Minnesota House Republicans have proposed a $4.8 billion tax plan, promoted as bringing relief to middle-class taxpayers. Yet as with most GOP tax plans, their latest proposal ladles the real benefits onto corporations and the state’s wealthiest.
That alone should give lawmakers pause, but such a proposal coming on the heels of a revised revenue forecast that reduced the projected surplus by $300 million makes it even more irresponsible.
Memories must be short among House Republicans, who have forgotten the consequences of the tax cuts enacted under Gov. Tim Pawlenty’s administration. Those cuts only managed to starve education and other priorities while the state’s richest pocketed more, further contributing to the already rising income inequality in Minnesota and the nation.
You only have to look across the border to Wisconsin to see the folly of the House Republicans’ plan, which is predicated on the discredited theory of trickle-down economics, which suggests that if you lavish tax breaks on corporations and millionaires, it will create more jobs.
A new study from the Pew Charitable Trusts shows that Wisconsin experienced the biggest decline in middle-class households in the country between 2000 and 2013. The study found that while the middle class dropped in all 50 states, Wisconsin’s drop, from 54.6 percent to 48.9 percent, was the most significant. In addition, Wisconsin saw a 14-percent decline in median household income.
Much of the blame can be pinned on Gov. Scott Walker, whose insistence on providing large tax subsidies to corporations put the state in economic peril, producing nothing but high-profile scandals and lackluster economic results.
By contrast, Minnesota, which has pursued a quality of life agenda and a dedication to a more shared prosperity, has outperformed almost every state in the union on a long list of economic measures.
Trickle-down economics is a fraud, as even former Reagan Budget Director David Stockman acknowledged way back in the 1980s, when he called the idea a “Trojan Horse” intended merely to justify huge tax cuts for those at the top. Those tax changes have led directly to the unprecedented level of income equality we see today.
The Minnesota House Republicans’ tax plan is just one more Trojan Horse. It delivers negligible relief for the middle class for a single year, while calling for billions in permanent tax cuts for corporations and the state’s wealthiest residents.
A Minnesota Department of Revenue analysis of the tax plan found that the bill’s personal tax exemption would save taxpayers earning less than $50,000 an average of $80, or less than 22 cents per day, for a single year. Those earning between $50,000 and $100,000 would see an average savings of $144 or 39 cents per day.
Meanwhile, the bill calls for $2.1 billion in permanent tax giveaways for corporations, property developers and the wealthy.
According to the Revenue Department’s analysis, the main beneficiaries of the tax bill are large corporations and property developers, many of which are headquartered outside of Minnesota.
Meanwhile, the 50 largest property owners in Hennepin County would see $50 million in tax cuts every year.
Providing huge tax breaks to corporations is not a recipe for economic development. It’s just an excuse to fill the deep pockets of corporations while Minnesota’s middle-class gets token relief at best. Lawmakers need to put the brakes on this deceptive gravy train before it leaves the station.