Conservatives react with disdain and revulsion at the mere thought of a tax increase. It is anti-jobs, anti-competitive, anti-growth and, worst of all, smacks of “class warfare” against the wealthiest among us goes the argument.
But as I watch what the Republican-dominated state Legislature has done so far this session, I wonder where the class warfare is actually being directed.
The Legislature, in creating its alternative to Gov. Mark Dayton’s proposal to make cuts and raise taxes on higher-end earners, wants to gut funding to the state’s major cities, higher education, transportation, inner city schools and health care benefits for the poor, to say nothing of state workers. The Legislature is even reducing the rent credit for lower-income Minnesotans. I’m not saying that the Republican majority is intentionally trying to hurt middle and low-income people, but look at the results.
Local Government Aid (LGA) would be phased out entirely to Minneapolis, St. Paul and Duluth over the next two years. That is money those cities need to operate and cutting it would probably result in higher property taxes. The central cities are home to many lower income citizens as well as senior citizens on fixed income, people least able to pay higher taxes. And despite the problems central cities face, they are vital to our economic well-being. Strong core cities are important in recruiting businesses and workers to the state and serve as the educational and cultural hubs. Most people outside Minnesota don’t know much about Eden Prairie or Bemidji, both fine places, but they have heard about Minneapolis and St. Paul.
Higher education is the key to economic growth in the 21st century. Having a highly trained work force makes the state competitive. And the state’s middle class students attend the University of Minnesota and the Minnesota State Colleges and Universities. Why would we shoot ourselves in the foot by drastically reducing their budgets?
The Legislature wants to eliminate integration funding to St. Paul and Minneapolis schools at a time when the school systems are struggling financially and working hard to improve the achievement gap between white students and students of color. That money is used to fund magnet schools and language academies, for bus transportation, for student placement centers and for the highly touted International Baccalaureate programs. Again, educating our children is the key to future economic development and job growth. Why would we penalize the students and parents who happen to live in the central cities?
The same goes for cutbacks in public transit. At a time when we should be investing in transit projects for the future, the Legislature wants to cut back severely, harming lower-income people in the central cities and making cities less attractive.
The most draconian cuts, however, come in the health and human services field, where the Legislature wants to force 100,000 of the state’s poorest citizens out of state provided health care by giving them a voucher to purchase private insurance. As someone who has had to purchase insurance (I have my own business) on the open market without benefit of a group, I can’t imagine how low-income people will be able to afford the premiums, a fact confirmed by the Department of Human Services, which estimated that some 86,000 would not be able to afford the private insurance premiums. The move is not good health care and it borders on the cruel.
When you think about what has been passed so far, it seems to me that the class warfare epithet is being applied in the wrong direction. Many of these proposals are not only targeted at the middle class and low-income citizens, but they do nothing to create jobs, make us more competitive or attractive, educate our children or build a better future. Surely, there is a better, more balanced way.
Asking the better off among us to pay slightly higher taxes will neither cause them great financial harm nor make them the targets of class warfare. I have no problem with people earning money through hard work, running a business, inheritance, investments or any other legal means. But the wealthiest taxpayers have benefited greatly over the last decade through generous state and federal tax cuts. People making over $137,000, pay 10.1 percent of their income in state and local taxes vs. 12.3 percent for the people making less than that, according to the Department of Revenue. And people making more than $194,000 pay 9.7 percent of their income in state and local taxes.
Asking higher income citizens to carry some of the burden for lifting us out of our financial predicament is not class warfare. State Management and Budget figures show that the average tax increase for all those facing an increase under Dayton’s proposal is $287 per year. For those making from $100,000 to $199,000, the average increase is $87. Between $200,000 and $500,000, the average increase is about $2,700. Federal deductibility will decrease these numbers further.
Small annual tax increases such as these don’t look much like class warfare when stacked against the deep cuts to programs and services the Legislature is proposing. And the cuts don’t do much to make us a stronger, better educated and more competitive state either.