Thursday, May 31, 2007

Tax Increases Turned Back in Minnesota 

Filed As:  Budget and Tax

On occasion, the right thing gets done in politics.

In Minnesota, last year's election flipped the House from Republican to Democratic control, and strengthened the Democratic control of the Senate. With strong majorities for the Democrats and a Republican governor having already backed off a "no new taxes" pledge in a silly attempt to call an increase in the tobacco tax a "health impact fee," observers were justified in thinking that tax increases were in the future.

Though the new legislative leadership forswore major tax increases, the session produced plenty of proposals for such, including an increase in the gas tax, the sales tax, an increase in auto registration fees, and the creation of yet another income tax bracket, at the high end. There was also a plan to index all government spending for inflation. (For a brief review of the effects of such measures, check out the blog of an economist.)

Fortunately for taxpayers and the economy as a whole, none of those measures survived the governor's veto. As he said in his veto message of the tax bill, "When legislators and the Governor assemble the state budget, we shouldn’t assume that every program should grow on autopilot. We need to examine every taxpayer dollar that will be spent and ensure that we are streamlining and keeping government efficient and effective."

I've certainly had my differences of opinion with the governor. But he is absolutely right on this one. Taxes should be raised only after significant public and legislative debate--not through a formula. Higher taxes are not a government entitlement.

"Tax Bill Dead on Arrival" was how the Saint Paul Pioneer Press put it. Among the side benefits of the veto: two egregious cases of corporate welfare were (at least temporarily) derailed. One involved the Mall of America, the largest retail establishment in the United States. Another involved the Thomson company, the 800-pound gorilla of publishing in the legal industry.

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