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Teachers’ Union Wish List? $4 Billion More from “the Rich.”

The Pioneer Press reports this morning that the teachers’ union, Education Minnesota, has a $4 billion dollar wish-list based on Gov. Walz’s promise to “fully fund” public education.

How does Denise Specht, the union president, suggest Minnesota pays for it? Tax
wealthy people and corporations.

“We believe the public is on our side,” said Denise Specht, president of Education Minnesota, said at a Friday news conference. “There was a time when all Minnesotans believed and invested in our education system.”

Specht didn’t specify how the state should raise the new money, but said it should come from the wealthy and businesses. She added she was frustrated that companies like Amazon pay little in taxes.

“I think we know there is an imbalance in who is contributing to public education,” Specht said.

We note that Amazon cut a special deal with the State of Minnesota. The Center would advise against those one-off deals for new entrants like Amazon. It is better to cut taxes for all employers (wealth and job creators) in Minnesota.

But Amazon is the exception not the rule.

Corporations in Minnesota are indeed paying taxes into the state and federal treasuries. Minnesota has the third highest corporate income tax rate in the country at 9.8 percent. According to the Tax Foundation, only six states — Alaska, Illinois, Iowa, Minnesota, New Jersey, and Pennsylvania— levy top marginal corporate income tax rates of 9 percent or higher.

Minnesota’s rates are so high, especially when combined with the federal tax rate, that important Minnesota employers like Medtronic have left the country via corporate inversions, establishing headquarters to friendlier places like Ireland.

As for wealthy individuals? The “wealthy” are already paying one of the highest rates in the county at 9.85%. Minnesota ranks #47 in the Tax Foundation’s ranking on individual income taxes.

What are some of those rich people doing? Moving to lower tax states. The Center’s 2016 analysis of the new tax rates under Gov. Dayton estimated that between 2013 and 2104 Minnesota lost nearly $1 billion in net household income to other states. And that Minnesota loses high-earning families at a much higher rate than other states.

Minnesota makes sure wealthy people get the message that they are just cash cows by piling on with a death tax (“Thanks for paying all those taxes while you were alive. We want more now that you are dead.”)

But the middle class are also paying more than their counterparts around the country. Minnesota’s lowest tax rate of 5.35 percent is higher than the highest tax bracket in 23 states. As a share of personal income, state-local taxes are higher in Minnesota than in all but seven other states.

These uncompetitive rates may account for why Minnesotans keep leaving the state during their prime earning years (and as snowbirds) in search of friendlier tax rates, good jobs and less severe weather.

Let’s recall that taxing the rich was Mark Dayton’s campaign slogan and he succeeded in raising rates on not just the wealthy but also the middle class when the DFL enjoyed full legislative control for two years in 2012-2013. The exodus of citizens increased after a $2 billion increase in 2013.

According to the Pioneer Press article:

Public schools get about $18 billion every two years from the state’s general fund. Adding $4 billion more would be a 22 percent increase and the state would have to raise taxes significantly to do so…

Specht acknowledged it was more of a long-term goal than a realistic proposal for the biennial budget lawmakers have to craft this legislative session. Gov. Tim Walz is set to make his first budget proposal Tuesday and he has said he wants to “fully fund” public schools.

With that in mind, Specht said the teachers union set out to figure out exactly full funding would mean. She added that an unprecedented number of educators helped the former history teacher get elected governor. (emphasis added)

And that perhaps is the point of Specht’s audacious demands; a reminder to Governor Walz who got him and so many others in the DFL elected,using paid staff and volunteer organizers to get out the vote.

But taxpayers and smart lawmakers should remind Gov. Walz and their colleagues in the Legislature that Minnesotans from all walk of life have choices, and they can vote with their feet, taking their income and wealth with them.

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