If you've opened a newspaper in the last 2 weeks you've no doubt heard the news: the DFL controlled state legislature has voted to change the name of our lovely state to "Taxapalooza," and, yes, Armageddon is on the way. Or that's what Tim Pawlenty, Ron Carey, and their Republican stooges around the state would like you to think. And, to the detriment of Minnesota, they seem to be winning the messaging war.
Although there's no doubt that the budget plan coming out of the State Legislature is going to get vetoed, I think it's an interesting study in Minnesota politics and the power of accessible messaging.
A convergence of factors have left the DFL Legislators fighting an uphill battle in selling this spending package they've cooked up:
- A one-time budget surplus has proven to be a potent talking point for the local righties despite the fact that it provides no continuing revenue and is largely eaten up by inflation. After all, why would we raise taxes when we have all this extra money to begin with?
- The Governor's occupation with a shot at VP has hardened his mind-numbingly myopic anti-tax pledge (by the way, if sticking to a promise made to a single organization to the detriment of the rest of the state isn't being beholden to special interests, I don’t know what gets you that label these days) and there's little doubt that the House and Senate's plans have a red pen coming their way.
- The potency of the phrase, "highest tax bracket in nation."
- And finally, the most significant of all the obstacles: the quick connotations that come from saying, reading, or hearing that your taxes are going up.
So, let's dive into these one by one.
First, there's no surplus, at least not in the way that one usually thinks of a surplus. The analogy I've been using is the difference between a bonus and a pay-raise. What Minnesota has on its hands is a one-time bonus for good behavior, not a pay-raise that we're going to see the fruition of every year. That means that none of this can be used to, say, raise the budget for education—we can use it to build a new school, but we can't use it to pay the teachers for that new school. And, to make the surplus even less useful, most of it is consumed by mere inflation. The force that you and I contend with every day but the government, in all its brilliance, leaves out of its budget allocations.
Second, the Governor should be governing, not kowtowing to his potential national conservative base by upholding a no-new-taxes pledge. Outside of the face-value stupidity of the pledge, the certainty of a veto that this pledge brings is what the local conservatives are using as a talking point. They argue that the House and Senate DFLers are wasting everyone's time with a budget plan they know will be vetoed. But we, as a party, should not legislate based upon the Governor's stubbornness; we should legislate based upon the needs of our citizens. We promised property-tax relief, health care reform, education solutions, and a better transportation system to the citizens that voted DFL, and that's what we're attempting to deliver, veto threat or not.
Third, the DFL Senate leadership had their heads somewhere dank and dark when they decided on pushing this tax bracket. I hate to admit it, but this just has to be said. When you're facing a Governor that has a no-new-taxes-pledge and a GOP party organization that is just itching to label you a "tax-and-spend" party, you don't propose the nation's highest income-tax bracket; you just don't. I don't know if someone dropped the ball on research, or if there's some bass-ackwards strategy behind this thing, but it is a messaging nightmare. Yes, I know, even with a 9.5% tax bracket the wealthiest, by percent, would still not have a tax burden as high as the middle class in Minnesota, but it's still an incredibly stupid plan. Not only will we almost certainly see this trumpeted in the next election cycle, even in the House races (people have a tough time separating the goings-on of the different chambers), but it significantly eases the case the GOP is making to Minnesotans. We could have done this at a slightly lower tax rate, and we should have.
Which brings me to the fourth obstacle, the tax-averse attitude of the average American. Although the Senate plan is an elaborate invitation for years of Republican talking points, the House plan is close to sheer brilliance. Without the ball-and-chain that is the "highest tax bracket" talking point, we may have had a shot (and still do) of selling the fact that the House plan raises the income taxes of less than 5% of Minnesotans and raises them only incrementally for that group. And the plan simultaneously provides significant property tax relief for over 90% of Minnesotans. So, the bottom line is that if I talk to random people on the street I can honestly tell over 9 out of 10 of them that the check they write to the State Government will actually be smaller under the House DFL's plan. I can sell that.
Ultimately this state needs more revenue. But most Minnesotans don't understand that our overall tax burden puts us in the bottom half of the states. Most Minnesotans don't know that the average state tax incidence for someone with an income of over $350,000 is 4% lower than that of someone making $50K. Most Minnesotans don't know that our economy growing slower than most American states for the first time in decades. And therein lies the fundamental problem of this DFL legislature: making the message heard. Even outside of election considerations, the only shot this legislature has of getting any of these proposals past Pawlenty is if the voters resoundingly support them. The DFL leadership needs to present Minnesotans with a compelling, easy to understand solution that they can rally behind. Fortunately, they still have a shot at winning some hearts and minds.
When this bill comes out of conference it will no doubt have a budget plan that provides significant property tax relief for the vast majority of Minnesotans, increases funding for early education drastically, puts us on the track to fixing our broken transportation system for the first time in a decade, and does it all without raising the annual taxes a cent for over 9 out of 10 of our citizens. And, much to my pleasure, it almost certainly won't have the highest tax-bracket in the nation.
The voters of Minnesota put the DFL in power in order to provide real solutions for the litany of real problems that Minnesotans face. Instead of artificially holding ourselves to special interests, we are listening and responding to the cries for help across the state. That is something that is to be applauded, and the Governor would do well to listen.