One thing is certain: folks in Shakopee and northern Scott County are sure grateful for the recent abundance of economic development and new jobs. I tip my hat to the city council and county board for helping foster a tax climate hospitable to world-class businesses that have expressed faith and confidence in our local economy—one of the better performing economies in the country.
The Midwestern can-do work ethic is durable and attractive to businesses looking to expand and grow. But only time will tell if the local economy remains strong enough—and the Minnesota spirit strong enough—to overcome roadblocks made by the most expensive and tax-heavy budget in state history.
Recently the Tax Foundation dropped Minnesota to the fourth worst state to do business because my liberal colleagues in charge of the Legislature, alongside Gov. Mark Dayton, “enacted a package of tax changes that reduce the state’s competitiveness.”
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The “package” passed this spring includes over $2 billion in new and expanded taxes and fees to pay for a historic increase in government spending ($3 billion).
I’m concerned about the big picture when it comes to these tax increases. Hundreds of millions of dollars in taxes are being taken away from the bottom lines of businesses—small, medium, and large. These include a new sales tax on farm/commercial equipment repairs and warehouse transactions. We’re a warehouse intensive community, and these things concern me a great deal.
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I think my concern is underscored by the fact that the 2011 Republican-passed budget—which was efficient, lean, and focused—yielded revenues in excess of projections to the tune of $3.4 billion. If you can remember back to our dismal economic outlook just a few years ago, that’s quite a turnaround!
Now that we have a fiscal quarter of the all-DFL budget under our belt—one that is fat and laden with tax and fee increases—we’ve seen those surpluses evaporate quickly. State officials announced recently that revenues came in short for the first time in years. In short, government spending is outpacing economic growth.
I often talk about diminishing returns, and some of you roll your eyes whenever I do, but here we are. It’s the old Reagan adage that if you reduce taxes, revenue actually goes up. Right now, we’re seeing just the opposite: taxes are higher than ever before, but revenue is down.
In 2011, we more fiscally prudent legislators tried to make the point that if you unburden hardworking taxpayers, they will create more economic activity and yield more in taxes. I would have to say this is the fundamental difference between us and liberals.
What my colleagues in charge of the Legislature didn’t understand was that by increasing taxes like they did, everyone pays more, regardless of income. Officials from Gov. Dayton’s own Dept. of Revenue came out this summer with a study showing that folks of all income brackets will pay more under this budget. What’s more, legislative leaders failed to conform with federal tax guidelines, meaning that many low- and middle-income Minnesotans will pay more when they lose simple deductions.
I think it’s better to err on the side of caution when state policymakers meddle with peoples’ livelihoods. Unfortunately, the budget we’re working with is anything but cautious.
Local Events
I hope to see you at the Saints Healthcare Foundation Gala on Saturday, Nov. 9. Funds raised go to support Integrative Health options at St. Francis Regional Medical Center. In addition, please consider the Shakopee Chamber’s Wine Voyage on Friday, Nov. 15.
During the Fall months, I welcome your continued comments and thoughts. Please contact me at any time. I can be reached at 651-296-8872 or by email rep.mike.beard@house.mn.