Column: Increasing your taxes is proven job killer

You’ve undoubtedly heard that Minnesota lawmakers and Gov. Mark Dayton have struggled to reach agreement on a two-year budget that will fund state programs, meaning government could shut down on July 1.

Some have wondered why the Legislature doesn’t enact Dayton’s nearly $2 billion tax increase, claiming all it does is “tax the top 2 percent” of Minnesota wage earners.

In actuality, the plan also raises corporate taxes and expands the sales tax; moves the Department of Revenue found would impact Minnesotans in all income levels.

Meanwhile, the Legislature approved a $34 billion balanced budget, which includes $2 billion in new state government revenue. That’s a 6 percent spending increase without raising taxes, and living within our means.

So why do I believe it’s important that Minnesota live within its means? Let’s analyze the successes and failures of two other states.

Did you know that 37 percent of all net U.S. job increases were created in Texas? According to data from the U.S. Department of Labor, Texas created 265,300 jobs out of 722,200 nationwide since the recession ended in June 2009.

Not only has Texas created an exceptional number of jobs, it’s one of few states that has more jobs now that when the recession began. Furthermore, in the last 10 years Texas created more jobs than any other state.

Now let’s analyze another large state: California. While Texas has

732,800 more private sector jobs than it did a decade ago, California has 623,700 less.

Why?

Texas is known for its small government, low taxes, streamlined regulations, and fiscal responsibility. California is plagued with a bloated government bureaucracy, high taxes, out of control public spending, and intrusive business regulations.

California has the second highest income tax rate in the country because politicians continually ignored the reality of their fiscal problems. The more they taxed, the more they spent, which helps explain California’s 11.7 unemployment rate - the second highest in the country.

These anti-growth policies have paralyzed the state’s private sector economy and bankrupted the state.

Texas understands that low taxes and limited government are keys to economic growth. Texas has zero income tax, low corporate taxes, and reasonable government spending. It is no coincidence that the state’s unemployment rate stands at 7.7 percent — far below the national average. It consistently ranks as a top state to conduct business.

The results of business friendly policies are real. States compete with one another for jobs and businesses. This is not some phony Republican myth; it’s economic reality.

While it’s important to remember that neither Texas nor California is perfect when it comes to operating their respective state governments, Minnesota can learn some important economic lessons from both states.

Minnesota can take Dayton’s easy way out and maintain our unsustainable tax-and-spend status quo. With $1.8 billion in new taxes and $1 billion in “surcharges and fees” to grow government, there’s little doubt the governor’s plan will hurt our economic recovery.

Or Minnesota could live within its means, and “only” increase government spending by 6 percent.

In the past few days, Minnesota lawmakers have made repeated attempts

at compromise with Dayton, even agreeing to drop one of our top priorities — tax relief - and using that $200 million on additional government spending.

As usual, the governor criticized the plan and refused to make any counteroffer, which is extremely problematic when you’re trying to negotiate a budget deal. At the very least, the governor should have taken care of the kids, courts and cops when he had the opportunity since we met his budget number.

The Legislature does not want a government shutdown. Lawmakers are attempting to compromise, but as they say, it takes two to tango. If

Gov. Dayton is serious about avoiding a shutdown and putting Minnesota on the path to economic prosperity, he would be wise to abandon his California-like tax hikes and agree to force government to live within its means.

Tim Kelly, R-Red Wing, can be reached at 651-380-4345 or rep.tim.kelly@house.mn.

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