Higher taxes aren't answer
Star Tribune | June 20, 2007
Mitch Pearlstein

My congratulations to the Star Tribune for somehow stopping short in a recent editorial of equating social and other conditions facing Minnesotans with those confronting Okies in the '30s, now that state and local tax burdens here have taken a comparative dip ("Cheapskating our way to greatness," June 14).

We've got problems in these river cities of ours; hefty problems in our entire state. But that's not to say Gov. Tim Pawlenty's success in resisting new taxes over the last four-plus years caused them, or that the problems themselves have spiraled to the basement. Or, for that matter, have his tax policies hastened our decline to the supposed wretched likes of Pennsylvania, whose laxer taxes (the editorial pointed out) Minnesota has come to copy.

The editorial didn't think it was a good idea for Minnesota, in 2005, to rank only 23rd-highest in the nation in terms of state and local taxes as a percentage of personal income. What state ranked first, with the highest rate? It was Wyoming, though I don't ever recall reading in these pages how Minneapolis ought to emulate Laramie or St. Paul ought to aspire to Cheyenne.

New York ranked second in the listing. Who ranked third? It was the District of Columbia, which is particularly interesting given that the editorial lamented Minnesota's "rising rates of disorder" and how graduation rates for minority kids here are "among the lowest in the nation." Questions: Where would you say crime is a bigger problem, Washington or Minnesota? I'd say Washington. And out of 60 sizable cities and counties across the country, where is the only place where graduation gaps between black males and white males are larger than in the Twin Cities? Try Washington again.

Sticking with education, can anybody make the case with a straight face that far too many kids in Minneapolis are doing terribly in school because taxpayers are chintzy? Go to the website for Minneapolis Public Schools. See that the district's budget for 2006-07, covering all activities, is $587,371,902, and that the number of students enrolled until earlier this month was 36,370. Do the division and you'll come up with an average of more than $16,000 per child. Granted, it's a crude measure. But can anyone really believe that spending a nonutopian amount more would adequately improve performance and persistence? Undermining achievement in Minneapolis are factors more powerful than money.

The editorial pined for Minnesota's good old days. But which direction were we heading, both in Minnesota and across the country, during several earlier decades of exploding governmental spending? Consider just two inconvenient numbers out of loads of possibilities: From 1960 to 1991 -- years in which Great Society programs rocketed up the size and reach of government more than Reaganomics defueled them down -- violent crime rates increased by 371 percent in the United States as a whole and by 620 percent in Minnesota specifically.

While tax policies are obviously critical, and while lower rates almost always have more going for them than higher ones, too much weight is often attributed to nonradical changes in taxes in predicting or explaining bad news. When conservatives, for example, said that Bill Clinton's tax increases in his first term would devastate the economy, they were wrong. And when liberals said George W. Bush's tax cuts would hurt everyone except his 75 richest friends, they were wrong, too.
It's absurd to think Minneapolis and St. Paul risk becoming a cold Scranton and Wilkes-Barre because we haven't raised taxes in a spell. But beyond all the data and indexes, let's not forget the democracy and freedom of it all: Minnesota voters have made it quite clear for a long time now -- especially in gubernatorial elections -- they prefer constraining taxes rather than compounding them. This, too, should count.

-- Mitch Pearlstein is founder and president of Center of the American Experiment.

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