It’s The Minnesota Way!

So you want to effect some change in Minnesota politics?  Perhaps right a wrong that you see?

What’s the best way to do it?

Spend years mustering supporters and changing public opinion?  Like the Tea Party?

Or sit in tents out on the sidewalk, warmed only by relentless NPR coverage, like “Occupy?”

Nonsense.  Just have a plutocrat father who had his office bought for him by your stepmom!

During an interview with the Post-Bulletin’s Editorial Board last week, Dayton said his sons Andrew and Eric Dayton have been making the case that tipped employees should be treated differently. His sons own the Minneapolis restaurant “The Bachelor Farmer.”

“It may be that we have to fine tune it. I understand my sons’ frustration with the tip credit issue. They make a very articulate case,” he said.

During the legislative session, the Minnesota Restaurant Association had pushed hard for a tiered tipped employee system. Under that proposal, an employee whose wages and tips equaled at least $12 per hour would be paid at the federal minimum wage of $7.25 per hour. Dayton said his sons have said that the minimum wage increase means their wait staff will be making significantly more per hour than the dishwashers and other staff.

Wait…

…I seem to remember a governor’s race four years ago.  Where a candidate suggested exactly that.  And was pelted with pennies, to the gleeful tittering of the local media and left (ptr).

So the next time you’re a liberal dilettante and you find your hobby restaurant is being financially stressed by the DFL legislature’s innumerate noodling in the labor markets, just make sure an assembly of oligarchic plutocrats gets Dadders elected!

Problem solved!

SUPPLEMENTAL QUESTION:  By my count, this is the third or fourth law that Governor Messinger Dayton had to sign to know what it’d do.

“Unexpected”

For the fourth straight month, Minnesota’s revenues came in below forecast – and the rate of the shortfalls is accelerating.  That is according to Minnesota Management and Budget, which is nominally non-partisan (but whose leadership depends on Mark Dayton for their employment, and whose rank and file work for AFSCME). 

Exactly as fiscal conservatives said they would.

Over the past four months, the shortfalls add up to over $200 million dollars – enough for a couple of Senate Office Buildings (hat tip: Ben Kruse). 

So what does this mean? 

Forward To The Past!:  Remember 2010?  When the DFL/Media harped on the “six billion dollar deficit” that two years of DFL control of the legislature had left us? 

The deficit that two years of GOP control in the Legislature erased and converted – in the year after the DFL took control, when GOP policies were finally taking effect – to over a billion in surpluses? 

The “D” word is back.  Oh, not that the Strib is going to make anything of it, not yet – not until there are Republicans to blame – but this adds new impetus to the predictions that the state budget – which the GOP dragged out of six billion dollars worth of deficit in 2011-2012 – is heading back to deficit in the budget’s off-year. 

So what does this mean?

Remember that $1.1 billion surplus that the DFL inherited from two years of GOP control?

Well, memories are all we have. If revenues keep falling at this rate, and the shorftall keeps growing at the rate it’s been accelerating this past few months, we’re going to be at over a billion dollars in deficits by the end of this year. 

And the worse news? 

Underperforming:  The budget forecasts were based on the projections of economic activity using the activity of the years of GOP control as a baseline, with growth predictions factored in.

The growth isn’t happening as predicted. 

So for all the DFL/Media’s happy talk about Minnesota’s economy, the MInnesota economy is like a Summit Avenue mansion; the main floor, where the Fortune 500 folks like Target, Best Buy, Ecolab, 3M and the like hang out looks just great – but the foundation is rotting away.

Democrat Fatcat Largesse

Think you’re done paying for football?

Hah.  Dream on, peasant ripe-sucks.

Helga Braid Nation is doing cartwheels that “we” will be hosting a Super Bowl in 2018 at “our” stadium. 

And Mark Dayton is going to soak up whatever sunlight the event gives him among the “Happy To Have Someone Else Pay For My Bread And Circuses” set:

Dayton and members of the city’s bid committee held a news conference Wednesday to celebrate landing the Super Bowl. The NFL chose Minneapolis largely because of its new stadium.

Oh, yeah – even though none of us will be able to afford to attend this particular circus, we’ll all be subsidizing it:

The governor says the state has made no commitments for tax breaks to the NFL apart from a sales tax exemption for Super Bowl tickets that remains on the books from when Minnesota hosted it in 1992.

But Michele Kelm-Helgen, chair of the Minnesota Sports Facilities Authority, says organizers may ask for sales tax exemptions for some of the other festivities.

Here’s a note to Minnesota’s Republicans; here would be a great time to draw the line on the whole “limited government” thing.  Also the “subsidizing billionaires” thing. 

So the next time you find yourselves surrounded by The Walking Meat all dressed up in purple and pounding the Idiot Drums, think to yourselves; in 2012, Mitt Romney and a whole bunch of Minnesota Republicans lost, not because independents didn’t vote GOP – they did – but because conservatives, angry about serial betrayals on the whole “limited government” thing (Vikings stadia, caving in on budget hikes in 2011 before the negotiations even began, etc), stayed home in droves.

(If the Bears aren’t playing, I don’t care.  And if the Vikings are playing, I’ll bring Scarlett Johannson as my date).

Be Thankful, Peasants

Two billion in new taxes.

A 1.2 billion dollar surplus (thanks, GOP majority from 2011-2012!), which means “unexpected” money collected in taxes, and is money that is lost from the economy.

That’s a total of $3.2 billion extra dollars sucked out of the Minnesota economy – about $600 for every man, woman and child in the state, or close to $1,000 for every taxpayer.

And we’re supposed to be thankful that the DFL majority deigns to “give” us $550 million “back”.

That’s about 17 cents on the dollar.

If you gave your cashier a $20 bill for a $15 meal, and you got 85 cents in change, I’m going to guess you wouldn’t be “thankful”…

I’m Jumpin’ NARN Flash, It’s A Gas, Gas, Gas…

Today, the Northern Alliance Radio Network – America’s first grass-roots talk radio show – brings you the best in Minnesota conservatism, as the Twin Cities media’s sole source of honesty!

  • I’m in the studio today from 1-3.  I’ll have Senator Roger Chamberlain on, regarding the dueling Bullying Bills.  Then, we’ll talk with Kim Crockett about the ”Minnesota Exodus”, all of companies leaving Minnesota over taxes. (oops – that’s next week…)
  • Don’t forget the King Banaian Radio Show, on AM1570 “The Businessman” from 9-11AM this morning!
  • Tomorrow,  Brad Carlson is on “The Closer”!

(All times Central)

So tune in to all six hours of the Northern Alliance Radio Network, the Twin Cities’ media’s sole guardians of honest news. You have so many options:

Join us!

NARN Tomorrow

It’s gonna be a huge show tomorrow on the Northern Alliance Radio Network. 

First, I’ll be interviewing Senator Roger Chamberlain about the dueling bullying bills, and why it’s an important battle even if you don’t have kids in the public school system.

Then, I’ll be talking with Kim Crockett about the number of companies leaving Minnesota over taxes.

Tune in 1-3 tomorrow on AM1280 The Patriot!

What Minnesota Deserves

Knowing that the media will never allow it to amount to anything serious, Governor Dayton “takes responsibility” for the MNSure fiasco:

Dayton reacted Thursday to a report from Optum, a unit of Minnetonka-based UnitedHealth Group. The report found MNsure’s problems are widespread and cannot be solved by the March 31 federal deadline for most people to have health insurance or pay a penalty. Optum said the state could try to fix the current system, which could take up to two years, or try to get it minimally functional for 2015 enrollment while building a new system from scratch.

Both options are exquisitely expensive.  There’s an old software engineering saying; “Fast, Cheap, High Quality – you can have two”.

And that’s at best.

And we’re not going to get “at best”.  Why?

Emphasis added:

“Those are the decisions that the new management is going to be making, and obviously the Legislature will be involved and the board and I’ll have my say in it too,” Dayton told reporters.

Even in the private sector, “designed by committee” is a synonym for “Bulgarian goat rodeo”.

Healthcare is impossibly complex; politicians operate entirely in the realm of oversimplification, and that’s even if they have a general sense of “what is right”, which our DFL-dominated legislature does not.

Politics is the worst possible way to allocate scarce resources and solve complex problems.

“But we’re going to fix it. We’re going to improve it. I’m determined we’re going to give Minnesota what it deserves.”

Minnesota already got what it deserved when it swept the DFL into power.

Will it deserve better this fall?

Level To Off

Minnesota tax revenue is off since July.

After a couple of years of faster-than-expected receipts – read “the economy was growing faster than had been predicted”, largely due to GOP economic policies – things are flat to a little slow.

And if you’re a conservative, you already know why “flat” is as good as it’s gonna get (emphasis added):

The state took in more from personal income taxes and sales taxes than budget officials predicted.

Minnesota workers contributed $2.1 billion in income taxes, about $27 million more than state officials projected. Consumers paid $1.1 billion in sales tax, about $46 million more than expected.

Corporate income taxes came in at $342 million, down $11 million from estimates. Other revenue accounted for $457 million, about $64 million below projections.

This the first budget snapshot since new tax hikes on high earners and a menu of sales taxes on business-related services kicked in.

Catastrophic?  Hardly – yet.

Dispositive empirical proof that the DFL tax and spend policy is going to tank the economy?  Not just yet.

A sign that Minnesota’s economy can’t possibly be amused?

I’ll bank on it.

Open Letter To Alliance For A “Better” Minnesota”

To:  Carrie Lucking, “Executive Director”, Alliance for a Better Minnesota
From: Mitch Berg, uppity peasant
Re:  Chain Of Command

Ms. Lucking,

The “Special Session” to deal with disaster relief teed up a few hours ago.

Just a hint; it might behoove you to copy your audioanimatronic marionette “Governor” Dayton on any legislation that gets proposed, or especially passed.  The vision of your audioanimatronic marionette our “Governor” proclaiming shock at legislation that the DFL has jammed through embarasses this state makes your chain of command look “not ready for prime time”. 

It’s pretty simple; route things from Governor Ms. Messinger, to you, to handler “Chief of Staff” Bob Hume, to Mr. Dayton.  And spend some time making sure he really knows what’s getting written into law. 

You’re welcome.

That is all.

Scope Creeps

As Gary Gross notes, the DFL seems at the very least to be floating as a trial balloon that they’re doubling down on the warehouse tax

It’s outside the scope Governor Dayton Messinger wanted for the special session. 

I’m torn on this one.

On the one hand, I think that if the warehouse tax goes into effect, it’s going to be a disaster.  And the DFL, and its Praetorian Guard, the media – will spin it – the job losses, the dislocation, the businesses heading across the Saint Croix, the Red, and Duluth Harbor - as a Republican problem because…well…because Gay Marriage, for the Children.  Or something like that. 

On the other hand, this absolutely is the Democrats’ fault.  “Governor” Dayton signed it, I suspect, without even bothering to get Bob Hume to Ask Carrie Lucking to ask Alida for permission to read it reading it.  Being a Democrat, and a couple generations removed from the generation of Daytons who knew anything about running businesses, it didn’t matter to him. 

This is the sort of issue that conservatives – Republicans – should win big, provided that we’re in a party that has the equipment and expertise to fight a message war.

So can you see why I’m worried?

We Warned You. Oh, Yes, We Did.

2011:  As the GOP majority began working to try to tame Minnesota’s government monkey, the DFL prattled “the GOP is raising property taxes!”. 

It was baked monkey doodle, of course.  The GOP re-focused “Local Government Aid” toward its original mission, helping poor outstate communities, as opposed to subsidizing the urban DFL. 

But in 2012, it was one of the DFL’s big chanting points; “Elect us and we’ll lower property taxes!”, by restoring and boosting Local Government Aid. 

And some of us warned you back then - while the DFL would certainly tuck into the job of wrenching more money out of the parts of the state that pay their way, there’d be no guaranteed cuts in property taxes…

…because the state has nothing to do with what counties charge.

Nothing.  Zip.  Nada.  Zilch. 

But the voters – maniupulated by a lot of emotional issues, and not thinking all that clearly – turned the House and Senate over to the DFL.  And the DFL raised taxes, and jacked up LGA payments to their friends in Minneapolis, Saint Paul and Duluth. 

And then what?

What the hell do you think?   Property taxes aren’t going to budge!

Joe Doakes from Como Park noticed it, and emailed:

St. Paul’s budget proposal has no layoffs; instead, there are new hires and expanded services, which the City Council President Lantry attributes to Local Government Aid received from the State of Minnesota.

Two weeks ago, Governor Dayton and the DFL promised that LGA would produce $120 million in local property tax relief instead of new spending.

But DFL politics aren’t driven by actual results.  All that’s necessary, in a state where the media mostly takes its marching orders from Alida Messinger, is that someone says taxes will go down, probably. 

And that’s exactly what’s happening. 

Doakes:

Nope, not in St. Paul. St. Paul taxes stay the same. The LGA gets spent on fun stuff, not boring old property tax relief. Again.

Joe Doakes

And by “fun stuff”, we mean more government employee union jobs. 

At any rate, I’ll claim a big win here – taxes in Saint Paul won’t drop, and they’ll probably rise.  Taxes in Minneapolis and Duluth will also stay the same, although there will be more “services” that serve precious few at exquisite cost.

The DFL lied.  And it’s you, the taxpayer, that’s paying the price – being taken for a ripe suck at both the state and (most) local levels. 

The funny part?  The DFL’s apparatchiks are still claiming taxes are dropping, even though they aren’t. 

It’s almost like they don’t expect the regional media to fact-check them, or give any coverage to those who do.

Black And White And Green And More Black

Doug Grow – DFL stenographer and reporter for the Joyce-Foundation-supported MinnPost - is convinced that the GOP is lying about the effects of the Warehouse Tax.

Exhibit A?

Grow writes about the Red Wing Shoes’ opting out of building a new distribution center in Red Wing; it’s something we wrote about here in SITD a few weeks ago.  

According to Grow, the GOP’s line is wrong because the executives involved didn’t step out on stage and burn an effigy of Tom Bakk as the cameras rolled. 

Business Is Hard:No, really; asked if the tax was the sole reason Red Wing Shoes deferred its expansion…:

Sachen couldn’t say that it necessarily would have.

Would the project definitely go ahead if the tax were eliminated?

Sachen couldn’t say that was necessarily the case, either.

He did say that the company, which has a facility in Potosi, Mo., is “in talks with Potosi.” But again, he wouldn’t say that there’s a direct link between the tax and the warehouse project.

Who’da thunk it; a businessman whose business depends, on a certain extent, on not pointlessly pissing people off over politics in this rent-seeking environment, gave an honest answer; there are many reasons that a company does or does not go ahead with an expansion.

Which on the one hand means there’s not a smoking gun hovering over “jobs that won’t be created” leading back to the DFL’s Warehouse Tax (point for Grow).  And on the other hand, it means that there never will be that smoking gun. (Take a point away from Grow). 

By the way – Democrats get hurt when conservatives say they don’t understand economics or business.  Reading this next bit, one would have to say “hurt” is probably less appropriate than “chastened”:

Additionally, it should be noted that the Red Wing Shoes warehouse wouldn’t create jobs — other than construction ones in building the warehouse. Rather, it would allow Red Wing to consolidate its current the five warehouses into one facility. Those warehouses, by the way, employ about 80 people, a number that would not increase with a new warehouse.

Er, yeah. 

Making the business – and the efforts of those 80 existing warehouse workers – more efficent gives the business more profit.  Which gets used to hire more people, design more shoes, improve existing products…heck, even just make staying in Minnesota more tenable.  Which means those 80 warehouse jobs stand less risk of becoming 40, or 20, or 0 warehouse jobs. 

It’d also speak to the long-term commitment on Red Wing’s part to keep those jobs in Red Wing, rather than someplace else. 

Leave The Gotchas To The Comedians: Of course, it’s not just Doug Grow.  Dave Mindeman of mnpAct thinks he’s got the DFL Warehouse Tax’s MNGOP critics over a barrel:

In addition, Rep. Garofalo apparently missed the June 28th Star Tribune clarification on where the tax actually applies…..

Myron Frans, state revenue commissioner, said Dayton has asked him to study the issue, and he has spoken with Red Wing officials about their concerns. He said the tax only applies when the producer or manufacturer purchases warehouse or storage services from another firm.

Garofalo offered no other examples of a potential problem. Thus the Red Wing Shoe factory will NOT be affected by this tax.

In other words, Rep. Pat Garofalo is, as usual, making it up.

And Mindeman deigns to condescdend:

I would hope this legislator will someday learn to get the facts right before making another condescending statement of inaccuracy.

Um, yeah.

Garofalo has actually worked in the private sector.  I know this because we worked for the same company, once upon a time; it was he that actually introduced me to the Drudge Report back when we were both minions at a local Fortune 500.

And he knows – as all of us who work in the private sector and pay attention to things do – that businesses rarely make decisions based on single factors, or on short-term stimuli.  Running a significant brick-and-mortar business (shaddap, consultants) is the ultimate long bet; it involves considering everything; access to the needed workforce, communications, supply chain, price to get product to market, taxes…

…and long-term outlook. 

Red Wing – and Laurence Transportation in Red Wing, who also held off on a warehouse expansion that will be directly affected by the DFL’s Warehouse Tax – is betting against Minnesota in the long term, given the way the climate looks now.

And since Mindeman wants to play the “they curiously ignored a Strib article” game, it’d seem he missed one too; Navarre is up and moving to Texas.  It warehouses products – providing the “value add” that the state is taxing – and also works in e-commerce, which is getting slapped by the DFL’s Amazon Tax. 

So it’s gone:

That was the first time the 30-year-old Minnesota firm had said publicly that it planned to move not just some of its warehousing operations but also its headquarters to the site of its recently acquired Speed FC e-commerce operation based in Texas. Navarre acquired Speed FC Inc. last November for $50 million in cash and stock.

Was it just the DFL’s Warehouse Tax?  Or the DFL’s Amazon Tax?

No.  But both of them, and other changes to the state’s business tax code, had to look ugly to a business that’s already losing money – money that will probably be made up by consolidating operations in a lower-tax locale alone. 

If you’re one of the almost 300 employees being pink-slipped, do you think it makes a difference?

They Also Think Penelope Garcia Is Like A Real Investigator: Back to Grow’s column, where in a quote of Governor Dayton’s chief of staff Bob Hume, he shows that…:

  • he is aiming his piece at economic low-information voters, or…
  • …he’s an economic low-information voter himself:

Hume is commenting on Garofalo’s call for a special session to get rid of the tax.  If you work in the  private sector, see if you can spot the clinker:

Bob Hume, the governor’s deputy chief of staff, made it clear that a special session is not in the offing.

“This is a stunt, not a solution,” Hume said in a statement. “The Legislature is coming back more than a month before this tax would take effect, which is more than enough time, if revenues permit, to review and possibly revise this tax.”

A whole month?  To make a decision affecting the profitability, well-being or survival of a business?

These decisions get made based on long-term outlook.

And while the state’s long-term outlook is subject to debate, let’s remember that when the DFL-shilling media says things like…:

To date, though, the Minnesota economy is humming at a far healthier rate than the economies in such business-friendly states such as Wisconsin and South Dakota.

…that the economy still largely reflects Republican policy, set when the state had responsible two-party rule (shaddap about Ventura) between 2002 and 2012.   The DFL’s tax and spend orgy still hasn’t largely gone into effect; even the first of the taxes have been wending their way through the process for about a week now, and the worst is yet to come.

Get back to us in a year. 

Around election time, preferably.

The “Wreck Everything” Legislature

Before the 2012 elections, the DFL tried to call the previous, GOP-run legislature a “do-nothing” legislature.

Leaving aside the obvious – the government that governs best governs least – it was a lie. The 2011-2012 legislatures accomplished some useful stuff – hobbled by a “governor” who was fully-owned by extremist special interests and some very un-conservative detours like the Vikings stadium.

But as we wait at the halfway point of a session of one-party government, what does the DFL have to show for their unfettered power?

  • Business taxes – especially the warehousing tax – that lop a serious chunk off of Minnesota business’ bottom line, and that already have businesses heading for the exits.
  • Two extra billion dollars taken out of the productive parts of the state’s economy.  Remember – Minnesota’s GDP is about $267 Billion.  Another two billion is nearly a percent – on top of the 30-odd billion in state spending that the state already sucks out of productive use.  Imagine having an additional 1% of your productive income taken out of circulation – $500 a year if you make $50K.   It’s not chicken feed. 
  • A home daycare system saddled with useless graft to the public employee unions, and with its revenue further cut by the state’s move into all-day kindergarten – which adds virtually nothing to kids’ education, but does create lots of new union jobs that pay dues to the DFL. 

And all of that at the end of a session that wasted months arguing about DFL social-domination issues (gun control, gay marriage) and power-acquisition. 

In exchange for what? 

So far, nothing but damage.

I’ll take “do nothing”, thanks.

Eggs For The Omelet

The Warehouse tax is going to cause all sorts of damage – and some GOP legislators want to do something about it:

Reps. Tim Kelly of Red Wing and Pat Garofalo of Farmington said lawmakers must act soon because the looming sales tax on warehousing services is already prompting businesses to delay planned warehouse expansions.

But the DFL could scarcely care less:

But a spokesman for the Democratic-Farmer-Labor governor dismissed the request as “a stunt, not a solution.

“The Legislature is coming back more than a month before this tax would take effect, which is more than enough time, if revenues permit, to review and possibly revise this tax,” Bob Hume, Dayton’s deputy chief of staff, said in a statement.

Hume is speaking like a bureaucrat and party stooge who thinks the private sector is the same of a hip club in Northeast Minneapolis.

The tax is already killing jobs!

Kelly said two large Red Wing businesses are delaying expansions because of the tax, and the prospect of losing those new jobs calls for quick action.

Stephen Lawrence, president and CEO of Lawrence Transportation Services in Red Wing, said a 6.5 percent sales tax on his company’s services would put them at a competitive disadvantage with firms in neighboring states, none of which has a warehousing tax. He said his business is considering building facilities in Wisconsin.

Governor Dayton was apparently waiting for Alida Messinger to tell Carrie Lucking what he was supposed to say about this.

 

Governor Messinger Dayton: “Eat The Poor!”

Governor Alida Messinger Mark Dayton, 2011:  ”Rorra rammma hassa humper thunt”.  (Translation:  We’re only raising taxes on the top 1%)

Govenor Alida Messinger Mark Dayton, 2013:  ”OK, poor people gotta pony up too!

The DFL’s current tax plan not only raises taxes on all Minnesotans across the board, but actually raises taxes on the poorest Minnesotans by more than the wealthiest.

2013 Minnesota Tax Bill Incidence Analysis by minnesoda238

Down below is the key table, showing net tax hikes by income “decile”:


That’s right – not only did taxes rise more for the bottom 20% than for the top 10%, but under the DFL plan taxes rose more for the bottom 10% than for Dayton’s friends, family and neighbors in the top 1%!

To add stupid insult to pointless injury – the report (prepared by Dayton’s employees) notes that the taxes on the lower deciles might drop because of “property tax relief”.  But that assumes that city and county governments will pass “their” local government aid raise on to taxpayers, rather than plowing it into more spending – an assumption that history shows is too stupid even to laugh at.

This is the change you hoped for, Working Minnesota?

Hello Steeltown; Goodbye, DFL

Jamestown, North Dakota.

15,000 people.  At confluence of the James and Pipestem rivers, about 90 miles west of Fargo.  Home to a state hospital and psychiatric prison (which sounds like something the MN DFL would build for Republicans, but it’s really pretty normal), a school for the profoundly handicapped, a college (my alma mater, as it happens), and a whooole bunch of agricultural businesses…

…and, soon, an iron mill.

A North Dakota company plans to build a $60 million iron producing plant near Jamestown, N.D., using iron ore concentrate from Minnesota.

A subsidiary of Bismarck-based Carbontec Energy Corp. called E-Nugget North Dakota LLC has unveiled plans to churn out 100,000 metric tons of iron annually using North Dakota sugar beet residue in the mix instead of coke coal.

It’s an interesting project; the plant will extract ore from tailings from the old iron mines up north that used to be economically un-feasible to extract.  There are millions of tons of now-usable ore piled up up north.

It’s Minnesota ore, and the research has Minnesota ties…:

The E-Nugget iron making process was developed by Carbontec and Michigan Technological University over the past five years, including large-scale batch tests at a Minneapolis facility, John Simmons, president of Carbontec, said Monday. The company already has plans to expand to a 300,000-ton plant if the startup goes well.

But the plant is being built in North Dakota.  Granted, it’s Jamestown, which – as it’s been throughout most of it’s history – has been safely tucked away from excessive prosperity.  100 miles east of the oil fields and their jobs, and 90 miles west from cha-cha, booming Fargo (yes, I said “cha-cha Fargo”; it makes sense in context), Jamestown is one of few parts of North Dakota that isn’t overheating economically so far.

But it’s not Flint or Newark or Cleveland.  It’s not even Minneapolis, much less Grand Rapids or Virginia, unemployment-wise.

So why there?

Simmons said the Jamestown site is well-situated because of easy access to sugar beet residue feedstock and also because it is adjacent to a Great River Energy power plant and directly on the BNSF rail line. He said the iron ore concentrate could move from the Grand Rapids area to North Dakota in rail cars that move western coal east but generally have been empty on their return trip west.

“We can get the right quality material from Grand Rapids and the rail routes make sense,” Simmons said.

So let’s get this straight;  Jamestown ND, which is about 90 miles from the sugar beet waste, and probably 300 from the iron ore tailings, gets the plant.

Why’s that?

Magnetation expects to start construction on a fourth plant northwest of Coleraine this year. That plant will produce 2 million tons of concentrate [that's the part you dig up, before you process it into iron] annually and will be ready to feed a new Indiana pellet plant the company now is building to supply partner AK Steel with iron ore for its furnaces by 2015. That new Itasca County facility is expected to employ another 160 people. The Coleraine plant ultimately will shift to get its ore from traditional open pit mining. (The company has shelved plans to build a recovery plant at Calumet.)

 

Simmons noted Carbontec also created an E Nugget Minnesota LLC and considered building the plant in Minnesota using wood waste from logging sites as the reductant or binder. He said the company chose North Dakota instead, in part because it’s so much easier to get permits in North Dakota.

Score one for the DFL Environmental Lobby!  More jobs exported to North Dakota!

Let’s let that one sink in; between taxes and permits, it’s cheaper to ship rock 300 miles than it is to process it in Minnesota.

Thanks, Minnesota DFL!

The Mulligan Session, Part II

The same DFL employees who gave us “E-Pulltabs” as a means of supplying “the state’s share” of an extorted payoff to an out-of-state billionaire for his real-estate upgrade (which fell 95% short of predictions, as predicted by certain right-wing bloggers) are going to try to take a mulligan and get it right on the second try, says this piece from the MinnPost’s James Nord:

The governor’s proposal would increase the cigarette tax from $1.23 per pack to $2.52 per pack – a larger jump than the 94-cent target he’d earlier proposed — and would require retailers and wholesalers to make a one-time payment on existing inventory that would funnel $24.5 million into the stadium reserve account, solving the shortfall there.

Where have we seen this before?

Oh, yeah – cigarette taxes never, ever raise the money they’re supposed to.  They rarely get 2/3 of the way to their goals.  Ever.

And a “one-time tax on existing inventory?”  Look for a fire sale on smokes the week before the tax goes into effect, and for chain convenience stores to shuffle inventory out of state pronto.

Then, if electronic pulltabs or linked bingo games fail to produce the revenue necessary to fund the state’s appropriation bonds for the stadium ["if" - heh.  Ed], the commissioner of Minnesota Management and Budget would have the authority to direct revenue from a closed corporate income tax loophole toward the stadium.

Frans said that closing the “tax avoidance loophole” would prohibit the current legal practice of some Minnesota companies that avoid paying full corporate income taxes on sales they make by shielding themselves through a subsidiary in a different state. He said more than 20 states have similar regulations in effect.

Dear Mr. Nord:  Not that I’m going to tell you how to do your job, but did you happen to ask Mr. Frans what states those were?  And how they’re doing in terms of business climate?  How well “closing” that particular “loophole” worked?

Remember – these are the same people who said “E-Pulltabs” would…y’know…work.

That measure is projected to bring in $26 million in the first year and roughly $20 million annually after that, although those totals could change as the conference committee works out the specifics of their compromise.

Frans said with the new contingency plan, which would also be backed up by current taxes on suites and memorabilia if for some reason it doesn’t perform, officials are ready to close the book on the shaky stadium funding issue.

“We believe it’s reliable, it’s consistent,” he said.

The Messinger Dayton Administration ”believed” a lot of things that didn’t turn out to be true.

If only we had an institution, with printing presses and transmitters and websites, staffed by people who see themselves as part of a truth-seeking monastic order, whose job it was to tell the public about these things.

Governor Messinger Dayton: “The Beatings Will Continue Until Morale Improves!”

Governor Messinger Dayton famously appeared at the Chamber of Commerce yesterday.

And boy, did he give ‘em what-for!

Gov. Dayton told a stunned luncheon audience that Minnesota is among the best places for business in the country, contrary to the Chamber’s message.

He said government spending is right in the middle, and that the state’s tax rank is dropping.

Dayton said he never heard the same criticism when Republican Tim Pawlenty was governor for eight years, and he asked his staff to investigate.

“And we could not find a single instance of the chamber calling for spending reforms during those eight years,” Dayton said. “Evidently, in your view, spending reform is needed only when a Democrat is governor.”

Messinger Dayton also said he was sticking firm to his promise to hike taxes on “the rich” (meaning “successful entrepreneurs and professionals who didn’t have the foresight or the fiscal and legal clout to move their money to dynasty trusts in South Dakota”, as opposed to, say, him).

A couple of observations:

Gov. Dayton told a stunned luncheon audience that Minnesota is among the best places for business in the country, contrary to the Chamber’s message.

He said government spending is right in the middle, and that the state’s tax rank is dropping.

Dayton said he never heard the same criticism when Republican Tim Pawlenty was governor for eight years, and he asked his staff to investigate.

“And we could not find a single instance of the chamber calling for spending reforms during those eight years,” Dayton said. “Evidently, in your view, spending reform is needed only when a Democrat is governor.”

A few observations:

Governor Whinypants:  Business never complained about spending on Pawlenty’s watch?   Huh?

During the first term, business complained about things like “health impact fees” – stealth taxes framed as compromises with the DFL in a legislature he didn’t completely control.  Just ask Sue Jeffers.   On the other hand, he generally held the line on taxes, pursuant to his pledge to the Taxpayers League.

During the second?  Pawlenty was faced with a wastrel DFL legislature; business rightly figured he was the last line of defense against the sort of pillaging the Messinger Dayton Administration and the Legislature have in mind.

And they were right then, and they’re right now.

Profiles In Leadership:  This is leadership?  ”If you don’t see things my way you’re a poopyhead?”

Reverting To Stereotype: Conservatives pillory liberals for being innumerate, having  stunted knowledge of economics outside of Paul Krugman’s ravings – the type who think raising the minimum wage cures poverty.

It’s on stories like this that you realize; the stereotype exists for a reason. .

Dave Mindeman at mnpACT put it a little differently, by way of cheering Governor Messinger Dayton on in a piece titled “To the Chamber of Commerce: SHOVE IT” in a flight of Oscar Wilde-like whimsy..:

So Dayton dropped the sales tax proposal with the caveat that his increased income tax on higher income earners would go forward.

But they object to that as well.

“Hey, we left your top line alone, more or less; you can’t complain if we attack your bottom line, now, can you?”

They continue to promote the addage that this tax will affect small business…and yes, here we go, the “job creators”. They continue this argument even though the Department of Revenue has shown that only 6% of small business would be affected. And again, we are only talking about the highest portions of their income. If they are making substantially more than $250,000, why the huge objection to paying some back to a state that has benefitted you greatly?

I can see Messinger’s Dayton’s disconnect; she he has never worked, and has no concept of what business is about.  Not sure where Mindeman comes at it from, and I’m not sure that it matters.

Messinger Dayton is daring business to pick up and leave.

She He doesn’t think they will.

I imagine we’ll find out sooner than later.

Elections Have Consequences, Part CXXIX

Saint Paul business owners, trapped between Saint Paul’s crushing property tax burden and Dayton and the DFL’s tax hikes, are finally speaking out:

Paul Wagner’s family has manufactured and sold conductive wire to the medical and defense industries for nearly 50 years, but he and his wife haven’t ruled out moving the entire company from St. Paul to Wisconsin, where they already maintain two-thirds of their operations.

Smart Minnesota businesses, in other words, got a head start on the exodus.

I know that MN Wire is far from the only one.

Proposed taxes on business transactions and a possible increase to Minnesota’s minimum wage could doubly impact their decision to stay or go.

“In the past three years, there’s been 12 new costs (added) to hiring employees,” said Wagner, president and CEO of Minnesota Wire on Energy Park Drive.

It’s not just (sarcasm on) big plutocrats (sarsasm off) like Wagner.  It’s small service providers, like this woman:

Stephanie Laitala took out a second mortgage on her home and maxed out credit cards to open Owl Bookkeeping in St. Paul a decade ago. Starting out, she paid vendors and employees before herself, sometimes skipping her own paychecks entirely. The idea of a new sales tax on her accounting services leaves her cold, and one step closer to going back to working for someone else.

Wagner and Laitala joined a handful of fellow business owners Thursday, Feb. 28, at Minnesota Wire to speak out against DFL Gov. Mark Dayton’s proposed tax package.

The governor’s plan would lower the state sales tax rate from 6.875 percent to 5.5 percent but also broaden it, applying the tax to clothing sales of more than $100, business-to-business transactions, and memberships to gyms and other organizations.

Someone should tell PiPress writer Fred Melo that taking $2 Billion more out of the economy is not “lowering” a tax.

Question to the businesspeople involved:  how active were you in trying to not get Mark Dayton, Chris Coleman and the rest of them elected?  Just curious.

Chanting Points Memo: Ryan Winkler, Brezhnev-Style Economist

Conservatives joke that liberals just. Don’t.  Get. Economics.

We joke, at times, that at some point a liberal is going to push for a “living wage” statute calling for a $100/hour minimum wage as a means to end poverty, followed by a bill barring any layoffs and banning bankruptcy.

It’s a joke.  Some liberals shake their heads and go “yeah, yeah, we’re not nuts”.

And then something comes a long to prove that they really, really are that dissociative.

Rep. Ryan Winkler (D St. Louis Park), also known as “The Eddie Haskell of the House” – is introducing a “Kill All” amendment to House File 92 that bars businesses from laying off workers, cutting hours or benefits due to minimum wage increases. 

I’m going to write that again, just to let it sink in.

Winkler’s bill would make it illegal for businesses to lay off workers, cut hours or benefits due to minimum wage increases.

No, I’m really not making it up; I’ve added emphasis to the original:

(c) Notwithstanding paragraph (b), during the first 90 consecutive days of employment, an employer may pay an employee under the age of 20 years a wage of :

(1) $6.07 per hour beginning August 1, 2013;

(2) $7.24 per hour beginning August 1, 2014;

(3) $8.41 per hour beginning August 1, 2015; and

(4) the rate established under paragraph (d) beginning January 1, 2016.

2.11 No employer may take any action to displace an employee, including a partial  displacement through a reduction in hours, wages, or employment benefits, in order to hire an employee at the wage authorized in this paragraph.

(UPDATE: Commenter Master Of None points out, the above section refers to a training wage – a wage that employers may pay for up to 90 days – and says it’s not quite as dire as I’d made it out to be.   I disagree; Winkler’s bill raises the already existing training wage, causing all the same problems that raising the minimum itself does, which negates most of the utility of a “training wage”, as well as starting some sort of enforcement mechanism to painstakingly adjudicate all disputes related to training and minimum wages.  Because Minnesota businesses needed more niggling regulations)

And as the Obama Administration launches into permanent quantitative easing, Winkler wants to key the minimum wage to inflation, ensuring that no wages will ever keep up with inflation:

2.14 (d) No later than November 1 of each year, beginning in 2015, the commissioner  shall determine the percentage increase in the rate of inflation, as measured by the Consumer Price Index for all urban consumers, United States city average, as determined by the United States Department of Labor, during the most recent 12-month period for  which data is available. The minimum wage rates in paragraphs (b) and (c) are increased by the percentage calculated by the commissioner, rounded to the nearest cent. The new minimum wage rates determined under this paragraph take effect on the next January 1

In other words: Ryan Winkler wants to…:

  • arbitrariliy set wages (higher than the federal minimum, no less!)
  • bar business from compensating for the arbitrary change in labor costs in any way but by increasing revenues in the middle of a crap economy (which Dayton’s business service taxes and Obamacare are making worse by the day).

It’s the sort of thing any Economics 101 student knows is madness if he or she wants to get better than a “C”.

Bonus Question:  Do you think Rachel Stassen-Berger, Tom Scheck, Tim Pugmire or John Cronyn will bring any of this up with Winkler or the leadership that enables him?

Slouching Toward Hawley

First things first: Charlie Quimby of “Growth and Justice” and Dave Mindeman of MnpACT are two of a small, select set of Minnesota liberal bloggers who needn’t be under police surveillance or at the very least restraining orders.  I’m just giving credit where it’s due (although the idea that a group can be named “Growth and Justice” yet still stand for neither is just a tad bemusing).

But over this past week, both of them assailed Rep. Pat Garofalo’s statement on this past week’s “TPT Almanac” program; the Lakeville Republican claimed, in what struck me as a bit of hyperbole, that the broadening of the state’s sales tax to cover clothing will “destroy” border communities like Moorhead.

Always on the lookout for hyperbole to dissect, Mindeman and Quimby were on the job pronto.

Quimby was – as is his unfortunate wont – dismissive, in a post subtitled “Do We Believe Our Lying Eyes?”

Back in 2007 when Growth & Justice was presenting its Invest for Real Prosperity tax proposals to the legislature, I recall a member waxing nostalgically about his parents hauling the family across the North Dakota border to buy untaxed clothing in Minnesota.

The point of his anecdote was that if Minnesota lowered its sales tax and broadened its tax base—as economists recommend—this lucrative cross-border school clothing traffic would dry up, with terrible consequences for Minnesota’s border city retailers.

We’re hearing a version of the same tale…This week, Rep. Pat Garofalo objected on TPT’s Almanac: At the Capitol. He reported that a North Dakota Democrat was proposing eliminating the state’s tax on clothing as a form of tax relief.

“Retail businesses in border communities like Moorhead will be destroyed,” Garofalo said, attracting blogger Dave Mindeman’s skeptical response:

Mindeman interspersed some facts with the snark (which is to his style what dismissal is to Quimby’s) in his piece, noting – correctly – that North Dakota has a 5% sales tax, onto which Grand Forks and Fargo lard 2% in city sales taxes.

Oh my God….how would Minnesota compete?…Garofalo loves that flaming rhetoric doesn’t he?

Fact: North Dakota sales tax is currently 5.0%. Fargo, ND which is the booming ND metropolis across the river from Moorhead adds a 2% city tax. So here is the facts. Under Dayton’s tax proposal, Moorhead (which adds no city tax) would be 5.5%. Fargo would charge 7.0% Clothing may be exempt in the future, but Moorhead will still have clothing under $100 exempt as well.

And like most DFLers, Mindeman, like Quimby, can’t resist taking a homer shot at the Dakotas:

But let’s suppose North Dakota finally drops its state clothing tax just when the gap with Minnesota is closing.

Then what? Will Minnesota border towns really suffer? Were North Dakota retailers in the thriving cities of Fargo and Grand Forks suffering in silence all these years?

To which Quimby assents – with, to be fair, an actual study with real numbers:

As the Minnesota legislator said in that 2007 hearing, should I believe you or my lying eyes?…Looking at the literature studying economic activity in response to sales tax rates, I found research that supports the following points:

Response to differences in the sales tax depends on proximity of border communities. In other words, the farther you have to drive to avoid the tax, the less likely you are to do so.

How much does distance matter? A 2010 Utah study of local option sales taxes PDF* that investigated distance as a variable found increasing the tax rate lowers taxable sales (all else held equal) when there is a jurisdiction with a lower tax rate within 5 km, or about three miles. The effect disappears altogether within about 40 miles. This is to be expected for low-cost goods and everyday commodities. But it also appears to hold for expensive major purchases such as new or used automobiles.

All of that may be true.

But the effects of an individual tax like the Sales Tax, and its nuts ‘n bolts comparison with other sales taxes, while potentially interesting and certainly economics-class-fodder, are the trees that help you miss the forest.

For the real comparison between the states’ tax burdens – not just sales taxes, mind you, but taxes across the board – you need to ask yourself a key question:

“What did I see last time I went to the Moorhead/Fargo area?”  Or you could fill in the “East Grand Forks / Grand Forks area”, or the “Breckenridge / Wahpeton” area, or for that matter the “Worthington/Sioux Falls” metro area?

For starters, you’d know they’re called “Fargo/Moorhead”, and “Grand Forks/East Grand Forks”, “Wahpeton/Breckenridge” and “Sioux Falls”.  Because in every case, the North/South Dakota side is where the action is.

And it’s not just force of habit; it’s not even close.  The Minnesota sides of each of these metro areas (or clusters, in the case of Wop/Breck) are sleepy, moribund and dismal out of all proportion to their North Dakota neighbors.  They’re not competitors in any meaningful way.  They are all sleepy little bedroom communities with highway exits; whatever commerce, dynamism and action is happening in the area is happening west of the Red (or the Bois de Sioux, or County 17, as the case may be).

Forty years of wide tax disparity – Minnesota has the #7 overall tax burden in the US, while North and South Dakota are 35 and 49, respectively) has left a clear choice to all of those places; move west, and keep more of what you have.  The choice was more nuanced, of course, 40 years ago – when North Dakota was a sleepy agrarian backwater.  Today, with my home state an economic dynamo in both energy and technology, things are a little clearer-cut.  And at any rate – as noted by Quimby and Mindeman – fluctuations in the sales tax, or any individual tax, are background noise to the larger effect of decades of disparity; the Dakotas have better business climates; while the western 3/4 of both states are limited by their sparse populations (which is why working on the rigs out in the Bakken pays so very very well), but Fargo, Sioux Falls and Grand Forks are all well-developed cities with young, highly-educated populations and, at least in North Dakota, K-12 schools that are as good as or better than those in Minnesota.

So once you take a step back and stop the pointillistic crabbling about this remark or that individual tax rate, you see that the real issue is the long-term effects overall tax burdens have.  As the Dakotas prosper more generally and gain more people and – as seems to be their goal – turn more of that prosperity into tax relief, that disparity is only going to get starker.

Put briefly – the reforms of the sales tax won’t destroy Moorhead, because tax policies took care of that forty years ago.  There’s really not that much to destroy.  It’d be like harming business in Saint Anthony compared to Minneapolis; who’d know?

So here’s another question:  Up until 2 years ago, Wisconsin was addled by governments more dementedly “progressive”, as a rule, than ours.  That changed in 2010, right about the time Minnesota seemed to have some hope of shucking off some more of the dross of DFL legislative control.  Now, as NPR noted last week – in a report I’ll be going over later this week – Minnesota’s economy is stronger as a whole than Wisconsin’s.  But the improvement in Wisconsin since 2008 is dramatic;it’s improving fast, bouncing back from decades of neo-socialist perfidy.  What’s going to happen in Minnesota?

What do you think?  We’re raising taxes in the middle of a recession!  What happened in California, Illinois and France?

That said – we won’t know what’s going to happen until things tamp down for a while.  Will Minnesota’s government remain the shiny toy of Alida Messinger’s band of plutocrat dabblers and union fixers?  Will Republicans retain control in Wisconsin?  If so, give it a few years.  Then we’ll check back.

As to Fargo versus Moorhead?  That train left the station decades ago.  Changing the sales tax one way or another is just bouncing the rubble, as it were.

When You’ve Lost The Strib

The Star-Tribune editorial board brutalized a key component of the Messinger Dayton and DFL tax plan over the weekend.

The editorial starts out with a half-squib…:

We urge Dayton to reconsider and the Legislature to reject a sales tax on business-to-business services, a tax idea the Star Tribune has long opposed. While expanding the consumption sales tax to a larger share of the economy and reducing its overall rate, as Dayton proposes, is sound tax policy, taxing businesses’ service inputs is anything but.

The lowering and broadening the sales tax is a fine idea, but broadening it to the point where it takes $2.2 billion more out of the state economy during a recession is just plain stupid.

But taxing business services?

Messinger Dayton may have done the impossible:  forced the Strib and me into a common cause.

We’ll get to the common cause.  First, the Strib accurately describes the inevitable consequences of this tax plan in a way they never did with the Governor’s personal or political record, which shows, I guess, their priorities, but better late than never I guess:

A tax on business-to-business services would distort the choices businesses make about purchasing or keeping in-house accounting, legal and computer services. It would favor large companies with big back-office operations over small firms. It would put Minnesota engineering, architectural, scientific and consulting firms at a disadvantage. And it would turn the sales tax into a price inflator of every Minnesota-made product through a process economists call “tax pyramiding.”

For example, a law firm would pay tax on its cleaning service, and add that cost to the legal bill it sends to a trucking company, which would pay tax on that bill and pass the cost on in its charges to a farmer, who would pay tax yet again on the whole accumulating amount. At that point, the state’s long-standing policy of not applying sales tax to food will have faltered.

To answer the inevitable question:  of course the Strib editorial board is acting in its own enlightened self-interest:

Consider the impact on one particular industry sector — one this Editorial Board serves and understands well — advertising, information and communications. Providers of those services together employ nearly 68,000 Minnesotans. Many of them serve clients outside Minnesota and compete with rivals around the country and the globe.

The American Association of Advertising Agencies ranks the Twin Cities ad industry ninth-largest nationally and second-largest in the Midwest. It reports that none of the top eight markets have a tax commensurate with the one Dayton proposes. A cautionary tale can be found in Florida, where in 1987 a sales tax was placed on advertising and a range of similar services. An advertising boycott quickly ensued. So did a repeal of the tax, only six months after its passage.

It could certainly happen here.  Of course, the spending that’s being matched with that revenue under the Messinger Dayton / DFL budget won’t get repealed any time soon…

But here’s the issue where, for the first time ever, I find myself on the same side of the barricade as the Strib:

More than large enterprises would be affected. Sole proprietor David Aquilina, a “strategic storyteller” whose PR business is based in Minneapolis, said he would be contractually obliged to absorb all of Dayton’s proposed 5.5 percent tax.

“I will have to pass along the full cost of the tax to my employee: me,” Aquilina said. The proposed tax “would effectively impose a 5.5 percent cut in the top-line revenue of my business and in my income.”

The tax would apply to lawyers, accountants, cleaning services, networking jobbers, PR flaks like Aquilina – and freelance IT architects like yours truly, who frequently work “corporation to corporation”, and have nobody to pass the cost of the tax on to.  And it will favor the big IT solutions shops, who can absorb the extra top-line costs and pass them on – although they won’t be much happer about it that…

…I almost choke to say it…

…the Strib and me.

Defaulters, Frauds, Liars: The DFL Has Never Said The Shift Was A Gimmick, Winston!

Let’s take a quick jaunt through history.

Spring 2011: Governor Dayton proposes a budget with a school payment “shift” – a delay of payments to schools until after an arbitrary date, the end of a fiscal year, to “move” the spending from one budget to another – of something well over $2 billion dollars.

May 2011:  The GOP delivers a balanced budget that includes a shift of a little over a billion dollars.  The DFL whinges that the GOP is “using a gimmick” to balance the budget.  Notwithstanding the fact that Governor Dayton had himself proposed a “shift” twice as large as the GOP’s.

June 2012:  The GOP proposes a bill to completely “repay” (i.e., pay before the arbitrary date) the existing “shift”.  Governor Messinger Dayton, incomprehensibly, vetoes it.

DFLers muttered that paying back the shift would have been  irresponsible, although they never really said why.

Election Season, 2012:  The DFL relentlessly beats the GOP over the head with its chanting point about “Short-changing the children!”, notwithstanding the fact that the GOP had made an effort to fix it, only to be thwarted by Governor Messinger Dayton.

At this point, to the DFL, the “shift” is a campaign bludgeon.

Mid January 2013:  The DFL proposes a budget that proposes paying back half of the “Shift”, but in a bill that – notwithstanding that the flood of other new spending and the tsunami of new taxes – has no funding mechanism, so the whole proposal is vapor.

Late January 2013:  A DFL legislator says the shift “is just another tool”.

Summary:  to the DFL, the “shift” has gone from “Irresponsible to pay back”, to “a fiscal assault weapon aimed at our children!” to “just a tool“.

Seriously.

Conclusion:  The DFL defaulted on their promise “to the children”; they defrauded the voters by saying they’d pay “the shift” back, and they lied about the Republicans’ plans to do the same. 

Discuss.

Special discussion point:  why haven’t Rachel Stassen-Berger, Tom Scheck, Tim Pugmire, John Cronan, Pat Kessler and the rest of the elite capitol press corps reported on this?

CORRECTION: First two grafs were 2011, not 2012.  Time flies when you’re fighting rapacious spendthrifts, doesn’t it?

Gov. Messinger‘s Dayton’s Budget: One Dry Well After Another

A few months back, those of us who figured Zygi Wilf should pay for his own real estate improvements rather than plunder the state treasury were vindicated when turned out that the “mechanism” (read: gimmick) the state planned to use for its share – “electronic pull tabs” – wasn’t going to deliver anywhere near the planned revenue.  If things didn’t turn around fast (note: they will not), the state’s “contribution” to Zygi Wilf’s investment the Vikings stadium will have to be paid for by all of us taxpaying ripe sucks out of the general fund.

That’s bad enough – and it’s just to cover a putatively fixed bill.

Now, Governor Messinger Dayton has started coming out with budget proposals.  And along with some of those proposals (although, notably, not the one to repay part of the education budget “shift”) come some “mechanisms” to pay for them.  Gimmicks, if you will.

Minnesotans, being virtuous in a passive-aggressive sort of way, love “sin taxes”; tobacco is a common public policy kick toy in this state.  And Messinger Dayton intends to jack up the price of cigarettes by 94 cents a pack.

It’s not going to work, of course.

For starters:  cigarette taxes never, ever deliver the kind of revenue that their proponents expect.

Despite fanciful claims to the contrary, many tobacco tax hikes across the country have failed to produce the promised revenue. In 2009, Washington, D.C. raised its cigarette tax from $2.00 to $2.50 per pack. The District projected the new tax would generate $45 million in revenue, about 20 percent above 2009 levels. Instead, revenues came in $12 million below projections and $4.2 million lower than before the tax was imposed. Similarly, New Jersey reported a $52 million shortfall in tobacco tax revenues after it raised its cigarette tax by 17.5 cents in 2007.

The reason for this?  Addiction notwithstanding, cigarette smokers are people – and people alter their behavior to avoid paying taxes on discretionary things like smoking.  If a tax increase jacks up the price of a pack of smokes by 10%, then all other things being equal, people cut their spending.

“Yay!” say the tax’s proponents.  ”10% of people quit smoking!  Or they smoke 10% less!”.  Some do.  Others switch to cheaper cigarettes, or buy from the black market that always, inevitably burgeons whenever government cracks down on something people want; at any rate, people avoid paying the tax as best they can.  It’s Econ 101.

(Indeed, the public health benefits of taxing smoking seem to have stalled over the past twenty years)

But government can’t seem to avoid the spending that was to be based on all that tobacco money, and goodness knows no DFL administration would ever roll back an expenditure that we can’t afford.  Which means:

Due to these declining revenues, states often turn to broad-based tax increases to pay for an overspending problem. A recent NTU study also showed that 41 of 59 state tobacco tax increases from 2001-2006 were followed by more expansive tax increases within two years, as states attempted to make up for tobacco revenue that never appeared.

Just like the Vikings stadium; they’ll be after us to fill in the shortfall.

Oh, yeah – and for all of Governor Messinger’s Dayton’s palaver about making the rich pay their “fair share”, it’s worth noting that the cigarette tax is the most regressive tax of all – according to that noted conservative tool, Governor Mark Messinger Dayton.

Why, if I didn’t know better, I’d assume the Governor‘s ex wife was just saying things to get elected…

Gary Gross has also been covering this.

Know Your Place, Animals!

This piece is sort of a natural follow-on to yesterday’s post – all the “Deep Thoiughts” about man’s relationship to government, and the different philosophies liberals and conservatives bring to the table on the subject.

But first, a brief digression.

I don’t normally rebroadcast other peoples’ ads – but this one was just too good not to pick up and run with, just a little bit.

It’s a riff on President Obama’s “You didn’t do it” scold to entrepreneurs and, by extension, really anyone outside government:

Nope, nobody paid me to rujn it. Although they sure could.

Of course, this sentiment is pandemic on the left.  Yesterday Jim Schowalter, Mark Dayton’s budget director, was at a meeting in Thief River Falls with, among other people, the CEO of Digi-Key.  You may not have heard of it – it’s a privately-owned billion-dollar company based out of Thief River Falls that is one of the biggest success stories and major employers in northwestern Minnesota.  The company started in the CEO’s apartment forty-odd years ago – guy didn’t even have a garage at the time – and grew into a billion-dollar operation employing thousands (I have family in the area, so I hear things).

And, according to a report from the scene, Schowalter told the CEO that  without government, he could never have done it

The theory among lefties is that without all the “infraastructure” government “provides”, entrepreneurs would be huddled in caves, helpless, banging rocks together to try to get fire.  It’s only through the nurturing hand of government that any human activity is possible.

But once government – at some level – has dealt with banditry, brigandry, barratry, piracy and piracy, really, you’re into the mundanities of laws, roads and regulations.   And when those are the subjects…:

  • What?  Government wants a cookie for doing what it was set up to do, and for which generations of people before the entrepreneur paid taxes – sometimes grossly overpaid in taxes – to get?
  • By the way, where do people suggest the money to build that “infrastructure” came from?  Brought down from heaven on the backs of unicorns?  No – people, entrepreneurs and company guys and executives and high school kids working at Tastee Freez and trust fund billionaires alike – had it taken out of their paychecks.

So yeah, government – good job and all, “providing” things that I and millions like me paid you to do.  Isn’t that like me going to my boss and saying “thank me for the design I handed off, on top of paying me to do it?”

By the way – try as I may, I can not find a single reference to this episode anywhere in the mainstream media.