Taxing Jeff Bezos more because he can afford to go to space won’t solve all our problems
If you are someone like me, you probably did not have a strong reaction to Jeff Bezos using his own money to go to space. However, for our politicians, the…
Even with a forecast budget surplus of $1.6 billion for the 2022-2023 biennium and $4.6 billion coming from the federal government in the latest round of COVID-19 relief money, some legislators in St. Paul want to raise taxes. Last week, the House passed a bill on a 68-66 vote — two Democrats joined all the Republicans in opposition — which would impose a new, higher top tier of income tax of 11.25 percent — Minnesota’s fifth — on top earners.
Policy this bad needs a big old heave on social media. A couple of examples in particular caught my eye.
First up was Senator Ann Rest:
Of course, if you’re asking they are entitled to say “No.”
In fact, “the rich” in Minnesota already “share” a lot of their money. The Minnesota Department of Revenue’s most recent Tax Incidence Study tells us that, in 2018, the top 10 percent of Minnesota households by income earned 43 percent of all income earned in the state but covered 59 percent of all income tax paid here, as Figure 1 shows. The same is true for the super-rich, the fabled “1 percent.” In 2018, they earned 16 percent of all income earned in Minnesota but paid 27 percent of the state’s total income tax revenues.
Figure 1: Percentage of total income earned in Minnesota and total income tax paid by population decile, 2018
Source: Minnesota Department of Revenue
Disappointingly for those who think this tax hike would bring floods of new cash for them to spend, the numbers show that the last one didn’t.
Next up was Senator Stewart:
“We have enough,” they say. Indeed “they” do. As we wrote in our recent report “Closing Minnesota’s Budget Deficit: Why we should make spending cuts and not raise taxes“:
Minnesota’s General Fund spending was higher in real, inflation adjusted terms in 2019 than in any previous year…in per person, real terms Minnesota’s state government has never spent more money than it is right now: $4,088 per Minnesotan, up 26.6 percent since 2010.
Figure 2: Per capita General Fund spending, 1960 to 2019 (2019 USD)
Source: Minnesota Management and Budget
Whatever problems the state government has to grapple with, as Figure 2 shows, a lack of financial resources is not one of them. They certainly “have enough.”
John Phelan is an economist at the Center of the American Experiment.