Prudent investments — not business tax cuts — make a good business environment
by John HottingerFeb. 28, 2009
In the next few weeks the Minnesota legislature will be concentrating more and more on the final budget for the next biennium. Governor Pawlenty and the organized business community continue to argue emphatically and repeatedly that Minnesota is hampered by a terrible business climate, and that even in the midst of a major budget crisis the state should be giving big tax cuts to business instead of making prudent spending cuts, fair tax adjustments and wise public investments.
In July of last year Forbes magazine -- that bastion of liberal advocacy -- issued a Special Report on the best states to do business in. Minnesota is number 11 -- ahead of neighboring states North Dakota (#13), Iowa (#22), South Dakota (#23) and Wisconsin (#43). Interestingly, the bottom three states are Alaska (#48), Louisiana (#49) and West Virginia (#50). Ironically, the two early leaders for the Republican presidential nomination 40-something months from now are the Governors of Alaska and Louisiana. What's that all about, other than proof of the disconnect between fiscally conservative Republican ideology and truly building a strong economy?
Bottom line: Minnesota can retain its economic leadership among the states as it comes out of the current economic crisis by maintaining its historically strong investment in labor quality (through education) and community quality that has led it to the top. But state legislators have to resist Governor Pawlenty's efforts to compete with Governors Jindahl and Palin for their bottom rungs of the business climate ladder.
And a reminder: Investment in early childhood education has been shown to be the most fiscally prudent investment of all -- getting kids off to a great start socially and intellectually, lessening the future remediation cost for kids who don't have that great start, and maximizing the potential of all of our children.
Hottinger is a former Minnesota state senator currently active in early childhood education issues.
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1 Comments:
Please express a word of thanks to Senator Hottinger for his most reasoned comments.
Isn’t ironic that the message Governor Pawlenty stated at CPAC which CNN reports :
Pawlenty told the conference audience Saturday that Republicans must do a better job of reaching out to working-class voters, a group he said agrees with the GOP on most issues, from gun rights to health care to education. The problem, Pawlenty said, is that lower and middle income voters -- a group he terms "Sam's Club voters" -- don't believe Republicans "are for the working person." He said the party must stress its commitment to job creation and market itself "with a feel and concern and tone and an understanding of the importance and the challenges of the working class of this country. "And it doesn't mean we have to sacrifice our principles to do it," Pawlenty said.
So how does cutting the state's corporate tax rate in half over six years (which costs the state $120 million in FY 2010-11, $410 million in FY 2012-13, and more in the future) help those "Sam's Club voters" ?
Coincidentally, Pawlenty has been making the rounds to business groups who may respond to the future of lower taxes but today are experiencing downturns in business that are producing more job cuts and business closings.
I don’t understand why Pawlenty isn’t being confronted by what his actions will do to property taxes … that all business pay – profitable as well as unprofitable --- and "Sam's Club voters". Pawlenty is proposing a 23% cut in Local Government Aid and a 27% cut in County Program Aid ( the tally is $372 in FY 2010-11). Why would any business want a cut in an Income Tax that they may not have to pay when they are faced with Property Tax increases ?
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