Letter: Things are better, thanks to top-tier tax increases
Once again we will be subjected to an entirely too-long campaign season for politics. We could try to legislate for specific dates when campaigning is legal, but that would probably be as successful as setting limits on campaign contributions. As long as the money flows in from special interest groups with no spending limits, we can only expect longer and nastier political battles. In that spirit, I thought I may as well throw my two cents in. (I say this being well aware of what two cents is worth at this time in my life.)
The last four years in Minnesota have seen the resolution of problems that have caused great debate for years. We have eliminated the long-term debt and we are living within our budget. We have paid back the school districts for money that was confiscated from them with state budgets put together with smoke and mirrors. We actually have some money in surplus to consider fixing roads and bridges that are falling apart. In fact, almost everyone in Minnesota is better off than they were four years ago.
Of course this was accomplished by raising taxes on the top tier of tax payers in Minnesota. This was supposedly going to place Minnesota in such a bad place economically that all the current job developers were going to move out and nobody would ever consider starting a business here again. Obviously, that didn’t happen. Minnesota’s unemployment rate has been sliding downward ever since and was at 4.6 percent at the last report (one of the best in the nation). The employment figures are showing more people are working in Minnesota than ever before. Forbes Magazine (a conservative journal) and CNN Business both show Minnesota in the top 10 best states for starting a business. These organizations have discovered, after a great deal of research, that tax climate is only about the third or fourth reason for business decisions. Good schools, competent labor forces, cultural and recreational opportunities and access to top level technology all seem to be more important to many businesses.
This brings me to my first penny’s worth of opinion. There is no correlation between cutting taxes and creating jobs. The worst recession and job loss in my lifetime came after the major tax cut in 2001. The best job creation came after a major tax increase in 1996. There have been periods of job growth when taxes were cut in the 1980s and job losses when taxes were raised in the 1970s. Jobs are created when people want a product or a service (demand), someone figures out how to respond to it, and sells it at a price that a lot of people can afford it (supply). That’s Economics 101.
There is a correlation that does occur when taxes are cut. We add to or create deficits. This is a simple equation. When you have less money and you continue spending the same amount, you have to go into debt to make up the difference. There are three major areas of spending in government, defense, Social Security, and health (four, if you count the interest on the debt). In order to make any meaningful cuts in spending, to go along with tax cuts, you have to make cuts in these three areas. The reason we always go into debt when we cut taxes is that the American public does not want any cuts in any of these areas that affect them personally. We only want to cut spending on those services, that in our opinion, other people are receiving unnecessarily. Congressman, Republican or Democrat, are reluctant to anger voters who want their services but don’t want to pay for them.
This brings up the last penny of my two cents worth of opinion. If a politician calls for tax cuts, he should make clear what services he intends to cut, so we can see that the tax cut proposed equals the services that he feels should be eliminated (i.e. $500 billion in tax cuts can’t be paid for by eliminating $40 billion from the Food Stamp program). More importantly, I can also determine, before I vote, if these service cuts will hurt me. If a candidate wants tax cuts, but he wants to maintain a strong defense and protect Social Security, he is in fact telling you he wants to increase deficits.
It is impossible to make meaningful spending cuts without making cuts in these two programs. I personally don’t want to see service cuts in these areas, so tax cuts are very low on my list of priorities for voting for a candidate. The small amount of extra taxes I have had to pay since the two percent increases in the federal and state taxes since 2010 have not caused me to alter my financial lifestyle at all. There is no upside in giving these services up. I do see a huge downside in eliminating services that protect our county and keep our seniors out of poverty.
Congratulations to anyone who stayed with my ramblings to the end of this letter. I even think it was a little long, but then, what can you expect for two cents anymore? — Donald A. Johnson, Detroit Lakes