ANDERSON ON TAXES
She ignored history in making her case
Pat Anderson proves she has studied the "Tax" section of the Republican platform ("The utter folly of 'taxing the rich'," Feb. 23). Her lines might seem less palpably memorized had she taken any account of some rather obvious things that could be said on the other side of the argument. Like the fact that President Bill Clinton's economic agenda, which included a tax hike on high earners, did not prove to be a jobs killer. Like the fact that the tax-cutting policies of the Bushies did not slide us along a rainbow arc landing in a pool of milk and honey.
ERIC JORGENSON, MINNEAPOLIS
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Pat Anderson offered anecdotes rather than evidence as to why raising taxes on the wealthiest Minnesotans would "actually work against the stated objective." I was particularly intrigued by her example of wealthy households as including "many small- and medium-size businesses whose owners run their businesses as S corporations ... mean[ing] that business income is passed directly through to them on their personal tax returns."
"Hey!" I thought to myself, "I've been a small-business owner of an S corporation for 15 years! She's talking about me!" Fascinated, I read on about how increasing taxes on salt-of-the-earth business owners like me takes away the very money that we use to "plow back into the business to make it grow," thereby putting my "working-family employees' jobs at risk."
But as I read I grew increasingly puzzled. Why, my accountant has told me for years that business revenue "plowed back into the company" in the form of equipment, labor costs, training costs, marketing, etc., created tax deductions, not tax liabilities. Had he misled me? Was I actually supposed to be paying taxes on my business expenses? After all, Anderson used to be the state auditor! And now she's president of the Minnesota Free Market Institute! She would know all about these things! Wouldn't she?
I called my accountant. "Al," I said in a worried tone, "Pat Anderson wrote in the paper that we have to pay taxes on our business expenses! What am I going to do?"
Al was silent for moment. "Look," he said, "first, you only pay income taxes on your profit. Revenue minus expenses. Profit. Not your employees' wages, not your office supplies, not your depreciation. Only profit. And second," he said, "no matter what business tax advice you read on the editorial page, your home subscription to the newspaper isn't a business expense!" He slammed the phone down.
