Minnesota Continues to Soak The Poor

Minnesota Republicans love to portray Minnesota as a liberal la-la land that unfairly victimizes their oppressed wealthy donors by “soaking them” with high taxes. 

Not true.  The reality is, Minnesota’s state and local taxes remain regressive, meaning that the rate of taxation actually decreases as incomes increase. 

This is wrong. Those with higher incomes should pay a larger proportion of their income in taxes, because they can afford to do so without suffering as much of a blow, proportionally speaking, to their quality of life.  

Conservatives typically point to state income tax rates to make their case, because that tax is indeed progressive.  The problem with that tired old spin is that the income tax is far from the only tax.  Minnesotans also pay sales, property, and excise (on alcohol, tobacco, and motor fuels) taxes, and those taxes are all very regressive.  That is, those types of taxes all hit people with lower incomes much harder, as a percent of income, than they hit people with higher incomes.

So the most relevant measure of whether Minnesota’s overall tax system is based on the ability-to-pay is the effective tax rate for all state and local taxes combined.  Every year, the Minnesota Department of Revenue calculates this amount.  Here is what the most recent version looks like.

Here are a few important things to note:

  • Tax Burdens Are Decreasing, Not Increasing.  Between 2018 and 2023 (projected), tax burdens are decreasing at every level of income.  Remember this the next time you hear conservatives whining about “skyrocketing taxes.”
  • Progressivity Is Improving, But Not Enough.  Between 2018 and 2023 (projected), the gap between the effective rate for the poorest and wealthiest Minnesota pay is narrowing , but it’s not a large or sufficient improvement.  The arc of the moral universe is bending towards justice, but it’s a painfully slow rate-of-change.
  • Minnesota’s Taxes Remain Very Regressive.  This is the most important thing to take away from this chart. Minnesota still has a very regressive tax system that hits poor people much harder than rich people.  Minnesota’s poorest taxpayers pay a 24.7% state and local tax rate, while our wealthiest taxpayers only pay 11.6%.

Before you shrug this off, stop and really think about it. The wealthiest Minnesotans are required to pay less than half the tax burden the poorest Minnesotans are required to pay.  For those who want Minnesota to be a more just and equitable place, the work is far from done.

Yes, stalwart conservative protectors of the wealthy will be quick to say, but the wealthy pay much larger tax bills than the poor! This is true. But it’s also true that when someone at the bottom of the income heap has to pay 24.7% for taxes out of their nearly empty wallet, that takes leaves a lot less to provide for their family than when the wealthiest Minnesotans only have to pay 11.6% for taxes out of their much fatter wallets and investment portfolios.   The poor person may not be able to pay rent, while the rich person may only need to leave ever so slightly less to their already well-pampered scions.

Every time someone proposes asking the wealthy to pay more in taxes, wealthy news anchors, pundits, and politicians breathlessly characterize the proposal as “controversial” and “unrealistic.”

For what it’s worth, Americans disagree. For instance, a POLITICO/Morning Consult poll found an overwhelming 76 percent of registered voters believe the wealthiest Americans should pay more in taxes. It might be controversial at the large donor soirees, but not most other places in America.

So when Minnesota DFL legislators propose, as they did this year, to create a new fifth tier state income tax rate of 11.15% on income above $1 million (or $500,000 for single filers), don’t fall into the trap of repeating the conservatives’ well-focus grouped “it’s soaking the rich” narrative.

Instead, look at these data and say “it’s a start.”

Will Progressives Step Up To Support An Unapologetic “Class Warrior?”

class_warfare_buffet_quoteFor the last several years, too many political debates have gone roughly like this:

A progressive pol points out the obvious, that wealth is getting too concentrated, and that the wealthy donors are controlling the political system as a means to accumulate still more wealth.

Then, conservatives, moderates and conservative-controlled news outlets cry in unison “Class warfare,” and “both sides do it.”

Then, the progressive politician timidly drops the subject, and agrees to their risk averse consultants’ demands that they henceforth sugar coat their campaign rhetoric.

This familiar scenario has played out hundreds of times over many decades, and that is why the United States now has the most unequal distribution of wealth of any advanced economy in the world.

Let that fact sink in for a moment.  The home of the American dream now has the most unequal distribution of wealth of any advanced economy in the world.  Is that really okay with us?

It’s not okay with South Dakota U.S. Senate candidate Rick Weiland.  He looks to be a rare exception to the rule of political cowardice in the face of, gasp, “class warfare” accusations.

From the beginning, Weiland’s “Take It Back” campaign has been focused on battling the influence of big money.  For instance, he has said that the first bill he will introduce in Congress will be a constitutional amendment to limit campaign donations and spending.  The language of the amendment specifically calls out the need to limit the excessive influence of the wealthy.

This is not okay with the blog Constant Commoner, which is a more thoughtful than most conservative blog in South Dakota.  In a piece titled “The Problem With Prairie Populism, Rick Weiland Style,” the Commoner recently shot this across candidate Weiland’s bow.

Where Weiland’s message is out-of-synch with reality is the way it lumps wealthy interests into some sort of monolithic, unified political juggernaut bent on making life miserable for ordinary Americans.  This actually is way off the mark. The politics of big money simply don’t congeal that way.   CNBC’s Robert Frank writes a nice critique and analysis of the study I reference and calls attention to the fact that for every right wing rich guy promoting schemes that Democrats abhor, there’s probably a wealthy leftie advocating the opposite. As Frank notes, for every Koch there’s a Buffett.

Historically, this is the point when progressive politicians would always obediently slink back to the mushy middle of American politics, like a scolded lapdog who had been caught pissing the Persian rug.  But Weiland didn’t do that.  Instead, he went right back onto the  blogger’s home turf to politely but assertively call bullshit:

Warren Buffet understands big money’s total triumph in public argumentation perfectly when he says, “There’s class warfare all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

I’m sure Mr. Buffet has met Mr. Soros, and knows full well of the wide range of opinions within the billionaires club.  But Mr. Buffet also understands the bottom line, and knows that the actual, factual distribution of wealth is the bottom line.

I agree with Warren Buffet.  I believe the bottom line proves that the “big money” big foot against which I am campaigning hard not only exists, but is the fundamentally incorrect and unfair set of policy assumptions which must be slain before we can hope to right our course.

It is not true that the right to buy politicians is big monies free speech right.

It is not true that granting tax free status to offshore profits, and billionaires grand kids piggy banks, or bundling bad mortgages, helps spur productive economic growth.

The results of these untruths, propagated by our refusal to challenge the ascendant political myths of big money, are stunting our economy and defrauding our middle class.

Like Seymour’s plant in Little Shop of Horrors, their myths have been allowed to grow unchecked for far too long, and they must be pruned.

That is why I am campaigning against “big money.”

I’ve been waiting for a long time to see a courageous politician under pressure from the defenders of the status quo reply: “Class warfare? Hell yes I’m engaging in class warfare, on behalf of 99% of the rest of us!”

Everywhere_Man_-_YouTubeToday I saw it, and it was said exceptionally well.  Weiland is not only an unapologetic “class warrior,” but his campaign carries the optimistic tone of a “happy warrior,” in the tradition of Minnesota’s happy warrior Hubert Humphrey.

Finally, here’s a gritty leader who has a strong enough spine to declare himself an unrepentant class warrior, and he’s doing it in a wicked tough environment – a deep red state versus a billionaire-backed conservative Governor.  If  progressives around the country don’t step up to financially support this kind of progressive eloquence and courage under political fire, and instead continue to fund the same old milquetoast  timidity they have for decades, well, then they deserve what they have been getting from Congress.

– Loveland

Why Wealthy Minnesotans Can Pay More

Taxing millionaires.  Surcharging millionaires.  Raising the minimum wage.

For the casual observer who hasn’t done their homework, I can see how this might be confused with “class warfare” waged by mean DFLers intent on punishing rich people.

But here’s the thing about warfare.  You can’t take a quick glance at a battlefield and identify the aggressors.  For instance, an observer flying over Normandy Beach on June 6, 1944 couldn’t reasonably conclude “those mean Americans storming that beach down there are obviously wreckless war mongers.”

After all, what about the blitzkreig and Pearl Harbor, right?  You have to know at least a bit about the prelude to an event to be able to make informed conclusions about the event. Continue reading