It’s Our Surplus: Give It Back!

Preview:

In December, Minnesota Management & Budget (MMB) announced a forecast budget surplus of $7.7 billion for the FY 2022-23 biennium, the largest surplus in state history. These are only forecasts and significant downside risks remain, but MMB notes that “the improved outlook carries into FY 2024-25 planning estimates.” Indeed, planning estimates for the General Fund budget show a surplus of forecast revenues over projected spending of $4.0 billion in FY 2022-23 and $5.9 billion in FY 2024-25. The question of what to do with this money will dominate the forthcoming legislative session in Saint Paul.

It’s Our Surplus: Give It Back argues that this money should be given back to — or more accurately, left with — the people who earned it: ordinary, hardworking Minnesotans. We believe this should be done in the form of permanent tax cuts. And we believe that this surplus represents an opportunity to move our state’s taxes in a decisively pro-growth direction.

There are a number of reasons for this. First, Minnesota’s state government is already spending near-record amounts, adjusted for inflation and in per capita terms. This should rule out using the surplus to fund even higher government spending. Second, Minnesotans are some of the most heavily taxed citizens in the United States. Third, needless complexities in Minnesota’s tax system increase its burden. Fourth, this heavy tax burden slows economic growth in our state. Fifth, it leads to losses of residents to other states. For these reasons, the surplus should be taken as an opportunity to cut and simplify taxes on Minnesotans.

A full copy of the report can be viewed here.