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Common sense, not tax and spend will save MN

State Senator Rod Skoe and Representative Roger Erikson recently held a town meeting in Park Rapids to discuss Governor Mark Dayton’s 2014-15 budget proposal and to obtain citizen input on several legislative issues. Respectful public debate on important issues is a positive process and should be commended.

Sen. Skoe provided an overview of Dayton’s proposed budget of $37.892 billion and plans to increase tax revenue by expanding the state sales tax, creating a new top tier income tax and increasing cigarette taxes.

Mr. Skoe failed, however, to explain the need for substantial tax increases without also addressing the critical need for spending constraints. He also did not address the major impact these proposed tax increases would have on individuals, small businesses and the states overall economic climate. In this regard, Dayton’s proposal would raise revenue from $34.994 billion in the current biennium to $37.920 billion in the 2014-15 biennium resulting in an increase of $2.976 billion or a whopping 8.5 percent. Additionally, Dayton’s proposal  would increase general fund expenditures from $36.681 billion to $37.892 billion for a spending increase of $1.031 billion.

Rather than continue the failed “tax and spend” policies which have earned Minnesota the dubious distinction of being a “hostile” business state, it would appear a wiser course of action would be to implement long term tax and spending reforms designed to eliminate wasteful and/or unnecessary spending and encourage new private sector business investment. For example, a recent Wall Street Journal study has already identified excessive out of line, administrative expenses being incurred by the U of M relative to other major universities which needs serious examination and correction.

During the public Q&A session Sen. Skoe declined to acknowledge that Minnesota is a “high taxing” state. He stated he was tired of hearing this from constituents and expressed his opinion that Minnesota was about “in the middle of the pack.” In a democracy opinions are always welcome, but unfortunately, not always factual.

To assist public and private entities develop fact based tax policy decisions, the U.S. Small Business and Entrepreneurship Counsel, a nonpartisan highly respected organization, has developed a comprehensive “Small Business Tax Index” which evaluates 16 different tax measures and combines them into one overall “best to worst” state ranking. This state tax ranking is compiled annually and is made available to all public and private decision makers.

The 2012 “best to worst” state business tax index should be no surprise to anyone who pays taxes and/or owns a business in Minnesota. South Dakota is ranked number one (best) and Minnesota is ranked 50th out of 50 states (worst). It also should be no surprise that several major, well known Minnesota companies have elected to create jobs outside the state rather than creating more new jobs inside Minnesota.

Education spending has been and should continue as a high priority for tax dollars. Policy makers, however, need to recognize this important priority will have minimum impact if our children and grandchildren are forced to move out of state for decent jobs.

In light of the foregoing, common sense dictates that our political leaders must face reality. We cannot continue pretending that taxes do not matter. The governor’s proposal to raise revenue by 8.5 percent during the next biennium will likely further erode the state’s fragile economy, and could lead to a vast economic wasteland in the northern half of the state.

Your voice is important. Call or write your representative or the Governor’s office. Ask them to abandon the historical “tax and spend” philosophy in favor of “common sense” tax reforms and increased constraints on controllable state spending. — A. L. Kleinke, Nevis