Make the pie bigger

Redistributionists stifle Minnesota’s economic growth potential.

Someone once characterized the history of man as a battle between the creation of wealth and the redistribution of wealth. American history certainly demonstrates that most economic policy-makers generally fall into one of these camps. One wants to grow the economic pie, the other wants to focus on dividing it up.

The wealth creators appreciate John F. Kennedy’s notion that “a rising tide lifts all boats.” Economic growth, they say, is the best way to ensure a prosperous society for everyone and for all income groups. Their priorities include job-creating strategies of lower taxes, increased trade, reduced regulation, and social policies that stimulate economic opportunity and reward individual responsibility.

Redistributionists largely take growth for granted. Seeing government as the be-all and end-all arbiter of society, they focus on manipulating the equality of economic outcomes, which usually means the transfer of wealth; their priorities generally consist of higher taxes, increased government regulation, and greater spending.

The challenge for the redistributionists, Margaret Thatcher famously once concluded “is that you eventually run out of other people’s money.”

And let’s not kid ourselves. The current administration in St. Paul is filled with redistributionist ideologues. Center of the American Experiment is emphatically in the wealth creation camp. We believe that forward-looking economic policies should stop fretting about redistributing individual slices of Minnesota’s economic pie. They should focus instead on making the pie bigger.

And, as our Peter Nelson has demonstrated again this spring, we prefer to build our policy recommendations on a foundation of facts, not feel-good rhetoric. Peter, a Vice President and senior policy fellow, released an update of his research that shows how high-tax policies are chasing high-earning taxpayers out of Minnesota just as the legislature was convening for its 2016 sessions. Using IRS data, Peter demonstrates that Minnesota has lost nearly $1 billion in adjusted gross incomes between 2013-2014 as Minnesota on net lost a record amount of income to lower taxed states, in the wake of Mark Dayton’s $2 billion tax increase in 2013. He quoted a study conducted by the Minnesota Society of Certified Public Accountants that found that “more than 86 percent of respondents said clients had asked for advice regarding residency options and moving from Minnesota.” Peter adapted his study for the cover of this issue of Thinking Minnesota magazine.

Peter’s ongoing work and the impressive level of public attention he received set the table nicely for two other major projects the Center will release in the next few months.

Next up, the Center is just concluding a study that addresses the liberal notion that Minnesota’s economy is performing well above the national average—all while knowing that Minnesota ranks only, 30th in percentage job growth nationally and 32nd in personal income growth. The analysis is being done by Dr. Joe Kennedy, a Washington D.C. economist with deep Minnesota ties. Kennedy served as chief economist in the U.S. Department of Commerce under George W. Bush.

Similarly, the Center is in the process of beginning a multi-year program that evaluates how regulations affect economic growth, with a special emphasis on small businesses. It will begin with a paper by Dr. Steven F. Hayward, America’s premier conservative scholar on environmental policy. Hayward will focus on how the Minnesota Pollution Control Agency and other government entities su