about 2.5 times more in sales taxes (again, it’s important to note that this is all expressed as percentage of their incomes, not in absolute dollars) than do the wealthiest, and pay five times more in property taxes than do the wealthy.

Dayton said Monday that the changes he proposes — higher income taxes on families with taxable incomes above $150,000, a new, higher property tax rate for homes worth more than $1 million, and a new tax aimed at “snowbirds” who spend half of their year in Minnesota but arrange to pay all their state income taxes to a state with lower tax rates where they have their winter homes — will still not change the status quo enough to make the Minnesota system truly progressive, but at least “fair,” meaning that the wealthy will pay roughly the same share of their incomes as average Minnesotans.

The second graphic in Dayton’s handout was from the research staff of the Minnesota House. It showed that the gap between the share of total income, paid in state and local taxes, between the richest and the poorest Minnesota has widened steadily, and significantly from 1990 and 2009.

The third graphic was a simple table showing the top federal marginal income tax rate from 1913 to the present. It demonstrates that the current top bracket rate of 35 percent is low by historical standards considering that as recently as 1980, the top rate was 70 percent and during the 1950s and ’60s it was above 90 percent. Dayton suggests that this shows that high top-marginal income-tax rates are consistent with periods of great prosperity. Personally, I found this one the least impressive.

Given the complexities of the tax code, I’ve never believed that very many Americans were ever paying those famous 90 percent rates. But I’m less skeptical of Dayton’s takeaway. I don’t believe that low taxes on rich people are the ticket to prosperity for un-rich people nor that high taxes on the rich ensure economic stagnation and decline.

The two most recent economic booms — in the mid-1980s after the Reagan tax cuts, which disproportionately benefitted the rich, and the mid-to-late ’90s after Bill Clinton significantly raised taxes on the high incomes — plus the economic disaster of the late Bush years despite a new round of tax cuts that disproportionately benefitted the rich, would seem to at least complicate the task of those who believe tax cuts for the wealthy creates a rising tide that lifts all boats.

The fourth table in the Dayton handout simply showed the top marginal rate in Minnesota’s tax code for every year since 1970. This one was also messy, because of various change in the way state income taxes are calculated — although it showed the Minnesota had a higher top marginal rate in a period when it was more prosperous than now.

Dayton backed this table up with a statement that if his plan is fully implemented, Minnesotans in the top decile will merely pay the same portion of their incomes in state and local taxes as they did in 1994, when Arne Carlson was governor.

(By the way, since the big political development of the morning was former Gov. Carlson’s endorsement of Horner, the reporters covering the Humphrey event asked Dayton what he made of the endorsement. He replied: “That they’re both Republicans.”)

The reference to the 1984 tax rates was clearly an effort by Dayton to suggest that his plan was not some unprecedented Bolshevik assault on the rich.

In concluding his opening presentation, Dayton said he didn’t have some big grudge against the rich as some of his critics suggest but rather — quoting the Sen. Paul Wellstone’s aphorism that “we all do better when we all do better” — Dayton said he simply believes “there are those who can afford to contribute more so that we can all do better.”

Hints of bad news

During the Q-and-A with Jacobs, Dayton hinted at some bad news ahead (and he seemed to firm this up slightly, although he gave no details, during a brief hallway exchange with reporters after his talk) for his plan.

Dayton has pledged that he will not propose a new top marginal rate for Minnesota that would be the highest in the nation. Hawaii has the current highest rate, at 11 percent. Dayton has never specified what the rates would be in his plan (which is certainly a mark against his general claim to have the most specific plan) but is currently working with the state Revenue Department to get more specific estimates on how much revenue he could raise with a new top tax rate.

He told Jacobs that he won’t raise the whole $4 billion he seeks from the taxes he has specified so far, and during his presentation he told the audience that he is “looking for suggestions” of other revenue-raising ideas that will be consistent with his overall determination to make the state tax system more progressive.

He also told the press gaggle in the hallway that he may not release the figures he gets from the Revenue Department on his plan, suggesting that it was getting to be unfair that he is so transparent about his taxing and spending proposals while Emmer continues to be so mysterious.

Jacobs offered Dayton a chance to respond to some of the usual objections to his plan. For example: Is he engaging in class warfare? Replied Dayton: If so, “I didn’t start the war.” He then referred to all the successful efforts over recent years to lower taxes on the wealthy.

What about the idea that raising taxes on the wealthy, many of whom are business owners, will deter them from hiring new workers? Dayton said that amounts to “holding the public interest hostage” to extort tax relief for those who need it least.

What about the idea that a high top tax rate will induce wealthy Minnesotans to flee the state, taking their tax money with them and doing more good than harm? Dayton said that as a child of a wealthy Minnesota family, he had been raised to believe that he had an obligation to give back to the community. He simply refused to believe that Minnesotans would flee the state and fire their work force to avoid a hike of 3 percent in the tax rate they paid on their highest portion of income. He called that idea “un-Minnesotan.”

Dayton is seldom a stemwinding speaker and often seems ill-at-ease in public. Today, he seemed comfortably professorial during his solo presentation. His facial expressions during the Q-and-A were more awkward, although he was absolutely ready with quite a substantive answer to every question. And he did show the occasional flash of humor. When Jacobs asked him if he was open to raising any revenue through an expansion of gambling, Dayton first said that personally “I found a surer way to lose my money, which is through politics.”

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Comments (53)

  1. Submitted by Bill Walsh on 09/13/2010 - 07:35 pm.

    Dayton’s charts and graphs certainly proved his point that the rich don’t pay what he considers their fair share in taxes. What we need to see is charts showing his solution actually raises the revenue he claims. I think last week’s PIM story debunked his plan and now it looks like the Revenue Department will concur.

    It was telling that 90% of his time today was spent on the revenue side. He is really running for Tax Collector, not Governor.

    Also, when is Eric Black or MinnPost going to fact check his spending cuts? He said today he will cut $689 million from outsourcing. His budget plan says $425 million. Which is it? And which contracts will he cancel? Or will he simply have state employees do the work instead, which will not save any money?

  2. Submitted by Suzanne Hilgert on 09/13/2010 - 07:40 pm.

    Since it hasn’t been proven than tax cuts to the wealthiest generate anything more than their own wealth, doesn’t it make more sense to just make sure the tax code is fair and everyone pays the same proportion of their income in taxes.

  3. Submitted by Ray Schoch on 09/13/2010 - 07:53 pm.

    Feeling fairly confident that the campaign rhetoric will get increasingly ugly as we get closer to the day I vote, it’s a pleasure to read of a candidate who actually has research conducted by people not necessarily beholden to his campaign to see if what he wants to do will actually work in the fiscal arena.

    “Class warfare” will be among the cries from the right, to which it seems proper to point out that Mr. Dayton is himself a member of the class that’s supposedly being victimized, so apparently he’s making war against himself. If that’s the case, he turns out to be no different than those of modest income who support “business-friendly” Republican candidates whose main talking points are reductions in taxes for the wealthy and for businesses. Supporting those reductions means those same folks of modest income are working against their own interests, as well.

    There are plenty of nonpartisan studies and statistics to show the massive transfer of wealth from the rest of society to the top 1 percent over the past quarter century. It’s eminently fair to ask those who can afford to pay more to do so. They didn’t acquire their fortunes in a vacuum, and in most cases, it’s the work of someone else – or a lot of someone elses – who made their fortune possible.

  4. Submitted by Thomas Swift on 09/13/2010 - 08:29 pm.

    “Class warfare” will be among the cries from the right, to which it seems proper to point out that Mr. Dayton is himself a member of the class that’s supposedly being victimized, so apparently he’s making war against himself.”

    You obviously haven’t been paying attention. Dayton is a trust fund baby; his “income” is negligable.

    Dayton is gunning for all those filthy rich families that actually earn $150k a year through their work.

    Class warfare describes Dayton’s agenda to a “T”.

  5. Submitted by John Hakes on 09/13/2010 - 08:51 pm.

    Former Gov. Carlson wholeheartedly endorsed Tom Horner earlier today, not Rep. Emmer as the article states 11 paragraphs back in this story.

  6. Submitted by Steve Rose on 09/13/2010 - 09:10 pm.

    Ray (#3):

    You stated: “it’s eminently fair to ask those who can afford to pay more to do so. They didn’t acquire their fortunes in a vacuum, and in most cases, it’s the work of someone else – or a lot of someone elses – who made their fortune possible.”

    Actually, Mark Dayton did acquire his fortune in a vacuum. It was earned by the hard work of his grandfather, and placed for him in a trust fund. I do recall that he spent about $10 million of Dayton money to get elected to the U.S. Senate. A seat he chose not to defend. How concerned could he be with his personal income taxes, if he is willing to make a $10 million campaign contribution?

  7. Submitted by Bill Coleman on 09/13/2010 - 09:26 pm.

    The Russian and French revolutions were class warfare. Raising the top marginal tax rate by a couple of percentage points is not.

  8. Submitted by Hal Johnson on 09/13/2010 - 09:28 pm.

    If the reports in the Star Tribune and Pioneer Press are correct, Carlson endorsed the Independence Party’s Tom Horner, not the Republican candidate, Tom Emmer. But either way, Dayton’s response, that Carlson endorsed a Republican, is more or less correct, since Horner was a longtime Republican, at least unofficially, before he switched to the Independence Party.

  9. Submitted by Richard Schulze on 09/13/2010 - 09:48 pm.

    Small government Republicans? I’m still waiting for Reagan to get rid of the Department of Education.

    Correctness seems to be a disadvantage in current debates, since it gets in the way of clear, concise talking points and tribal affiliations. The idea is to make it true by persuading enough folks to believe it.

  10. Submitted by Paul Udstrand on 09/13/2010 - 10:00 pm.

    If you think Emmer will counter with facts and figures in a few days, please call me, I have this wonderful bridge for sale in Dhaka, the price is fantastic and it’s sure make any proud owner a million dollars a year easy. Really.

    And what’s with all this noise about Dayton and his fortune from the champions of the wealthy around here? Do any of you people have any idea how much money Emmer has? Dayton’s the only one who’s released his tax returns.

    Some people might want to spend a little more time looking at the budget and the economy and worrying a lot less about Dayton’s trust fund.

    To answer Mr. Walsh’s question, yes there’s more than enough more than enough money in the top decile to generate 4 billion dollars.

    Population Decile Income Range

    1 $9,728 Under
    2 $9,783 – $16,056
    3 $16,000 – $23,00
    4 $23,000 – $31,000
    5 $31,000 – $40,000
    6 $40,000 – $51,500
    7 $51,500 – $67,000
    8 $67,000 – $87,000
    9 $87,00 – $124,000
    10 $124,000 & Over

    Top 5% Over $176,000
    Top 1% Over $448,000

    Source: 2009 Minnesota Tax Incidence Study

    http://taxes.state.mn.us/legal_policy/Documents/other_supporting_content_2009_tax_incidence_study_links.pdf

    Note that the income in the top decile is so large they break it down further to give you some idea what kind of income you may be talking about. In MN the poorest person is probably homeless, unemployed, and manages to pan handle a couple thousand dollars or less a year on the street. The wealthiest Minnesotan is probably a corporate executive; in 2009 United Health CEO Stephen Hemsley made $101,000,000.

    (source: Star Tribune http://ww3.startribune.com/projects/exec_comp/ey )

    Another way to try to get your head around the staggering disparity of income in MN is to consider the fact that of the $165 billion dollars total earned in MN in 2008, $71 billion went to the 245,000 people in the top decile while only $1.5 billion went the 245,000 in the bottom decile. In fact, the top 1% alone, the wealthiest 24,000 Minnesotan’s pulled in $28 billion dollars, that’s more than the bottom five deciles combined.

    If you want to pull 4 billion out that 71 billion you’d be taking about 5%. The top 5% making $175,000, Mark Dayton for instance, would be paying around $9,000 more a year. The top 1% making $450,000 or more would pay around $22,500 more a year.

  11. Submitted by Mohammed Ali Bin Shah on 09/14/2010 - 12:18 am.

    “But if you value straight talk about what a candidate plans to do, based on facts and logic, DFL guv nominee Mark Dayton demonstrated again today at the Humphrey Institute that he is in a class by himself.”

    And here I thought I was reading a news article. My mistake.

  12. Submitted by Glenn Mesaros on 09/14/2010 - 06:00 am.

    Dayton’s “proposals”, which come out of the Typhoid Barry playbook, are similar to the Captain of the Titanic demanding that all the rich people on board belly up some “extra money” to pay for more lifeboats. It’s too late! The Ship of State is Sinking. Why doesn’t the bored rich uncle, who never worked for a dime in his life, go after the hedge fund speculators who now dominate the Democratic party, and tax their speculative operations which have destroyed the real economy of the United States, and left it a shell of a Third World Country.

  13. Submitted by Larry Copes on 09/14/2010 - 08:53 am.

    Mr. Shah,

    He is in a class by himself, because neither other candidate has done this. Mr. Black leaves open the possibility that they will do it in their own appearances in this menu.

    Despite the glitch in mentioning Emmer (was that really the question to Dayton?), I do appreciate the reporting here. I’m not sure whom I’ll vote for, but I admit to being biased toward a discussion of facts. I strongly disagree with those who think that the ends of getting elected justify the means of direct lying and of name-calling those who disagree with them.

    Toward that end, I set up a forum for civil discussion of the MN governor’s race at http://www.odyssys2sense.com.

  14. Submitted by Greg Kapphahn on 09/14/2010 - 09:08 am.

    If Mark Dayton does not win election based on solid facts, figures and statistics and a logical approach to resolving our state budget deficit, it will only indicate that a majority of my fellow citizens are still addicted to the delusional, “low taxes bring prosperity” snake oil that the conservative (and dominant) wing of the Republican Party has been selling ever since St. Ronnie, he of the magical “bring prosperity to the nation by destroying the middle class” Raygun was president.

    If Horner (whose moderate ideas would have too little impact, and be too late to help), or even moreso, Emmer (who would just bring in the bulldozers to speed up King Timmy’s project of pushing the state economy over the cliff into the abyss) are elected, it will be testament to that addiction and to the public’s dedication to the old “hair of the dog that bit you” approach to dealing with an addiction problem (so strongly favored by some of the commentators posting here, already).

    If that turns out to be the case, I can’t help but wonder how far the State of Minnesota, formerly the economic king of the upper Midwest has to descend into this addiction before we hit bottom.

    Is it possible that our state is responding to our current economic distress by moving ever closer to pulling a collective economic “Richard Cory?”

    I find myself wishing for the return of “Bill W.” in a person who can help to heal our collective addiction to this very societally destructive, personally destructive, totally illogical, and factually false snake oil whereby the general public has consistently been seduced into electing politicians who are seeking nothing more than to destroy the economic lives and the quality of life for that same general public in favor of massively padding the pockets of themselves and their cronies?

    Of course there was a time when the churches, mosques and synagogues would have served as a countervailing force to such destructive ideas and ideals, but far too many religious leaders have now been co-opted by their love of money to risk offense to the wealthy members who keep their buildings, their budgets, and their salaries well supported.

  15. Submitted by Paul Udstrand on 09/14/2010 - 10:12 am.

    //Dayton’s “proposals”, which come out of the Typhoid Barry playbook, are similar to the Captain of the Titanic

    Mixing your metaphors there a little Glenn. Republicans ran the ship in to the iceberg, and I for one think they did it deliberately. You seem to celebrate the sinking this helmsmanship has brought about hence my suspicion that this was not accident. Typhoid has nothing to do with a sinking ship. You can’t switch metaphors in midstream just so can blame the outcome on someone else.

    Beyond the poor use of metaphors, a little less vitriol and a little more substance from Dayton critics would be nice.

  16. Submitted by James Hamilton on 09/14/2010 - 10:43 am.

    It’s two months from the election and I have a choice between a candidate who wants to raise individual income taxes, a candidate who wants to eliminate corporate taxes and reduce all other business income taxes, and a candidate who wants to do both. Poor choices, all.

    Ed Lotterman did an excellent job of pointing out the realities of the ’80s individual tax cuts on Sunday, noting that the cuts were matched with the elmination of tax advantages. Simply cutting taxes did essentially nothing for the economy. Corporate taxes, which were not matched with the elimination of tax advantages, did not return to pre-cut levels for a decade.

    If we’re all in this together, then we’re all obligated to contribute to getting through this, both in Minnesota and nationally. (No more simultaneous wars and tax cuts, please! No more “tax refunds” from the state when times are good, either.)

    Fiscal emergencies may be an opportune time to push for adoption of your preferred tax scheme, but emergencies rarely result in good long term plans, in my opinion. Impose a surcharge on income taxes and expand the sales tax base for a period of time and then get serious about long term systemic changes (without the use of blue-ribbon panels composed solely of representatives of the group under study).

    As I write, state employees have been charged by the Pawlenty administration with wringing the last few miserable dollars out of social programs, considering things I’m not at liberty to mention but which I am sure most would (will?) find both appalling and foolish, including fiscal conservatives.

    Meanwhile, the populace argues about who should pay for the things we’ve previously agreed are needed. We’ve all benefitted from these things, directly or indirectly. We all should participate in paying for them.

  17. Submitted by Kent Fralish on 09/14/2010 - 01:35 pm.

    When I have no money, I stop spending. I have heard nothing from any of the candidates about eliminating spending, only raising our already oppressive taxes to new higher levels. I would like to hear that the government money gobbling machine is going to be throttled back, just like the rest of us have done with spending. Outsourcing government services would be an excellent start. Eliminating the government as an employer is logical and necessary. It would create private sector jobs at very competitive rates, and the service and competence would be outstanding. Competition would guarantee it. Are the candidates listening?

  18. Submitted by Richard Schulze on 09/14/2010 - 01:43 pm.

    It really does speak to how the parties choose their candidates. I tend to think that the best DFL candidate was Mayor Rybak.

    The GOP had the tea party along with half term governor Sarah Palin influence their selection.

    There is no perfect candidate and we do not have any easy and acceptable answers on the policy side. And this problem has become larger because the governor has been rolling deficits for eight years.

    Now someone is going to have to inflict a level of austerity in order to fix the problem. The state economist Tom Stinson has said that the best policy would be to raise revenue and to cut the budget. Tom Horner is closest to that solution and offers some of the same revenue solutions that DFL Senator Tom Bakk has proposed.

  19. Submitted by Paul Udstrand on 09/14/2010 - 01:47 pm.

    //It’s two months from the election and I have a choice between a candidate who wants to raise individual income taxes, a candidate who wants to eliminate corporate taxes and reduce all other business income taxes, and a candidate who wants to do both. Poor choices, all.

    Jim, this is zero sum thinking. Details are important. Dayton doesn’t simply want to raise income taxes, he wants to raise them on the wealthiest Minnesotan’s who’ve gotten the biggest tax cuts and are paying the smallest share of their income. He also wants to find savings in government operations. Emmer Republicans apparently think deficits only exist if you believe they exist, and they don’t believe one exists so Emmer not bothering to develop a viable plan of any kind. Horner is trying to split the difference but his numbers don’t add up to a balanced budget so the question with him is what’s his follow-up going to be?

    Lotterman did not do an excellent job of summarizing Reaganomics, he did good job of glossing over the realities of trickle down economics and voodoo tax plans. This idea that the Reagan tax cuts were somehow “balanced” is pure historical fantasy. Reagan created what was at the time the biggest deficit in US history. Reagan didn’t balance tax revenue he cut it and shifted the tax burden to the middle class and the poor. During his presidency the top 10% got a 7% tax cut amounting to trillions of dollars while middle class taxes saw a marginal decrease on the federal level that was completely erased as states and counties raised taxes to make up for the federal cuts. Many state taxes almost doubled during this period. The over-all tax burden during this period actually increased for median income families.

  20. Submitted by Joseph Skar on 09/14/2010 - 02:31 pm.

    WOW facts and logic that only produce 1.9 billion per the Strib…. Epic Fail!

  21. Submitted by Thomas Swift on 09/14/2010 - 02:42 pm.

    This just in:

    State revenue: Dayton’s call for new tax brackets comes up short

    A state Department of Revenue analysis of DFLer Mark Dayton’s so-called “Tax the Rich” proposal to add tax brackets for high-income earners showed Tuesday that the gubernatorial candidate’s plan would raise roughly half of what he had hoped to get to help solve Minnesota’s $6 billion budget deficit.

    http://tinyurl.com/2be6ltr

    All that hard work; all those pretty charts and graphs….*sigh*

  22. Submitted by Paul Udstrand on 09/14/2010 - 03:18 pm.

    Dayton’s number come up short. Well that happens sometimes when you use math instead of magic. One nice thing about math is that instead waving a magic wand to try to fix your results you can adjust your numbers.

  23. Submitted by Ginny Martin on 09/14/2010 - 03:24 pm.

    Paying an average of 11% in taxes, considering all tax sources such as gas taxes, taxes on restaurant meals and drinks, and property taxes is hardly oppressive. If you think so, I think you either simply do not understand the realities of this world. Taxes are the price we pay for a civilized society, said Oliver Wendell Holmes. Considering the rampant incivility of our society, it appears we are not spending enough.
    “Class warfare” has been the cry of the business class since the Industrial Revolution. The wealthy used this as one way to scare the bejesus out of some people, and the gullible are still buying it. They fought to destroy the unions (while themselves uniting in such organizations as chambers of commerce and other business groups), and persuading people that this radical unionism, as well as socialism, communism, progressivism, would destroy us. Some things never seem to change.
    Getting the most wealthy to pay their fair share is not wealth distribution; it’s simply allowing the rich to pay their fair share for the many perks they enjoy in greater amounts than most of us.

  24. Submitted by Joseph Skar on 09/14/2010 - 04:14 pm.

    What is taking Minnpost so long to cover the Dayton budget shortfall story? Now it looks like Emmer has an actual plan to balance the budget and Dayton is still short a few billion. I’m personally waiting to see the 15% top rate.

  25. Submitted by Barbara Miller on 09/14/2010 - 05:30 pm.

    “Taxes are the price we pay for a civilized society, said Oliver Wendell Holmes. Considering the rampant incivility of our society, it appears we are not spending enough.”

    Amen, Ginny, amen!

  26. Submitted by Paul Brandon on 09/14/2010 - 08:26 pm.

    Mr. Sklar–
    I don’t see any “actual plan to balance the budget” from Emmer — just a handwaving argument that says that somehow cutting taxes will increase revenue; something that has never occurred in the real world.

  27. Submitted by Joseph Skar on 09/14/2010 - 09:47 pm.

    Paul – Please attempt “the Google” and try a search zero based budgeting because that is what Rep Emmer is proposing. Also please see the PDF’s in Jay’s new post for the detail of the proposal. If you still can’t tell when expected revenue less expected expenses equals zero, Normandale CC offers a nice sample of entry level accounting courses.

  28. Submitted by donald maxwell on 09/15/2010 - 07:30 am.

    “Class warfare”?

    The real class warfare has been going on apace for the last thirty years, and the lower classes have been the big losers. What do you call it when the system multiplies the disparity between workers’ incomes and those of their executives by factors of 10 or 100?

    Calling an increase in taxes on the most affluent “class warfare” simply identifies you as an enemy of the rest of the people.

  29. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 09:09 am.

    Ginny,

    11% of income in taxation is hardly oppressive. You are correct. You may want to add in the 39.6% Federal ObamaTax rate, the 7% or so SS tax rate, and the 6% payroll tax. I know there are a few more that I am missing. We are around 60% Oppressive enough for you?

  30. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 09:12 am.

    Mr Copes,

    When you use the term “in a class by himself” you have gone over the line from reporting to opinion. If I wanted a lefty editorial in every news story I would read the Strib.

  31. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 09:14 am.

    Mr Udstrand,

    Dayton’s math did fail. And the only way he can adjust his numbers while appealing to his base is by RAISING TAXES EVEN HIGHER.

  32. Submitted by David Brauer on 09/15/2010 - 09:37 am.

    Mohammed – I think your math is fuzzy.

    At these income levels, a person likely wouldn’t pay “SS tax rate and the 6% payroll tax.”

    Usually, SS is considered a payroll tax – the biggest component, a 6.2%, along with 1.45% for Medicare. But I’ll give you a break and assume your person is self-employed, meaning they would pay both the employee’s 6.2 and the employers 6.2, for a total of 13.85% above state & fed.

    HOWEVER the SS tax maxes out for taxable incomes over $106,000. Meaning it would evaporate well before the upper bracket gets hit.

    The Medicare tax has no income limit, so your victim would be hit with 11% state, 39.6 fed, and 1.45% Medicare, or 52 percent. And remember, that’s only on marginal taxable income ABOVE the $130,000+ Dayton’s talking about and the $250,000 (roughly) Obama mentions.

    I’m sure that’s too much for you too, but just wanted to be precise.

  33. Submitted by Bernice Vetsch on 09/15/2010 - 09:43 am.

    Mr. Skar — I believe Emmer’s plan is to cut taxes YET AGAIN, YET MORE and then to reduce state spending to match the revenue received.

    Bye bye to every program that attempts to help poor families, the homeless single adults who are chronically and cannot work, the disabled, the elderly, and other other groups who cannot earn incomes sufficient to support themselves. The US Constitution calls for us to “provide for the general welfare,” not to enrich the rich at the expense of the poor.

    Bye bye to the maintenance of roads and bridges, to higher ed that is anywhere near what middle or lower class students can afford, to K-12 education with classrooms holding fewer than 50 students, to the maintenance of water treatment systems and restaurant inspections and any other necessary state-provided service you can think of.

    Emmer’s plan amounts to the destruction of our state.

  34. Submitted by Paul Udstrand on 09/15/2010 - 10:09 am.

    Joseph,

    Please look at Emmer’s PDF. In the bottom row you’ll see that projected spending is 38.679 billion and Emmer’s budget is 32.281 billion. That leaves Emmer about 6.4 billion short. At least that’s the result of subtracting one number from the other, we call that “arithmetic”. Google it.

    As for zero based budgeting, two things: 1). ZBB simply requires that increased spendig be justified, Emmer is claiming that there is no possible justification for increased spending, he only justifies spending cuts. He’s not using ZBB, he’s simply freezing spending and reducing revenue with more tax cuts. 2). No clear advantages of ZBB have been identified, even on a household level strict ZBB breaks down because it fails to account for simple inflation on the expense side. This is exactly what Emmer and Pawlenty are doing, they factor inflation into the revenue but not the expense side of the ledger.

    Finally, even in theory ZBB applied to government operations is simply a recipe for massive administrative cost increases. The application of the “justification” process itself adds hundred of hours of administrative time and expense depending on how detailed the requirements and oversight are. Emmer’s application of ZBB isn’t a government management strategy, it’s a strategy for dismantling government. The question is whether or not the electorate has finally realized that Republicans aren’t interested in running the government, just taking it apart.

    Emmer describes increased costs as: “auto-pilot increases”. Everyone else uses the term “inflation”. You may want to google “inflation”, it’s pretty standard concept in economics.

    Mohammed,

    //Dayton’s math did fail. And the only way he can adjust his numbers while appealing to his base is by RAISING TAXES EVEN HIGHER.

    Finally you’re beginning to understand how budgets work. Yes, if revenue is insufficient to pay expenses you have to raise revenue. Yes, you can spend less in some places and adjust priorities, but the fact that we’ve got a 6 billion deficit proves that those techniques have played out, we’re down to revenue.

  35. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 10:17 am.

    David,

    Thanks for taking the time to do the details. Yes, I know SS tops out at 106, so at 250K the effective rate is about 6%. And yes you need to add in the payroll tax, even if not self employed, because that is a cost of hiring you, and it could be yours if not taken by the government.

    So, I guess after all that – is 52% oppressive enough for you? Or will you not be happy until “19 for you and one for me” rings true?

  36. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 10:34 am.

    Paul,

    “Finally you’re beginning to understand how budgets work. Yes, if revenue is insufficient to pay expenses you have to raise revenue.” WOW. Do YOU know how budgeting works in the real world?

    Trust me, after running business units with MANY MANY zeros behind the leftmost number on the net income line (and supporting HUNDREDS of US jobs), I know how to budget. And when my revenues did not meet expectations, I needed to make CUTS in expenses. And when my take home pay gets reduced either through company wide salary cuts or higher taxes, I CUT my spending to compensate for what I have left. Unfortunately I don’t have a magic wand (or the IRS) that I can go and take money from my co-workers to make up the gap.

  37. Submitted by David Brauer on 09/15/2010 - 11:03 am.

    Mohammed –

    I assume we both know the difference between marginal rates and effective rates, so I’m not too worried about 95% confiscatory, or that producers will even pay half of their marginal income in taxes, ultimately.

    After all, on the fed side, we are talking about rates that equal Reagan’s.

  38. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 11:39 am.

    David,

    I am very concerned about 50-60% or more marginal tax rates. I already deem that to be confiscatory. And don’t hide behind the Reagan canard – he cut them in half from 70% federal, or close to 85% or more total. Very darn close to “19 for you and one for me”.

  39. Submitted by Paul Udstrand on 09/15/2010 - 12:09 pm.

    Mohammed,

    //And when my revenues did not meet expectations, I needed to make CUTS in expenses.

    It’s interesting to know that you’re not trying to grow your revenue at your multi-zero business, I hope that works out for you. Personally, with my business, I’ve found way to increase my revenue over the last two years as well as reducing some advertising costs, switching to digital saved me a bundle. However, at the end of the year I actually brought in more dollars than I had the year before, and so did my wife. It is odd I must say to run into all these business men who don’t seem to realize that every budget has two components, revenue, and expenses. They only seem to want to talk about expenses. I guess maybe that’s why 50% of American businesses fail within five years.

    Ya know the reason we’re supposed to listening to these business boys in the first place is they’re supposed to be so good with numbers. Remember, 50% of them run their companies into ground. Even when they swim in cash they manage to pull off spectacular failures like the mortgage and banking crises.

    There’s no substitute for basic math and economics.

  40. Submitted by Joseph Skar on 09/15/2010 - 12:25 pm.

    Paul U – Work on your Google there is no inflation in 2010, despite the best effort by the current administration. Just tell me how do you justify increasing the budget +25% over the course of 2 years(from 30.713 to 38.679) while in a recession. Totally irresponsible.

  41. Submitted by Mohammed Ali Bin Shah on 09/15/2010 - 12:39 pm.

    Paul,

    Yes, I know how to develop new products, new markets, and new channels in order to grow revenue. Have done it for years. Your tone is condescending.

    I said when revenues failed to “meet expectations”. Expectations could have been a 30% growth and only 25% was achieved. Expectations could have been a 10% decline and results were actually minus 15%.

    When the industries you serve completely collapse in a 2 month period, it’s hard to raise revenue overnight. Cuts in variable expenses and some fixed overhead is necessary to match expenses to income in order to survive.

    This type of thinking does not make sense to most liberal politicians. Again, as for raising revenue, I do not have the magic wand of the IRS and a printing press in order to make more to meet my wishes. When I want to raise revenue, I need to invest money and resources and time in order to make it happen. Mark Dayton and the liberals don’t want the hard work of setting priorities and making hard choices – they just want to waive a wand and have money tress grow out of the stomachs of “the rich”.

  42. Submitted by Paul Udstrand on 09/15/2010 - 05:59 pm.

    Mohammed:

    //I said when revenues failed to “meet expectations”.

    Who’s expectations? We’ve had deficits for 8 years, the only one’s who seem to be surprised by these shortfalls are the ones who keep claiming there is no deficit and that we can “cut” our way out of deficits. Remember the unallotment battle? Pawlenty tried to claim the deficit took him by surprise and wasn’t predicted. In fact all of these deficits were not only predictable, they were predicted. You can’t claim we’ve been hit with an unexpected shortfall. We’ve been ignoring the revenue end of the equation for 8 years. If that’s NOT how you run your business, what makes you think it will work with government? If that is how you run your business, I hope you have a nice nest egg set aside because I’ve got a feeling your going to need it sooner than later.

    As for “magic wands”, magic is the purview of Republicans who seem to be saying that there is no deficit as long as we don’t believe there’s a deficit. There’s nothing magical about taxes revenue. By the way, Minnesota does not print it’s own money, printing money is not a part of anyone’s plan to deal with Minnesota’s deficit.

    Look it’s really very simple, you’re clearly not interested in balancing the budget. Your only priority is deny any additional funding for the government. Your entitled to your priorities but that’s not how anyone runs governments or businesses, that’s how they run governments and businesses into the ground, and I think you know that. So the question is: “Why do you want to run the government into the ground”?

    The question for the rest of us is why anyone would think it’s a good idea to hire a Governor who wants to run the government into the ground?

    Joseph, we’re not talking about 2010 inflation, we’re talking about the cumulative affects of 8 years of deficit spending in a system that doesn’t allow deficit spending, that 38 billion includes for instance the 2 billion in deferred education funding. Emmer wants to defer it indefinitely but it’s still on the books.

  43. Submitted by Joseph Skar on 09/15/2010 - 06:27 pm.

    So I needed to google inflation so you could tell me that is was irrelevant. What an argument. Epic Fail.

  44. Submitted by Paul Udstrand on 09/15/2010 - 07:43 pm.

    //So I needed to google inflation so you could tell me that is was irrelevant. What an argument. Epic Fail.

    No, I said inflation was cumulative, not irrelevant. Again, basic economics. Unpaid deficits carry over into the next budget cycle.

  45. Submitted by Richard Schulze on 09/15/2010 - 07:45 pm.

    I am convinced that at least half the population doesn’t understand how marginal tax rates work. I remember when Obama was first elected, there were all sorts of stories about people that were lowering their income so it would be under $250,000.

  46. Submitted by John E Iacono on 09/16/2010 - 12:52 pm.

    //”Emmer’s budget is 32.281 billion”

    Sure sounds like running the government into the ground to me…NOT.

  47. Submitted by John E Iacono on 09/16/2010 - 01:01 pm.

    “Thou shalt not muzzle the ox that treads the grain.”

    Governments forget this at their peril.

  48. Submitted by Paul Udstrand on 09/16/2010 - 03:25 pm.

    You can’t just look at a big number and assume it tells you something. GM made 179 billion dollars in 2007, that sounds like a lot but it still put them 69 billion in the hole, they went bankrupt. 32 billion is a lot of money, but if it’s not enough it’s not enough. sometimes a miss is a miss be it by an inch or a mile. Insufficiently financed government won’t function the way it’s supposed to.

  49. Submitted by John E Iacono on 09/17/2010 - 09:53 am.

    And therein lies the crux: How is government SUPPOSED to work and what is it SUPPOSED to do.

    I submit that many many folks sincerely believe that government is NOT working the way it should, and is NOT engaged in only activities it should be.

    Those folks WELCOME the idea that a hard look is warranted, that pruning, quite possibly severe, is called for, and that more effective and efficient delivery of what is left is not only desirable but necessary.

    To those folks, Mr. Dayton’s implied position that generally all is well with the status quo, with only more funding needed is not only simplistic but also offensive.

    And returning one million from his former budget won’t cut it.

  50. Submitted by Paul Udstrand on 09/17/2010 - 10:33 am.

    //I submit that many many folks sincerely believe that government is NOT working the way it should, and is NOT engaged in only activities it should be.

    I personally don’t know anyone who would disagree with this statement. We all want our government to work the way it’s supposed to and do what it’s supposed to. The problem is the assumption that “smaller” is always the answer. Rational discourse regarding government has completely disappeared from the cultural and political landscape over the last 30 years. Instead of actually discussing, studying, and debating government we’ve pursued the magic plan of cutting revenue and spending and hoping the rest would work itself out.

    Anyone who’s serious studying government function and efficiency would agree that the rational course of action is make the study FIRST, then adjust taxes and spending accordingly. Instead we’ve done exactly the opposite, we cut first and asked questions later. This has been a strategy to bypass the discussion, not engage it. One should also note, that the results of any examination of government services and efficiency are NOT predetermined. There’s this assumption in some quarters that government spending must always go down (at least for anything but military spending). In fact, any serious examination and discussion of government is equally likely to produce the opposite conclusion that spending and revenue ought to increase- it’s not a one way train.

    If Republicans are finally willing to actually discuss and study government, and make decisions based on analysis and information instead of ideological stereotypes and assumptions, I welcome that discussion. I would point out however that your candidate for MN governor is clearly not interested in the new conversation.

  51. Submitted by John E Iacono on 09/17/2010 - 11:45 am.

    //”the rational course of action is make the study FIRST, then adjust taxes and spending accordingly.”

    That is, I believe, a precise description of the approach Mr. Emmer declared in the spring he would do: Listen to the people, then look at the current structure and adjust it to what they say they want, and prepare a proposal for spending based on that amended structure.

    His opponents have been merciless in attacking this approach, however. He has stuck to it anyway.

    As for the assumption that spending must go down, when a huge shortfall is projected it seems to me that would seem to be a logical inference.

    Unless, that is, the government beast must be fed regardless of the pain inflicted on the poor fellow who then has to eat oatmeal because he can no longer afford meat. Of course, he is probably amongst the 47% whose vote is bought by supplying him from someone else’s pocket.

    As King George discovered, thee comes a point where “Tax ’em, Tax ’em, and Tax ’em some more” yields unexpected consequences.

  52. Submitted by Paul Udstrand on 09/17/2010 - 05:09 pm.

    //That is, I believe, a precise description of the approach Mr. Emmer declared in the spring he would do: Listen to the people, then look at the current structure and adjust it to what they say they want, and prepare a proposal for spending based on that amended structure.

    Please, your not seriously suggesting that a campaign stunt constitutes a serious attempt to study a set of issues and develop a fact based approach to a complex problem? Those stunts were staged at friendly venues and were deliberately designed to preclude any productive dialogue. Dude I was there when Emmer “listened” to severs trying to discuss his minimum wage theory, he flat out refused to discuss his minimum wage theory. Emmer’s plan is the product of pure ideology, it’s the plan he’s been pushing his entire life and it’s impervious rational observation.

    As for shortfall’s dictating spending cuts, again I don’t know why you guys absolutely refuse to look at revenue increases, it’s basic accounting, balance revenue and expenses. These deficits didn’t come out of nowhere, we’ve been piling them up for 8 years, they were predicable and predicted. There is such a thing as being pro-active instead of re-active.

    //Unless, that is, the government beast must be fed regardless of the pain inflicted on the poor fellow…

    Clearly no intent here to engage in any honest attempt at fact based evaluation. Its always a bait and switch- pretend to amenable to honest discourse and then wham it’s right back to stereotypes and ideology. Our government isn’t a beast, it’s a product of our democracy. The services that exist weren’t made up by government workers, they were created as a response to constituent’s demands and requests. Guys like Emmer are always looking for some end run around democracy that gives them the power to veto stuff they don’t like. At the end of the day a lot of people just don’t believe in democracy. It’s always a bad idea to put people like that in charge of a democratic government.

  53. Submitted by John E Iacono on 09/18/2010 - 11:41 am.

    …and the little red hen said ” I’ll eat it myself.”

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