Taxing ‘the rich’ isn’t enough. We need longer vision

A good article from the Opinion page of the Pioneer Press-

Taxing ‘the rich’ isn’t enough. We need longer vision
Pioneer Press
Updated: 07/01/2011 08:09:19 PM CDT

What we have here is a failure to compromise. Much of the state budget could have been passed, but the governor chose not to get those parts of the deal done. At midnight the lights went out unnecessarily on lots of state workers and government functions tied to parts of the budget that could have been passed. At the 11th hour legislators proposed a lights-on measure that would have kept the government running for a few more days. The governor dismissed it as a gimmick.

In other words, bring on the pain – an unnecessary infliction of pain. But, as they say, sometimes you have to break a few eggs to make an omelet. The DFL governor is apparently thinking he can inflict enough pain on the state to force the Republican Legislature to its knees.

Let’s be clear. The Legislature passed a complete budget and sent it to the governor. He vetoed it. Meanwhile, the governor has yet to put forward a full budget himself. Instead, he put forward a set of numbers without the details to back them up.

One thing the governor is very clear about, though, is taxing the rich. Please don’t misunderstand. We are not all that particular about taxing the rich. They won’t go hungry and they can go somewhere else if they don’t like it.

Problem is, taxing the rich is a Band-aid, not a solution. We already have one of the higher state income taxes in the nation, so clearly high income taxes don’t produce balanced budgets.

And if you think even higher income taxes in an already high tax state are the answer, take a look at how things are going in New York, California and New Jersey. Those states have even higher income taxes than we do and still have all the same budget problems, if not worse.

It would be much easier to get behind the soak-the-rich agenda if were working for other states, but it’s not. Or if the governor had a budget of his own and would explain to us how this approach will work not only in the upcoming biennium but in the one that follows and that one that follows that.

What’s the plan? Tax the rich, then tax the rich again, then tax the rich again?

While tax revenue will be up nearly 6 percent this year, Dayton wants spending to increase 12 percent. This kind of spending is unsustainable. The Minnesota State Demographic Center predicts a 4.1 percent annual rate of revenue growth between 2010 and 2020. Meanwhile, with very little total population growth, the 65+ population is about to skyrocket – increasing more in this decade than it has in the last 40 years combined. So what we are facing is the lethal combination of low workforce growth, low revenue growth and high growth in entitlement spending.

The governor is silent on this, the issue of our time. Silent, perhaps, because the holy grail of the left, taxing the rich, can’t possibly solve the problem.

As we have said before, Gov. Mark Dayton is an honorable man who ran on tax increases. He won by the skin of his teeth: 8,000 votes and 44 percent of the electorate. But he won. Taxing the rich is an article of faith for the governor and his base of supporters, and he will do his best to see it through, breaking eggs as needed along the way.

And to repeat, we’re not necessarily against increasing the taxes of the rich in an already high-tax state, except that it is largely besides the point. It’s a Band-aid.

The real issue is the accelerating demographic shifts that, it would seem, defy solution via taxation. We urge Gov. Dayton to lead in this area by laying out his long-term vision for addressing the demographic trends that are upon us.

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