Minnesota's budget deal protects the super rich at the expense of the general welfare, fiscal sanity and debt elimination

By Jeff Kolnick and Jeff Ueland | Wednesday, Aug. 31, 2011

Now that the dust has settled and the memory of the shutdown is behind us, it is time to reflect on what was at stake. The tepid compromise reached between Gov. Mark Dayton and the Republican majority in the Legislature reveals, with stark clarity, the bottom line for each of Minnesota's two ruling political parties.

Gov. Dayton borrowed from the future to keep property taxes lower, the elderly in their homes, and the buses running. His goal was to limit tuition increases at public colleges and universities and the devastation to our public schools and to protect other essential services.

The conservative majority borrowed from the future to protect people who earn more than $1 million dollars a year from experiencing a small, temporary tax increase (there would have been no change in their tax rate on their first $1 million of income, and rates would have returned to their old level in two years). To save the super rich, the conservative majority gave up on fiscal responsibility, jettisoned its social agenda, and most significantly, ignored the vast bulk of their constituents, few of whom make more than $1 million a year.

According to 2008 data from the Minnesota Department of Revenue, of the 7,900 people earning more than $1 million in Minnesota income, 3,800 do not live in Minnesota and are not constituents of our elected officials in the Minnesota Legislature. Indeed, in 2008 there were some 2,454,019 taxpayers who lived in Minnesota and only 4,100 would have been impacted by the last proposal from Gov. Dayton (0.00176% of tax filers).

The concentration of millionaires
Of the 4,100 million-dollar earners who live and vote in Minnesota, 3,840 live in 19 counties; that means that only 160 live in the remaining 68 counties. Of course, some counties and legislative districts would almost certainly have no individuals who earn $1 million a year. About 78 percent, or 3,199 of these lucky citizens, live in the Twin Cities' seven county metropolitan area; many of them are represented by DFLers. In stark contrast, outstate areas have few $1 million earners, but saw a surge of GOP additions to both the House and Senate, all who rejected higher taxes on the super rich.

Click on chart to enlarge

Jeff Kolnick and Jeff UelandClick on chart to enlarge

Republicans claim that taxing the super rich will chase them away to low-tax states. But as John Van Hecke points out, people who work in one state but live in another state are still subject to income taxes where they earn their money. Indeed, most of the 3,800 million-dollar earners who live outside the state pay Minnesota income tax.

The small increase in taxes offered by the governor would have allowed us to cut state borrowing in half by avoiding either an additional shift of $600 million to K-12 education or the selling of tobacco bonds, thus maintaining a regular stream of money coming to the state for health care expenses.

The bottom line
It is the responsibility of elected officials to represent the people who elected them. The conservative movement in the United States has revealed its bottom line, which has been laid bare in both the U.S. Congress and in the Minnesota Legislature: protect the super rich at the expense of the general welfare, fiscal sanity, and debt elimination. The Minnesota GOP does not represent the people who elected them but only those in the highest income brackets, many of whom live states other than Minnesota. This singular focus of the Republican majority to support a tiny number of residents and nonresidents has effectively undermined a majority of their constituents (also taxpayers) who need and use public services.

Jeff Kolnick is an associate professor of history at Southwest Minnesota State University. Jeff Ueland is a professor of geography at Bemidji State University.

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