Growing Government

I did some further digging into the ALEC-Laffer economic report (initial post here). I thought it would be interesting to shed a little more light into some of the specifics that they had on Minnesota. While some of the metrics are not bad for Minnesota, they are (no doubt) about to get worse - if the DFL has their way. For example, our sales tax burden (per $1,000 of personal income) is 16th best (1 being best and 50th being worst) in the country. However, if the House and Senate Majority have their way, it will be worse. There were multiple sales tax increases proposed in the last session that could have moved us much further down the list. The property tax is 15th highest and it has steadily increased since the survey was taken (2005).
Now to the other end of the spectrum. Our top marginal corporate tax rate is 45 (5th worst) in the country and last session it could have gotten higher. There was a tax written into the budget that would have been imposed just on businesses. Our legislated tax change ranking was 43rd in the country and if the $334 million bonding bill had been passed last year, we would have been much, much lower.

The ALEC-Laffer report draws some very interesting correlations between taxes and economic decline in states.

Defenders of the high-tax and high-spending conditions that precipitate this fall into theeconomic cellar argue that big government policies and taxes on the wealthy are necessary to protect the poor and the disadvantaged. Yet when flight occurs away from an area, it is always the highest achievers and those with the most wealth, capital, and entrepreneurial drive who tend to "get out of Dodge" first, leaving the middle class, and then eventually only the poor and disadvantaged, behind. Inevitably that means fewer taxpayers and heavier tax burdens for those who remain. It's an analogous situation to the old party game "Pass the Bomb," where a plastic "bomb" gets passed from one person's lap to another until it buzzes and the person holding it loses. But this game is real:
The bomb is high taxes, and the people always left holding it when it detonates are the poor -- the very people who are supposed to benefit from redistributionist policies. This can create a crushing, viciouscycle of economic and fiscal decline.

Now based on that, maybe we should rethink our current policies. Instead of driving business and individuals out of the state with high taxes, maybe we should bring more business in. After all, if there are more businesses in Minnesota to pay taxes, there will be more tax dollars coming in for the state to spend. It's just something to consider....