Governor Dayton Will Regret Vetoing Tax Cuts After Seeing U.S. Growth Numbers
This morning, the Bureau of Economic Analysis announced that GDP grew by 4.1% in Q2 (April-June) this year. Disposable personal income increased by 4.5% and is on pace to grow over 5% in 2018. This is great news for all Americans, as a strong economy means more opportunities for everyone.
A large factor in our strong economy is the Tax Cuts and Jobs Act, which cut taxes and simplified the tax system. Low taxes, especially low income taxes, stimulate the economy by attracting investment and increasing incentives to work and produce.
While Minnesota will benefit from the national tax bill, the economic gains could have been even bigger. In the previous legislative session, legislators passed a bill that would have lowered taxes for 82 percent of filers including most low and middle-income families. On top of this, filing would have been easier for everyone via measuring income by Adjusted Gross Income, which is how federal taxes are now calculated.
Unfortunately, this bill was vetoed by Governor Dayton, forcing Minnesotans to pay higher taxes in an outdated system for at least one more year. He claimed the bill was a cake to the rich and big corporations, but as we mentioned previously, corporations would have been expected to pay more taxes than previous years under the new law.
After witnessing the impact the national bill has had on working families, maybe Dayton will regret not signing a similar bill into law. No matter what he thinks, it will not be his decision next year as the election in November will decide who replaces Dayton in the governor’s mansion. Hopefully tax reform is a top campaign issue and next year’s legislature can make a deal that works for everyone.
Andrew Scattergood is a summer intern with the Center, a senior finance major at the University of Minnesota’s Carlson School of Management, and a graduate of Wayzata High School.