Category Archives: Taxes

The Real Minimum Wage

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Progressives, awash in worry about income inequality, will barber on and on over whether the minimum wage should be $10, or $11.50, or even a Seattle-sized $15/hour.

Conservatives know that the real minimum wage is zero. 

“Diggity”, a new fast-food restaurant concept in Coon Rapids, gets a jump on McDonands, does away with the server:

Diggity functions on an elaborate and expensive system of self-serve, touchscreen kiosks and software that allow customers to place orders directly from smartphones or tablet devices. Diners watch monitors (or their phones) to track the progress of their order and pick it up at the counter when ready.

 Customers can also order takeout online, drive into a designated spot in the parking lot and check in using the restaurant’s wireless Internet connection, which will ping the staff with a request to bring the order out.

“You don’t even have to make a telephone call, which is one more convenience factor,” Cary said.

The system cost six-figures (Cary wouldn’t be more precise), but he said he has no doubt it will pay for itself. The setup from Michigan’s Nextep Systems allowed Hemipshere to hire half the staff a restaurant of Diggity’s size would normally need.

But wasn’t it just the “wow” factor that led to the innovative design? 

Cary and Managing Partner Anoush Ansari said the new model was inspired by Minnesota law mandating a gradual bump in the minimum wage.

Thanks, DFL!  The teen unemployment rate is going to take another hit.

Dear “Progressives”

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We warned you. Oh, yes we did.

“When you raise the taxes on the parts of our society that produce wealth, the wealth moves”

That’s especially true when the taxes you’re raising make the producers of wealth – companies, in this case – less competitive in a global marketplace with other companies that produce wealth and get less of a tax hit.

Two weeks ago, it was Medtronic packing up its corporate plantation moving to Ireland for a much, much, much better tax rate.

This week? Word that Walgreens is planning a similar inversion with a company in Switzerland.

And after news that Nash Finch and Advance Auto Parts are leaving Minnesota largely because of the DFL’s tax orgy, and Red Wing Shoes and Laurence Transportation shelving major expansions because of that same tax policy, i’m wondering how much longer the DFL can hide behind the the headlines about Minnesota’s phantom, low unemployment rate.

(Which translates to “low unemployment in the metro, where all the Fortune 1000 companies are, with the market a little less reassuring outstate…)

Closing The Hatches

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Joe Doakes from Como Park emails:

Help thousands of customers into loans they can’t afford leading to foreclosure, bankruptcy, and Trillions in federal bailouts . . . yawn.

Help a few people hide money from the tax collectors . . . $2.5 Billion in fines.

Priorities

You can’t take a house out of the country. Taxpayers are another matter.

Democrat Fatcat Largesse

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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).

Paging Fran Tarkenton

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Joe Doakes from Como Park emails:

Dorsey lawyer’s Strib editorial on residency requirements for income tax purposes doesn’t make much sense. Not surprising, as it’s plainly self-interested on three fronts – keeping in good with the Tax Court and with Democrat politicians, as well as keeping her wealthy clients after they move out-of-state.

First, she says the law on residency hasn’t changed and it’s not a problem. Then she says two recent notable cases weren’t a big deal and the losers should have lost. But then she says she supports the proposed change in legislation because people who move out of state shouldn’t have to switch lawyers to prove a change in residence.

Hey, either the law was fine before, or the critics were right and the tax court has turned this state into the Hotel Minnesota: once you live here you can never leave, you’re always a “resident” for income tax purposes.

I agree with the critics: the present law is overly broad, inconsistently applied and antiquated. The only reason we still have it is Democrats want to tax rich people wherever they live, however slight their connection to this state and the present law is a fig leaf to justify it.

Joe Doakes

rumors that the DFL wants to tax everyone who has ever been a professional athlete in Minnesota are exaggerated.

Probably.

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

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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!

Tax Cuts!

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SCENE:  Mitch BERG is picking up cat food at the grocery store.  Avery LIBRELLE, carrying a case of kombucha, walks past, sees BERG, and stops. 

LIBRELLE:  Hey, Merg!   University Avenue is about to get a $1.4 Billion dollar tax cut!

BERG:  (Looking for a graceful way out) Um, what now?

LIBRELLE:  The Green Line light rail is rebating 1.4 billion dollars worth of local, state and federal taxes to the consumer of Saint Paul!

BERG:  Um, we’re spending a billion and change on a light rail line. 

LIBRELLE:   Right – the taxes were paid, and then the money is being sent back to the taxpayer in the form of rail!  It’s a tax cut!

BERG:  That’s absurd. 

LIBRELLE:  And MNSure is tens of millions of taxpayer dollars being returned to Minnesota’s healthcare consumers. 

BERG:  And Information Technology companies, and business consultants.

LIBRELLE:  Exactly!  All of them are benefitting from the Tax Cuts!

BERG:  None of these are tax cuts.  All of them are government taking money from some people, and giving it to others…

LIBRELLE:   …you’re a sore loser, Merg!   Why, look at the tax cuts we’re giving to the working poor!

BERG:  “Tax cuts?”  You hiked the budget $2.1 Billion, and took over a billion extra out of the economy, and the DFL’s idea of a “tax cut” is to give a few million back to people to reinforce their DFL votes?

LIBRELLE:  Blah blah blah!  It’s tax money, and someone is getting it back!

BERG:  So giving hundreds of millions of tax dollars to Zygi Wilf is a “tax cut?”

LIBRELLE:   Is it tax money?  Is someone getting it?  It’s a tax cut!

BERG:   So the CIA and the SEALS gave Osama Bin Laden a “tax cut” when they killed him?

LIBRELLE:   Don’t be absurd!  They lowered the unemployment rate!

(And SCENE)

Strib: “Oops – Sorry About All Those Unexpected Property Tax Hikes”

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If there’s a “broken record” phrase in all of Minnesota conservative alt-media, it’s “the Star Tribune is carrying the water for the DFL”.

It’s like saying “Boy, isn’t Lady Gaga weird”.  It’s the baseline.  It hardly needs to be said.

As Strib observers and critics go, I’m more jaded and cynical than most, which is another way of saying “almost cynical enough”.

But even I – who doesn’t really doubt that the Strib’s editors, and likely some “journalists”, are on the local version of “Journo-List” with the DFL, Take Action, Alliance for a Better Minnesota and Alida Messinger – wasn’t ready for the avalanche of lies and bald-faced image-shaping in this editorial.

The subtitle says it all:  ”Relief not as sizable as hoped, but help goes where it’s most needed.”

There was no relief, and the “help” was taken from most Minnesotans and given to the Minnesotans whose votes the DFL wants to buy!

It only gets worse:

As many previous statehouse politicians learned to their sorrow, local property taxes are hard to control from the Capitol. That reality has hit home to the DFLers in charge of the Legislature and the governor’s office.

 They thought they set the table in 2013 for noticeable reductions in property taxes around the state. Instead, they got mixed results and a muddled message. Total K-12 school and local government levies are up $125 million this year, giving Republican politicians the chance to crow that the DFL’s tax-suppression strategy failed.

There was no “DFL Tax-Suppression Strategy, other than repeating “raising Local Government Aid will lower property taxes!” enough times for the incurious to believe it. 

None! 

But DFLers also engineered an increase in property tax refunds for both homeowners and renters, distributed on an income-based formula to low- and middle-income taxpayers facing high tax bills. Factor in estimated claims for the richer refunds, and net property taxes in 2014 are down slightly from 2013 — by $8 million, or 0.1 percent…But count us too among fans of the $133 million boost this year in refunds to qualifying taxpayers. The income-driven property tax refund and renters’ credit are well-designed programs that this year will reach an estimated 550,000 property owners and renters — up from 140,000 previously eligible.

“Income based formula”.

In other words, the DFL took money from some people, and gave it to others. 

That’s not a tax cut.  That’s redistribution.  That’s the state picking winners and losers. 

 That leaves plenty of Minnesota’s 2.1 million households staring at higher taxes again this spring. This is the 12th year in a row for increases in total property tax burdens, with yearly increases averaging $332 million.

 But the credits are helping to stabilize housing for low-income Minnesotans by sending help to those whose property tax bills are high enough in proportion to their incomes that their ability to remain in their homes could otherwise be in doubt.

That’s not “property tax relief”.  That’s a social program, using the state to funnel money to overextended low-income home owners.

 The refunds may not stifle political criticism, but they’re sound policy.

No.  They are DFL campaign spending.

Fact: after two years of the DFL claiming at every turn that the GOP’s cuts to LGA hiked property taxes, and that their reinstatement would “cut property taxes” – their words, over and over and over again – nearly 80% of Minnesota’s jurisdictions raised property taxes. 

The DFL lied to the people.

TheStrib, in this editorial, is covering for the lie, and doing it clumsily. 

Well, too clumsily to fool anyone that’s paying attention. 

But the Strib’s political coverage isn’t aimed at that audience.

When Grownups Run Things

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On the one hand: Minnesota hikes taxes two billion dollars.  The “surplus” rises about $200 million over what the Republican majority in 2011-2012 left.  The DFL majority is currently arguing not so much over how to spend the “surplus’, but how many times over it shall be spent. 

On the not-stupid hand:  Wisconsin under Scott Walker cut taxes.  Wisconsin’s surplus is pushing a billion dollars.  And the only argument in Wisconsin today is “how are the taxpayers going to get the overbilling back?”

“The additional revenue should be returned to taxpayers because it’s their money, and my administration will work with the Legislature to determine the most prudent course of action,” Walker said in a statement.

Walker has been talking with Republican leaders about tax cut proposals he plans to release in his State of the State speech next Wednesday. Walker’s spokeswoman Jocelyn Webster said the governor wants to adjust income tax withholding tables to put more money in taxpayers’ pockets immediately and is also eyeing income and property tax reductions.

It’d sure be nice to have grownups in charge in Minnesota again.

(VIa regular commenter Chuck)

Chanting Points Memo: That Humongous Surplus!

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How soon people forget…

…well, no.  How soon the DFL and its stenographers in the mainstream Minnesota media try to make them forget. 

The GOP-majority legislature in 2011 and 2012 bounced the state back from a (let’s take the Democrat-controlled bureaucracy at its word) $6 Billion-and-change deficit to an $800 million surplus, without raising taxes.  Had they followed the Tea Party freshmens’ advice, and held spending at 2010 levels, it would have likely been more like $2 Billion – but that’s water under the bridge for now.  They also tried to use some of that money to pay back the “school budget shift” – a DFL-designed accounting gimmick that operated entirely as a chanting point for the DFL – but Governor Dayton Messinger vetoed it to hold it out there as an election-year rhetorical cudgel. 

But it’s another year.  And a DFL controlled legislature.

And after increasing taxes by two billion dollars – many of which haven’t kicked in yet – the DFL is taking full credit for a “Billion dollar surplus”. 

Let’s make sure we’re clear on the compare-and-contrast, here:

  • The GOP, without raising taxes, moved moved the revenue needle seven billion dollars (although two billion got eaten up by additional spending the DFL demanded via Governor Dayton Messinger. 
  • The DFL, in one year, took an additional two billion dollars out of the productive economy and handed it to government – leaving us with a grand total of $200 million in additional surplus.   And remember – the worst of the DFL’s taxes haven’t even started yet. 

That of course begs a question – concluding that a surplus is a good thing.  It’s not; it’s money taken out of the productive economy.  That billion dollars is money the State of Minnesota thinks it deserves more than you – the person who actually earned it. 

The DFL is going to do its best to obscure that – because for all of their endzone-happy-dancing, it’s really not all that good.

Snow Place Like Home

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Joe Doakes from Como Park emails:

City of St. Paul takes responsibility for street plowing the way Obama’s IRS does – proclaim outrage, shuffle people around, make vague promises and hope the issue goes away.

A city taxes residents to perform a few, basic duties: keep the peace, fight fires, provide safe drinking water, treat sewage and plow the streets.  Since I moved here in 1998, streets have been a cruel insult.

Comparing St. Paul to Minneapolis sounds fair – both big cities with huge staff and monster budgets – but a better comparison is Roseville or Falcon Heights – a small city with small staff and small budget whose streets are plowed and sanded, clean and dry, weeks before St. Paul’s streets are done.  If the little town can do it with tiny staff working for peanuts, why can’t giant St. Paul do it with all its union employees and LGA resources?

I suspect Mayor Chris Coleman doesn’t want to discuss the solution proven to work:  contract it out.  I vaguely recall the City did for a while back in the early 90′s – maybe during Mayor Norm Coleman’s time?  I think they contracted to heavy equipment companies that did road construction in the Summer but sat idle all Winter.  We could hire them again.

I want to say it was West or South Saint Paul, or maybe a trial program on the West Side.  The city’s union employees claimed, unsurprisingly, that the private contractors were terrible at the job, and the program was ended.  ”Cauterized” might be a better term.

Plus, St. Paul never plows alleys – residents band together to hire some guy with a Western plow on his pickup, which is good Winter work for landscapers.  They could each clean a few streets, too, and have them perfectly clean before the city crews even get to the shop.

A chicken in every pot, a car in every garage, a plow on every block: now there’s a campaign slogan I could love.

That’s my block; one of our neighbors does plowing.  We each chip in $20 a winter – and he has to keep the alley plowed to get to work.  I think during the big blizzard in 2010 he may have made one of the side streets passable too…

  When I bought my last vehicle, I went shopping for a 4-wheel drive.  My in-laws asked me “Why do you need a 4-wheel drive, you live in St. Paul?” and I replied “I need a 4-wheel drive BECAUSE I live in St. Paul.”  Now that’s pathetic.

Joe Doakes

Saint Paul seems to be getting counterintuitively worse at clearing roads.  While last year was the worst – with even high-traffic streets remaining impassible sheets of glare ice for days after big storms – we haven’t had a real donnybrook of a storm yet, either.

The roads, even after last week’s modest storm, are like goat paths in the Bolivian Andes.

We’re Number 47!

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Minnesota has the 47th-best tax climate, according to the non-partisan [1] Tax Foundation.

In none of the five major categories – corporate, individual income, sales, unemployment or property taxes – is Minnesota even in the top 60%.

Keep up the good work, DFL!

[1] – Hey, if the media calls “Common Cause” “non-partisan”…

CORRECTION:  47th best.  Not 47th worst.  I needed coffee.

Why Do Reps. Ellison, McCollum, Walz And Nolan Hate Veterans?

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Four of Minnesota’s five House reps voted against funding veterans benefits during the shutdown (Collin Peterson did the right thing).

Now, their explanation will be that the Democrats’ congressional leadership – Reid and Pelosi – want the whole budget passed, not a bunch of piecemeal mini-budgets – because that’s just not the way we do budgets, apparently.

Of course, the Democrats don’t do budgets at all But I digress.

It’s buncombe, of course; the GOP’s strategy, making the Democrats justify their spending piece by piece rather than having it all jammed down in full tantrum mode – might just show the people that there’s an alternative in DC.

That’d make the Democrats in DC very upset.

So the real question is why do DC Democrats hate taxpayers?

We Keep Warning You

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We warned the DFL.  ”Go ahead – raise cigarette taxes – the most regressive tax there is.  Watch what happens.  People will go out of their way to avoid paying the tax.  Just you watch!”

And the DFLers – and their camp followers in the local Sorosphere – assured the,selves “Naw!   People won’t drive miles out of their way for…cigarettes.  No way. It people aren’t that manic about not paying for A Better Minnesota”

But at a price break of almost two bucks a pack? <A href=”http://kfgo.com/news/articles/2013/aug/19/cigarette-buyers-flee-minnesota-to-avoid-tax-hike/”>Of course they are</a>.

 

 

Diplomatic

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It’s gotta be tough to be the Strib Editorial Board.

On the one hand, you are joined to the DFL at the hip.  You run what is in effect the DFL house organ.  

On the other hand, you’re not only trying to run a business – you’re running a business in a dying industry and a garbage economy.  Alida Messinger has you on speed-dial.  You worked overtime – well, you had your people work overtime – to see Mark Dayton and a couple of DFL legislative majorities elected. 

St. Paul and Minneapolis mayoral property tax bids for 2014 came in Wednesday and Thursday, respectively, and with them the strongest indication to date of how much change in Minnesota’s property tax climate was wrought by the 2013 Legislature.

The change is in the right direction, but it’s more modest relief than the Editorial Board had hoped for, particularly in St. Paul.

As I’ve predicted for the past year, and correctly noted yesterday, the hikes to “Local Government Aid” will not lead to any meaningful property tax cuts anywhere in the state, least of all in the Twin Cities and Duluth.  True enough; Minneapolis is instituting what’ll be a fairly cosmetic cut for most people.  Saint Paul is, ostensibly, holding its taxes steady – which is not a cut at all:

Mayor Chris Coleman — who is seeking a third term this year — recommended that city levies be held flat next year. He called it a “no-drama” budget. But for St. Paul homeowners hoping for a partial reversal of the big increases in recent years, it was a disappointment. The City Council should aim lower as it sets next year’s levy.

While each city’s budget will benefit from a state infusion next year, the Twin Cities are not twins in city government size, scope and fiscal condition. St. Paul is in many ways the needier twin, more dependent on state aid, which was slashed in 2003 and has only this year begun to recover, and on homeowner taxes, which rose steeply in response.

This year’s $10.1 million LGA increase does not quite fill the $11.5 million gap projected for next year’s St. Paul budget before more state aid arrived.

Just as promised, Saint Paul isn’t putting one red cent toward reducing property taxes.  Its budget remains a grab bag of goodies for Chris Coleman’s and the City Council’s key stakeholders, the unions and the non-profits. 

Anyone who expected otherwise was deluded.  Anyone who told you it’d be otherwise is either naive or lying. 

So what is the Strib editorial board, then?

We Warned You. Oh, Yes, We Did.

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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.

Eggs For The Omelet

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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.

 

Unintended Consequences

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Joe Doakes from Como Park emails:

USDA buys food products from eligible vendors, then gives them away to schools and eligible poor people.

The purpose of the program: “The Agricultural Marketing Service’s Commodity Procurement Staff purchase a variety of food products in support of the National School Lunch Program and other food assistance programs. These purchases also help to stabilize prices* in agricultural commodity markets by balancing supply and demand.

*Euphemism for price supports, aka subsidy to food producers.

Lots of foods are available including raisins. Raisins? We need to create an artificial shortage to support higher prices for grape growers? Yes, except one of the growers is pissed the government forces him to hand over his crop and brought a Takings claim. The case went to the Supreme Court which ruled he didn’t have to pay the fine for failing to turn over his crop before he could bring a Constitutional challenge to the law requiring him to turn over his crop or pay a fine. The government didn’t pay for raisins, they took them, to feed the poor. Barak “Raisin Robin Hood” Obama.

The whole system is insane. We buy food and store it in warehouses to make food artificially expensive and therefore more profitable to producers, but then poor people can’t afford food so we truck it around the country and give it to them for free. Stop The Madness! Don’t buy the food, let the market decide how many producers can produce food and still be profitable, let Cub and Rainbow warehouse and ship it, let prices slip so poor people can afford it. The market will take care of everything if we just get the hell out of the way!

Why is that so hard to understand?

Joe Doakes

If you leave out the forced labor (so far) and use of food as a terror weapon, the similarity to the Soviet agriculture plans of the 1930s will make you pound your head on the desk.

 

Back On The Shelf

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It was the humblest and most obscure among the DFL’s orgy of tax pushes this past session. 

And it may be the one that has the broadest impact fastest

The DFL imposed a tax on warehouse services this past session; basically, if it goes into a warehouse, you pay for it.  And pay.  And pay. 

And Minnesota businesses are not amused:

With a warehousing services tax looming next spring, Rochester businessman Eric Lawrence is rethinking the company’s expansion plans.

That means “not hiring any more people”.  Back to McDonalds, proles – and remember, it’s for A Better Minnesota!

The president and CEO of Red Wing-basedLawrence Transportation Company had been looking to build a new warehouse facility in Winona but tapped the brakes on the plan. While the warehousing tax isn’t the sole reason for delaying construction, he said it is a major factor.

“I want to grow this business. I want to offer the services and have the space to do it, but it’s not worth the risk,” he said.

With Hudson, Prescott and La Crosse just across the river and sharing the same (or better) transportation links that Red Wing has?  

The DFL-led Legislature approved extending Minnesota’s sales tax to commercial warehousing services last month. The proposal is expected to generate nearly $100 million for the state per year once it takes effect April 1, 2014.

It won’t, of course.   Ripping 6.75% plus out of the bottom line of the warehousers – which is not an especially high-margin business to begin with – makes it a no-brainer for any company.  

Senate Majority Leader Tom Bakk, DFL-Cook, said during a recent visit to Rochester that the warehouse tax enabled lawmakers to repeal a requirement cities and counties pay state sales taxes — a cost that got passed on to property taxpayers. It also helped fund an upfront refund for business capital equipment purchases.

“We thought (the warehousing tax) was a business-to-business service that wouldn’t harm economic growth, but we put it in effect in April so we could assess what potential issues that are with it because we’ve never had it before, and if there are some ramifications, there will be time to make some corrections to it,” Bakk said. “But right now, today, I don’t see it having a hindrance on economic output.”

“I don’t see it having an impact”. 

This is from the leader of a party that thinks “supply chain” is something you pay $20 extra for at Deja Vu. 

Critics disagree. They argue the tax will encourage Minnesota companies to warehouse their products in other states…Among the businesses concerned about the tax is Red Wing Shoes. The company declined to provide comment for this article. But in an interview with the Star Tribune’s Neal St. Anthony, Red Wing Shoes President Dave Murphy said the company has decided to delay plans for a new $20 million distribution center in Red Wing as a result of the tax.

I know of one major company in Greater Minnesota with a very large warehouse component that has been quietly renting up all the warehouses it can find in a neighboring lower-tax state (with better transportation connections and easier building permitting to boot); if that company leaves, it will gut the job market in its neighborhood.

It’s not just the warehouse tax that’s got them shopping.  But every little bit hurts, when you’re trying to be competitive with surrounding states thatjust plain get it – they understand competition, having spent the past forty years competing with their fat ‘n happy neighbor at the top of the Mississippi River. 

So when your warehouse gig moves off to Superior or Grand Forks or La Crosse, just remember - it’s For A Better Minnesota!

Turd-Polishing

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Desperate to keep the stadium finance “plan”…er, afloat, the state is making another big push to try to sell “E-Pulltabs”:

In Duluth on Tuesday night, about 35 charities and bar owners showed up for a chance to test-drive all the electronic pulltab and bingo games now available in Minnesota. They got tips from charitable gambling leaders and bars along the North Shore who use them. They received the latest data from state officials on Minnesota’s most popular e-gambling counties, the effect on charity collections and more.

“I’ve seen the machines before, but I’ve never tried them,” said Duluth bar owner Mike Ronning, checking out the electronic pulltabs. “It’s fun. I just don’t know if it’s right for my place.”

The upshot:  people are still keeping them at arms length.

One wonders if we might have saved a whole lot of trouble doing thisbeforethey made them the key revenue-generator in the state’s Viking stadium jamdown.

The Death Of A Million Cuts

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 When the DFL-controlled legislature started jacking up taxes, we tried to warn ‘em.  “North Dakota’s gonna eat Northwest Minnesota’s lunch”. 

But did they listen?

Pffft.  They know what “A Better Minnesota” means, peasant!

Oh, the left trotted out its talking heads.  “It’s really fairly marginal”, said the heads, snug in their academic offices in the Twin Cities.

One of the Marginal Ones up in Moorhead has had enough:

When service station owner Brady Olson decided politicians weren’t listening to him, he took to the airwaves to protest higher taxes that he said were cutting into his profits.

 

“Hi, I’m Brady from Brady’s Service,” he said in a 30-second radio spot. “Minnesota has quietly been turning my business in to a tax collection business.”…Olson and other business owners in northwest Minnesota say those higher taxes make it difficult for them to compete with businesses in North Dakota, where the booming economy has allowed legislators to cut taxes.

To a talking head in the Twin Cities – who, likely, has never run a business or made a payroll – it’s just nickels here, dimes there. 

But nickels and dimes add up:

 With Minnesota legislators recently deciding to increase cigarette taxes by $1.60 a pack, Olson said, “Now they’re in the well again.”

 

Olson was particularly critical of the higher cigarette tax, which on July 1 will be $2.83 a pack. North Dakota’s cigarette tax is 44 cents a pack.

 

As a result, Olson expects to lose a few customers. He said people who buy cigarettes in Fargo will likely buy gas there.

And the bottom line?: 

Olson said every tax increase makes it tougher for his family-owned business to compete with convenience stores a mile or two away in Fargo. He pointed to gasoline as a key example of taxes that make his profit margin smaller than that of a North Dakota business.

I did mention the academics, didn’t I? 

As Minnesota lawmakers struggle to pay for essential services while allowing companies to remain competitive with those in nearby low-tax states, a big question is whether such tax disparities can kill a business.

 

There’s not much evidence to support that, said David Flynn, an economist at the University of North Dakota.

 

“When it makes a difference, they move or they change their business tactic,” said Flynn, who has studied the border business climate. “When it doesn’t make a difference they complain, but we don’t see a noticeable change, a business shuttering the windows or anything of that sort.”

 

Flynn said taxes are generally not the key factor in where business locates. As an example, he cited Minnesota’s lack of a sales tax on clothing. Although North Dakota taxes clothing purchases, there are more clothing stores on the North Dakota side of the border.

And there’s the point that everyone (on the left) misses, always.

There’s more of everything on the North Dakota side.  Moorhead, Breckenridge and East Grand Forks are pale, wan little bedroom towns across the river from Fargo, Wahpeton and Grand Forks (respectively) that are booming, and have always far outstripped their Minnesota neighbors in employment, in business growth, in everything. 

In short, the point isn’t that the border doesn’t reflect the disparities today over taxes discussed last month; it reflects decades of different approaches to taxes and regulation, which the current session will exacerbate.

Read the whole thing – it’s from MPR’s Moorhead correspondent, and it does a decent job of stringing together the story, including the non-sequiturs from the apologists for the Minnesota system.

Chanting Points Memo: “The DFL Cuts Property Taxes!”

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One of the DFL and media’s (ptr) hoariest chanting points is the idea that “Republicans raised property taxes!”, and that the DFL – due to its tender regard for the middle class – is hotly engaged in cutting them.

This is a classic low-information voter play, of course; the state doesn’t set property taxes.  City and county governments do.

All the state does is send money, in the form of Local Government Aid (LGA) and Market Value Homestead Credit (MVHC) to cities and counties to subsidize their activities…

…and then, theoretically, those lower levels of government use that money to lower their citizens; since they’re getting money from the state in the form of tax dollars redistributed from the rest of the state, they can tax their own citizens less.

Right?

Well, no.  Usually not.  If you’ve read this blog, you already know more than most Democrat voters; that when LGA was “cut” over the past decade, cities and counties raised vastly more in tax hikes than they’d actually gotten from LGA in the first place.  Such is the addiction of government at all levels to spending.

And now that the DFL has cranked open the spigot again, what’s going to happen?

A PiPress editorial last week notes that “government will cut property taxes about the time I’m caught by paparazzi leaving a Los Angeles club with Amy Adams” is the proper answer to that.  I’ll add emphasis:

A Pioneer Press report this week on 31 metro suburbs cheering the restoration of funding they receive from the state included this note of caution: “There’s no guarantee cities won’t spend all the new state money on services, salaries or public works projects.”

Reporter Bill Salisbury cited findings in a 1990 analysis by the Office of Legislative Auditor that “state aid may boost city spending more than it provides local property tax relief.”

It said cities had used 82 percent of their additional aid to pay for increased spending and only 18 percent to reduce property taxes. Citizens should be prepared to hold their local lawmakers accountable.

But the DFL – and, for the most part, the media – have done their best to diffuse this accountability, to couch this “aid” in terms of “Free money borne down from the sky by unicorns”, rather than money taken from the parts of this state that work – the Twin Cities exurbs and some prosperous outstate communities – and redistributed to smaller towns with lower tax bases (the original intent of LGA) and the Twin Cities and Duluth (which was not, but which became the primary focus of LGA over the past 20 years).

But the editorial is right.  The DFL spent most of the past decade trying to make the case that hiking LGA was a matter of cutting property taxes.

It’s not, and has never been.  It’s been a money transfer, mostly from the parts of the state that are run responsibly, mostly to the parts of the state that are not.  And the smart people already know that this new money is going to overwhelmingly pay for new spending, especially new union-dues-paying government labor.

And as this last election cycle showed us, it’s not enough just to win the smart people.

We’re From The Government And We’re Here To Help

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Joe Doakes from Como Park emails:

Student loan fraud has nearly doubled since 2009. Something about 2009 sounds familiar. What happened in 2009?

Oh yeah, that was the last year private lenders made student loans. After 2009, the federal government took it over as part of Obamacare, so the interest paid by students would offset health care costs for poor people.

Either this is a government-run program that’s twice as corrupt as a private-run program, or half as competent. Who could have seen that coming?

joe doakes

Who could have seen it coming?

Less than 47% of the people, unfortunately.

All The Facts That Fit (The Narrative)

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Dems must smell their own blood in the water for next year; they’re frantically trying to attack the notion that tax cuts help create jobs…

…in the minds of those who don’t check the facts.

This one’s been popping up on Twitter lately:

So I looked at the link.  It’s from “Think” Progress, which is always a good sign that you’re about to descend into the fever swamp.

And it says…:

The five states that implemented deep tax cuts during the 1990s experienced slower job growth over the next economic cycle than states that did not, and none of those states experienced income growth that exceeded inflation, CBPP found:

And what states were those?

The post doesn’t mention ‘em.  You have to look at the fine print on the handy graph they included:

Colorado, Connecticut, Delaware, Massachusetts and New York?

Five states that were pretty much boom economies throughout the 2000s before the crash (perhaps because of the tax cuts in the 90s)?   States that in most cases had very little room for job growth – before the crash (at which point the “study” conks out), anyway?

This is sort of like the Dems’ slur against Romney – the Massachusetts economy grew slower when he was Governor (because it was already pretty much steaming along at full bore)!

Distrust, but verify.  Then, almost invariably, distrust some more.

 

And They Say DFLers Don’t Get Economics

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Let’s say, hypothetically, that you live in a city.

And in that city there are 19 big companies.   They have everything that makes up a big enterprise – a CEO, executives, management, stores, labs, manufacturing plants – in your city.

And then the economy picks up.  And the 19 big companies hire more people, because a good economy means good sales, which means you gotta develop, build and sell all of those 19 sets of products!

So what’s the measure of the good economy?  ”19″?  The number of big companies in your town?

We’ll come back to that.

Then, driven by high wages and the need to be competitive, the 19 companies outsource their manufacturing to the Philippines.  All the people in your town that earned a living from building things for those 19 companies are out of work.

How’s the economy measure?  Still a “19?”

And then the price of R and D rises, and the companies relocated their R&D labs to India and Singapore and Slovenia.  All your researchers are out of work.

Is your city still a “19?”

And then the economy tanks.  Stores scale back and lay people off, managers get RIFFed, the work force plunges.  Your town’s unemployment lines are getting longer and longer…

…but there are still 19 CEOs and corporate boards in town.  They administer companies that do their R&D and manufacturing elsewhere, and sell to whomever can afford the products through stores that are ever dingier and more understaffed.

But those 19 CEOs are still in your town.  So the town’s economy is healthy.  Right?

If you said “what, are you kidding?”, you might be a conservative.

If you didn’t, you probably think this piece by Dave Mindeman at MnpAct makes perfect sense.

North Dakota and Wisconsin taunt our borders with new signs that say – Our State Is OPEN For Business!

Everybody seems to be overlooking the basics here.

Sure taxes have some effect on business decisions….so do a lot of other things. Let’s look how Minnesota compares.

Now, let me make sure I reiterate; Mindeman is one of that tiny minority of Twin Cities leftybloggers that don’t need to be under police surveillance.

But when he says “let’s look how Minnesota compares”, what he really means is “let’s cherry-pick some non-sequiturs as absurd as the fictional list of company CEOs in my example above”.

No, literally:

The Facts: Minnesota has 19 Fortune 500 companies. Five are in the top 100. Fourteen in the top 300. United Health ranks the highest at #22. Minnesota ranks 17th in the nation for total GDP. We rank #14 in GDP per capita. Our current unemployment rate is 5.3%. Our high school graduation rate is 91.6% (National average is 85.4%) Persons with at least a Bachelor’s Degree – 31.8% (National Average – 28.2%) Median Housing Value – $201,400 (National Average – $186,200)

Let’s leave aside for a moment the factors that have nothing to do with measuring economic health (graduation rates are nice, and might – maybe - predict the future, economically.  Or they might not.  But if 100% of your town has masters degrees, but they’re all in Women’s Studies so the unemployment rate is 100%, what’s the real (hypothetical) measurement?);

We’ve got 19 Fortune 500 companies.  Bully.

Now – are those companies creating jobs in Minnesota?   Is 3M building new plants in Minnesota?   In fact, they literally exported one plant, with hundreds of jobs that used to be on the East Side of Saint Paul, to South Carolina.  And do you remember when they used to do R&D in the Twin Cities?  Welcome to Austin!

Medtronic?  Aren’t they contracting?  Well, here they are.  In Tennessee?  Not so much.

Boston Scientific?  Well, they’re not expanding anywhere – but it’s here in MN that they’re contracting fastest.

When was the last time Ecolab built a plant in Minnesota?  (Trick question; it was the seventies).

It’s not just big Fortune 500s, of course; Red Wing Shoes is eyeing a move.  Jostens is shifting jobs from Owatonna to Texas, the first of what will likely be many moves to lower-tax states.  We talked about the iron mill that’ll be built in North Dakota rather than the Range last week.

But we have 19 headquarters here.  Right?

Well, doy.  Of course we do.  If you’re a Fortune 500 CEO, where would you rather live – around Lake Minnetonka, the Guthrie, the Ordway, with Cathedral Hill restaurants and Galleria shoppping, or up in some holler in Mississippi, sweating through your underwear? It’s a no-brainer.  And that creates jobs – for management, for MBAs and upper management, sure – and their administrators and financial planners, and bartenders and caddies and nannies and gardeners, too.

But where are you going to build the plant, and create the jobs, especially for the people who aren’t management?  Who  don’t have the MBA and the BMW and the career spent networking among the corporate elite and the decades of experience in a field?

You did see the paragraph about all the “Minnesota” companies building plants elsewhere, right?

Mindeman:

So, how do we compare with our neighbors?

Vs. North Dakota: Sure North Dakota has a very low unemployment rate. A big surplus. And most of all an oil boom. But North Dakota doesn’t have a single company in the state on the Fortune 500 list.  Not one single business.

Remember that next time you run into an unemployed Ford Plant worker; “hey, you’ve got no job, but at least we’ve got lots of headquarters here!”.

Of course Minnesota has the Fortune 500s.  Minnesota benefitted from what mattered to people, and companies, when population patterns were largely set, back in the 1800s and early 1900s;  proximity to resources, plus water, rail and eventually road communication, which led to an urban center; this center became the center the upper-midwest region, the part of the country west of Chicago and north of Omaha and Saint Louis and east of Denver.   The era when the big Fortune 500s we currently have were largely formed.  An  era that, according to some thinkers on the subject, is on its tail end, and will be over someday soon.

In total GDP, North Dakota ranks 50th out of 51 US economies – and although they do better in per capita rank (20th); of what value is a low GDP with a total population that would fit into Hennepin County?

Leaving aside that Mindeman brushes aside an amazing statistical anomaly – a state that was poor, with a low, agriculture-related GDP fifteen years ago, that is now batting thirty spaces above its weight, in league with the big, inflation-adjusted coastal economies – like it’s no big thing, he gets the real question backwards.

What could Hennepin County – whose unemployment and crime lead the state, whose schools are among the worst in the state, whose achievement gap is a state disgrace, and whose major city is rapidly fulfilling Joel Kotkin’s predictions of the obsolescence of the big central city – do if they used their resources, their inherent dynamism and their talents as wisely as North Dakota has?

North Dakota may be having an economic “boom”, [Why the scare quotes, Dave?  It's a boom.  No bones about it!] but why would any business consider a major move to a state that has a total market of about 800,000 people and a GDP that is about 1/8 of Minnesota’s? Really?

So many problems with that statement.  So many confirmations that DFLers just don’t get economics.  Where to start?

Mindeman is reliably imprecise when has asks “why would any business” move to North Dakota.

Any business?

Best Buy?  3M?  Starkey Hearing?  They’re not going to move to North Dakota.  What’d be the point?

You want to start a trucking company?  You’ll be making money hand over fist.  A machine shop in Minot?  You’ll be working three shifts seven days a week the moment you open your doors.  A house-cleaning service?  Accounting firm?  Security company?  Contract law firm?  Gas station?  Hotel?  You’ll have more business than you can handle.

Mindeman runs through all the neighboring states – focusing especially on the relative dearth of Fortune 500s in Iowa and the Dakotas – and asks:

Again, is that the type of market that can attract major business?

Why the obsession with “major” businesses?

The “Fortune 500″ is an arbitrary set of companies (or was – it hasn’t actually been published in ten years), set by the editorial staff of a magazine.  It focuses, by definition, on the 500 biggest companies, in terms of sales, profits, assets, market value, and employees.

Not growth.  Not innovation.  Just sheer size.

Are these companies the major sources of American economic dynamism?  Of innovation, strength, or even new hiring?  No.  They are not.  Small business is.

Sure there are plenty of people moving out of Minnesota and heading south, but that has been a weather trend that has been going on for decades. Our population is holding better than any of the states that border us.

Another factoid that Mindeman sails past like a mile marker on 94 headed west for good.

Why have people been leaving for decades?  Why is Minnesota on the cusp of losing a Congressional seat?

If you think it’s the weather – the Dakotas are growing.

Let’s put the question this way; if you’re a financial researcher with an MBA, your best shot at a job is in one of the big metro areas, with a big company.  Ditto if you work in political non-profits – you go where the politics are.  Big cities.

But if you’re a person with a high school education, maybe with a child to support and some bills to pay, which state would you rather be in right now – North Dakota or Minnesota?

Republican talking points are only so much hot air.

Minnesota’s quality of life is thriving and we are the Midwest model for business.

That’s what the facts say.

And maybe in a future post Mindeman will explain exactly why, in terms other than “CEOs per acre”.

Maybe.