I drove out to North Maplewood the other day to have a chat with some DFLer acquaintances of mine; Stephen (never “Steve”) Plotznick-Hale, and his wife, Bella Plotznick-Hale-Rehavy. Committed DFLers both, she is a social worker in the Maplewood school system, and he’s a grievance writer with the Department of Labor.
They sat, dourly focused on their organic boxed wine, as I walked into the bar. They were in no mood for small talk; they cut right to what passes for the chase.
I’ll join the conversation there:
STEPHEN: This shutdown is ridiculous! The GOP is obsessed with protecting the rich!
MITCH: Well, no – the GOP Legislative caucuses are doing what they were sent to Saint Paul to do; oppose all new taxes.
BELLA: But if we taxed the millionaires, we could solve thish problem! We could afford everything that the Lezh…Ledge…Lesbolature sayzh we needed!
MITCH: Well, Bella, funny you should say that. Let’s ignore, for a moment, whether all that spending is needed, much less wise. and start by definining “millionaire”.
STEPHEN: Easy. Someone with a net worth of a million bucks.
BELLA: YEAH! Shomeone with more money than…Jeeeeebuzh!
MITCH: OK. Now, we’re talking income tax rates, here. They don’t all make a million bucks; if we assume a million or more in net worth, we’re talking everyone from the CEO of United HealthGroup down to regular people who’ve invested very very wisely. They may make $30 million a year, they may make $150K. For purposes of this discussion, let’s say they make an average of half a million a year in income.
STEPHEN: O…K… (takes another sip, fingers nervously drumming table).
BELLA: I’m gonna get a beer. (She sits motionless).
MITCH: OK. So the first $200K in Adjusted Gross Income is taxed at the current top tier rate of 7.95%. The rest of their income is taxed at 10.95%, as the Governor proposes. We’ll hit all 7,700 of them.
STEPHEN: Exactly! That’ll close the deficit.
MITCH: Which is how much?
STEPHEN: Five Billion dollars.
MITCH: Heh. Not exactly. Taxing “millionaires” according to Dayton’s plan, assuming an average income of half a mill a year, gives us a grand total of $375 million. About six percent of the “Five Billion Dollar Deficit”.
STEPHEN: (Stares blankly)
MITCH: Of course, the Dayton rate was never going to stop at an AGI of $200K. It was going to be more like $135.
MITCH: In which case, assuming a half a million a year in income, we the people rake in a total of a little over $390 million.
BELLA: Oh, you’re sho full of…(belches)…crap, Merg. They all make a million bucksh a year!
MITCH: OK. Let’s say the average income for these 7,700 millionaires is a million dollars a year. Applying the Dayton tax rate gets you a total of…
BELLA: Eleventy billion dollars!
MITCH: Hah! Bella, you rock! No – it’s just shy of $797 million. And if you start the surcharge at $135,000, the extra revenue jumps to $811 million.
STEPHEN: (Calculates frantically in his head) That’s, like, way less than five billion…
BELLA: We should just TAKE IT AALLLLLL! (Bella swoops into a face-plant on the floor).
MITCH: (after helping Stephen help Bella into her chair). OK. Let’s do that. Let’s say we assume the average “millionaire” makes $500K a year, and we confiscate every penny above the $135,000 a year level – a 100% tax rate on the wealthy.
BELLA: (head down on table) Yeahhhh….
MITCH: You get a total of $2.8 billion the first year – about half of the DFL Deficit. And let’s say we assume the “millionaires” make a million a year apiece, and we confiscate everything over $135,000; the total we take in is $6.7 billion.
STEPHEN: So you cover the deficit!
BELLA: Yaaaay! (starts to vomit a bit in her throat)
MITCH: Yeah – once.
STEPHEN: Well, that’s the Legislature’s problem, not mine! Make it happen! Eat the rich!
(Mitch grabs a mung rag and cleans up the expanding vomit slick under Bella’s passed-out head on the table).