Letter -- Skoe's response to govornor's budget plan is flawed

As our current state deficit stands at $6.2 billion, there does need to be an across the board cut to the state's budget.

There are programs that are unnecessary and others that should be cut back. But unfortunately we've become used to the old adages that the squeaky wheel gets the oil.

Or if I scream real loud and make a big noise I'll get to keep everything I've always wanted and more.

This type of thinking needs to be stopped both on the state and federal levels.

Our governor, Mark Dayton, has proposed to tax the 5 percent wealthiest Minnesotans and this will supposedly cure our budget woes.

In theory this sounds wonderful and most would think that this would work. But in practicality it does not work and should be stopped before it can ever implemented.

An article that can be found on the internet speaks to this issue. It is "Tax Hikes on the Rich Won't Work - dated 9/27/2010. The website on this article is www.freedomworks.org/log/jborowski/tax-hikes-on-the-rich-wont-work .

I have paraphrased it here for space: There are two states currently using this system of taxing the rich to cover budget shortfalls. What they found out is by doing so the rich left the states involved and they simply moved to states that were not taxing them out.

The following was taken from the article:

"Simply, soak-the-rich policies have never worked in anyone's favor. For instance Maryland Gov. Martin O'Malley raised income tax levels on wealthy households to 6.25 percent from 4.75 percent in 2008. Lawmakers in Annapolis wrongly predicted that this millionaire tax would generate $106 million. According to the Wall Street Journal.

Well, the state comptroller's office now has final tax return data for 2008, the first year that the higher tax rates applied. The number of millionaire tax returns fell sharply to 5,529 from 7,898 in 2007, a 30 percent tumble.

The taxes paid by rich filers fell by 22 percent, and instead of their payments increasing by $106 million, they fell by some $257 million.

Certainly, Maryland's millionaire tax backfired. It is estimated that Maryland lost $1 billion because one-third of wealthy residents moved or filed their taxes in other states with lower tax burdens.

Since Maryland's millionaire tax was implemented, Maryland's deficit has increased from $1.7 billion to $2 billion.

Similarly, New York enacted a "millionaire tax" that raised tax rates on all residents making more than $200,000 a year. However, since New York implemented its so-called millionaire tax its state revenue declined by 9 percent.

According to New York Governor David Paterson:

"We increased the income tax for millionaires last year. We projected that we would get $4 billon and we actually got well short of it. Tax the rich, tax the rich. We've done that. We've probably lost jobs and driven people out of the state."

Raising federal taxes on the rich will also have similar unintended consequences -- successful U.S. companies will be more inclined to move to a country with a lower tax burden.

The rich are better able to change the location, compensation or timing of their income in response to changing government tax policies.

Wealthy Americans can generally afford to hire expensive lawyers or accountants to avoid paying numerous taxes.

While the capital gains tax is expected to rise by 33 percent, billionaire Bill Gates and Warren Buffet hold most of their wealth in the form of non-taxed and unrealized capital gains.

In various ways, the rich are the most responsive to shifting tax rates.

Under the Obama administration's plan, the federal top two income tax brackets will rise to 36 and 39.6 percent. As President Obama once said, "I do think at a certain point you've made enough money."

If the federal government confiscates nearly 40 cents out of every dollar made, businesses are discouraged from expanding their operation and would be entrepreneurs are deterred from starting new enterprises.

Instead, Congress must lower taxes for all Americans across the board to lower the deficit and boost job creation.

President Kennedy favored "an across-the-board, top-to-bottom cut in personal income and corporate income taxes."

In the eight years that Kennedy's tax cuts were in effect, tax revenue actually doubled.

Hiking taxes on the rich is simply a lose-lose situation by stifling economic growth while increasing the budget deficit.

For the time being we still live in a democracy, and God willing we will continue to do so. But it is time to rein-in deficit spending among other things; it's time to call attention to bringing our state and nation back into living within their means without an ever-increasing reach into our pocketbook by our government on both levels.

Most of us have to have a budget and keep to it. We don't have extra that we can just pull out of thin air. As a Minnesotan, I'm very concerned about Gov. Dayton's proposed budget, because it would tax the top 5 percent income earners in the state.

This tax hike won't work, with the result being an across-the-board tax increase for all Minnesotans.

Simply put, wealthy people spend money -- create jobs -- pay taxes which creates more revenue.

Let's make Minnesota strong again, let your representatives know it is time to cut spending across the board to actually balance the budget with the money at hand and not burden the people of the State of Minnesota with more unnecessary and burdensome taxes.

Respectfully Submitted,

-- Kelly Stockstrom, Rochert