Now that Mark Dayton has proposed to jack the taxes of Minnesotans making over about $150,000 up to 10.95%, and those who earn over $500,000 to an unprecedented 13.95% – one dollar out of every seven they earn – it seems there’s a little ambiguity on who “the rich” are.
Who are “The Rich?”
Let’s break it down for you.
The Rich Are Not…: DFL uber-donor Vance Opperman, who donates millions to the DFL’s pet causes, and whose income comes largely from dividends and investments. He’s not rich.
The Rich Are…: The guy who runs the small consulting shop that landed you the IT gig with the company that was hiring. He and his wife – who does the accounting – might break $200K for the year. They are “the rich”, in Mark Dayton’s world. Not Vance Opperman, silly reader.
The Rich Are Not…: John Cowles, who donated $2.4 million to help start the Guthrie – in 1960, when that was serious money. Who used to publish the left-leaning Star Tribune, and who ponied up to help found the center-left MinnPost a few years back. He’s also given tens of thousands of dollars to the various groups that funded the epic, toxic sleaze campaign that helped squeedge Mark Dayton into office. Cowles, with his money coming from dividends and trusts and all the usual shelters that the super-wealthy can afford? What, you thought he was “the rich?” Of course not!
The Rich Are…: Grandma’s oncologist. The guy or gal who spent eight years working his or her ass off taking the hard courses in high school and college to get into med school, then more of the same to survive the weeding-out process during four years of education, an internship and three years of brutal residency designed to test his/her mettle for the field, leading to post-doctoral training leading to a board-certification and then a few decades of experience that make him able to help Grandma to turn her cancer into a harrowing cautionary story rather than an early good-bye to the grandkids. After all that, the doctor and his/her spouse – a hospital administrator, as luck would have it – earn a little over $500K, of which about $40,000 currently goes to the state of Minnesota. Since they – not John Cowles – are “rich”, that tab is going to go up to almost $70,000. Doc and spouse, of course, still have options; that place in Prescott is looking mighty nice right now. Which Prescott – Wisconsin or Arizona? I think they’d both love to have an Oncologist for a neighbor, especially since they’re “rich” – don’t you?
The Rich Are Not…: Mark Dayton, whose net worth is somewhere between $3,000,000 and $12,000,000 (or was, back in 2006, the last time he deigned to report his net worth according to the Minnesota Birkeydependant. It’s mostly tax-sheltered, of course, off in tax havens like South Dakota or all those other states where people aren’t so Happy To Pay For more government. Which makes them ideal for trusts, where trust fund babies like The Governor can keep his money! So even though Governor Dayton has Renoirs to sell to finance his gubernatorial campaign, he’s not The Rich. Nosirreebob.
The Rich Are…: You, if you are (to pick an example from my own social circle) a programming consultant who started working as a code jockey right out of college, and spent a decade or so honing your skills as a software enginer. You write good, tight code; you’ve stayed up on all the advances, and are fluent in not only several programming languages but in many of the arcane architectural environments that seem to so completely tribalize software these days. You’ve moved on up; from your first job, making $24K a year as a COBOL programmer for, say, Best Buy back in 1989, you’ve worked your way up to being a pretty indispensible part of some big, business-mission-critical projects. You’re a hired gun, and a good one, and you get paid pretty well for it; you bill $85 an hour or so, and work for six-month stretches on high-profile projects. Tack on the salary from your spouse – a corporate HR benefits administrator who makes about $55K – and that means you make about $$225K on a good year; more during up years, less when the market’s off. Not enough to have Renoirs to sell, but plenty comfortable. Good thing, too – you pay for your own retirement, and write your own checks to Medicare and Social Security. You know better than to complain – but you’re both one layoff or cut contract or downturn away from living on savings until the market turns up again. Oh, yeah – your state tax bill is going to rise from $17K and change to almost $25,000. Because you, you greedy bastard? You are rich!
Unlike Vance Opperman, John Cowles or Mark Dayton.
Hang your head in shame, plutocrat.
CORRECTION – MAYBE: I’ m told that the 13.95% rate only applies to income over $500,000. It changes the math…
…but not the principle. “The Rich”, according to Daytons’ budget proposal, are people who earn income, as opposed to the rich, who make their money from capital gains and dividends and can afford to shelter their income in ways “The Rich” usually can’t.
For those of us not earning that level, don’t forget that if you want that oncologist to work in the Twin Cities instead of elsewhere, you’ve got to offer him comparable compensation–but standard fee schedules do not allow them to get paid more in Minnesota than elsewhere.
20 below is hard enough to sell to doctors. Do we need to tell them they can also take a $20k pay cut for working here, too?
It just never ceases to amaze me that even though the leading rich people are liberals, they are never villified by their fellow useful idiots. If you have an R or a GOP association after your name, God forbid that you make more than $100K per year, because you are one of the “evil rich.”
You people make me sick.
So…What should we do? Reduce the tax rates on all of those “greedy bastard[s]” or increase the tax rates on guys like Vance Opperman, John Cowles, and Mark Dayton?
Income taxes are payed from the net income – in the case of small businessmen (who don’t own an S corporation) – after their business expenses have been taken into account. I don’t buy the argument that the cost of higher personal tax rates will get passed on to customers.
I agree that many so-called liberal rich guys hide behind tax dodges, but it always seems like the conservative base aggressively protects those same tax havens. Methinks they also have a strong power base behind those same tax shields!
If there is a problem here, then the conservative legislators (state and federal) should fix it! They have the power!
“What should we do?”
Reduce taxes.
“I don’t buy the argument that the cost of higher personal tax rates will get passed on to customers”
That’s too bad.
“tax dodges” “tax havens” “tax shields”
Dropping shields is always a bad thing to do when you’re still under attack.
“conservative legislators (state and federal) should fix it”
I think conservative legislators (state-wise, anyway) are fixing it: they are attempting to make government justify budgets that are currently on autopilot. If the state spends less, it can tax less, and there will be a lesser need for tax shelters.
Leslie, what you do is you move to a government model that requires less revenue (cut “diversity committees,” PBS/MPR, LGA) and is less intrusive. It’s worth noting that upward mobility was greatest in our country when we were least concerned about whether taxation was progressive or regressive–the truly wealthy can always hire good accountants and lawyers to shield income and wealth from taxes, so ironically, progressive taxation protects the wealthy.
What’s an S-corp got to do with it?
Forming a corporation and then making the Subchapter-S election passes corporate income through the corporation to the shareholder, making that income taxable to the shareholder as if he were a sole proprietor (yes, I know that for certain, as I’ve been filing such tax returns for my own Subchapter-S corporation since 1998).
Using impressive-sounding words to cloak an emotional argument only works if you choose the right words, Les. The words you’ve chosen don’t mean what you think they mean; therefore, your own choice of words shows that you don’t actually know what you’re talking about.
You should run for the Legislature, you’re clearly well qualified.
.
Re: Cowles 1960 donaqtion to help start the Guthrie Theater.
What cost $2400000 in 1960 would cost $17192295.58 in 2009
http://www.westegg.com/inflation/infl.cgi
Leslie Hittner Says: “I don’t buy the argument that the cost of higher personal tax rates will get passed on to customers.”
Les, I can guarntee you with absolute certainty that they do. At the end of the day I’m not going to take the financial hit for some politicians whims. As much as possible (giving consideration to market conditions) I’m going to pass the cost down to my customer. Taxes are a cost of doing business that I have no control over (other than at the polls), I’m not going to eat any government imposed increase on my product/service/net income without trying to recover it by increasing my prices. I own one S-Corp, and I am also employed to manage another S-Corp. I also sit on the board of a non-profit corp that sells tickets for events we put on. Those tickets are subject to state sales tax. We bury the sales tax burden in the ticket price.
“I agree that many so-called liberal rich guys hide behind tax dodges”
So called, Les? Really? Have you even looked at the political affiliations of the top 20 richest people in the world, i.e. Soros, Gates, Buffett (although he goes with the wind) and a whole cast of liberal legislators? The Daytons, Cowles, Pohlads, etc. are all freaking hypocrites, hiding their wealth in tax free zones, then tell everyone else that they have to pay “their fair share” and therein lies the difference between conservatives and liberals using tax shelters.
Excellent point, Boss:
Dayton lives in Minnesota and preaches Tax The Rich but hides his wealth from taxation in tax-free South Dakota.
Limbaugh preaches Don’t Tax the Rich and lives in tax-free Florida, putting his money where his mouth is.
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