A Policy Agenda For Minnesota’s Next Progressive Governor

In 2018, progressive Governor Mark Dayton will be retiring, and Minnesota voters will be selecting a new chief executive.  To retain control of the Governor’s office in 2018, Minnesota Democrats need a compelling policy agenda. It goes without saying that they also need a compelling candidate, but this discussion is about policy.

What constitutes a compelling policy agenda? First, it’s bite-sized. It can be quickly consumed and remembered by casually engaged voters. It’s more like five proposals, not fifty proposals. That doesn’t mean leaders should only do five things as a governor, but it does mean that they should only stress and repeat five-ish policies as a candidate, so that the agenda can be remembered.

Second, a compelling policy agenda delivers relatively bold change. It’s not merely about protection of the status quo from the bad guys, or small incremental improvements (see HRC campaign). It’s aspirational, and not limited to ideas that currently have the necessary votes to pass. If a candidate has to scale it back after elected, so be it. But they should run with a bold vision.

Third, a compelling policy agenda needs to have popular support beyond the political base. After all, a campaign agenda is about winning votes.

Fourth, it’s is easy to understand. Few have the time or inclination to study the intricacies of a 15-point tax reform plan, so candidates should stick to things that most can easily grasp and embrace.

Finally, a compelling policy agenda must be directed at Minnesota’s most pressing problems. It shouldn’t merely be about kowtowing to the most powerful interest groups, as is so often the case. It must actually be about the problems that most need fixing.

What fits those criteria? In no particular order, here’s my recommendation for a progressive gubernatorial candidate’s agenda.

  • MinnesotaCare for All Option. Allow all Minnesotans to buy into the MinnesotaCare public health insurance program. This will put competitive pressure on private insurance companies to keep premiums down, and ensure Minnesotans will always have a coverage option, even if health plans pull out of the market.
  • Transportation Jobs Fund. Increase the gas tax by a nickel per gallon — one penny per gallon per year over five years — and put the proceeds into an untouchable fund that will put Minnesotans to work improving the state’s roads, bridges and transit system. This will lift up the portion of the workforce that is struggling the most, and ensure Minnesota has a competitive economy and quality-of-life into the future.
  • Achievement Gap Prevention Plan. Ensure every child under age five has access to a high quality early learning program, starting with the children who can’t afford those programs on their own. This will prevent low-income children from falling into Minnesota’s worst-in-the-nation achievement gaps, gaps that opens before age two, lead to lifelong inequity and pose a grave threat to our economic competitiveness.
  • Fair Share Tax. Create a new, higher tax bracket for the wealthiest 10% of Minnesotans.  During a time when income inequality is the worst it has been since  just prior to the Great Depression (1928), the wealthiest Minnesotans are paying a lower share of their income in state and local taxes.   Adjusting the state income tax is the best way to remedy that disparity.
  • Super-sized Rainy Day Fund. Increase the size of the state’s rainy day fund by 25%. This will control taxpayers’ borrowing costs and help keep Minnesota stable in the face of 1) an economy that, after the longest period of economic expansion in history, may be due for a downturn and 2) a federal government that is threatening to shift many fiscal burdens to states. Bolstering the rainy day fund will also communicate to moderate voters that a progressive will be a level-headed manager of their tax dollars.

Yes, worthy issues are left off this agenda.  But we’ve seen time and again that when Democrats try to communicate about everything, they effectively communicate about nothing.  Long, complex “laundry list” policy agendas may please the interest groups who are constantly lobbying the candidates and their staffs, but they are simply too much for busy voters to absorb.  As legendary ad man David Ogilvy preached, “the essence of strategy is sacrifice.”  To be heard, many things must be left unsaid.

This kind of progressive gubernatorial policy agenda would be simple enough to be understood and remembered, but not simplistic.  It would be relatively bold and visionary, but not pie-in-the-sky.  It would be progressive, but swing voter-friendly.

This agenda would put Republican opponents in a political bind, because these progressive proposals are popular with moderate swing voters.  The partial exception is the Transportation Jobs Fund, where swing voters are conflicted.   Surveys tell us that gas taxes are somewhat unpopular, particularly in exurban and rural areas, but the transportation improvements that would be funded by the higher gas tax are very popular with voters of all political stripes, as are jobs programs.  On that front, one key is to guarantee that tax proceeds could only be spent on improvements, something many skeptical voters seem to doubt.

If such an agenda were sufficiently repeated and stressed by a disciplined candidate, fewer Minnesotans would be lamenting that they “have no idea what Democrats stand for.” Most importantly, this agenda also would go a long ways toward fixing some of Minnesota’s most pressing problems.

Why Have DFL Progressives Stopped Pushing For Progressive Tax Reform?

Every year, we hear the State Legislature endlessly debate “water cooler” issues, such as Sunday liquor sales and legislator pay. Meanwhile, we hear almost nothing about more fundamental issues of governance, such as whether we have a taxation system that treats Minnesotans fairly.

When you look at Minnesotans’ effective state and local tax rate — the proportion of income paid in combined state and local taxes – it’s clear that we don’t have a progressive system. That is, we don’t a tax system where the rate of taxation increases, or “progresses,” as income increases.  This chart based on Minnesota Department of Revenue data paints a pretty clear picture:

Note: Department of Revenue study authors point out that “effective tax rates in the 1st decile are overstated by an unknown but possibly significant amount.” If you want to know why, there’s an explanation on page seventeen of the study.

However, even disregarding that first bar for the purposes of this discussion, we can certainly say that Minnesota has a state and local tax system that is not very progressive. That is, it is not taxing Minnesotans according to relative ability to pay.

As you can see in this chart, local taxes in Minnesota are particularly regressive.   Compared to other income groups, the wealthiest Minnesotans are paying the smallest share of their income in local taxes.  So if state lawmakers want tax fairness for Minnesotans, and they can’t rely on local officials to reform local taxes, then they need state taxes to be more progressive to offset those regressive local taxes.

Before my conservative friends trot out their tired old “socialism” rhetoric, they should read the words of Adam Smith, the father of free market economic theory who conservatives worship, on the subject of progressive taxation:

“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess … It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”

Republicans should also keep in mind that the nation’s first progressive income tax was enacted when the revered father of the Republican Party, Abraham Lincoln signed the Revenue Act of 1862.  A few decades later, Teddy Roosevelt carried on this Republican tradition when he strongly advocated for progressive taxation:

I believe in a graduated income tax on big fortunes, and in . . . a graduated inheritance tax on big fortunes, . . . increasing rapidly in amount with the size of the estate.

The fact is, until relatively recently Republicans were comfortable with much higher top income tax rates than they are today. While the top rate under Democratic Presidents Obama and Clinton was 40%, the top rates were 91% under Republican President Eisenhower, 70% under Republican President Nixon and 70% under Republican President Ford.

So, to my right wing friends, you’re embarrassing yourselves when you call progressive taxation “Marxism.”  For more than a century, progressive taxation was mainstream Republican thought.  Don’t let the uber-wealthy interests who seized control of the Republican Party in more recent years blind you to that fact.

To my friends in the center, spare me the “be reasonable” lectures you deliver every time progressive taxation is proposed.  Unless moderates also view Presidents Eisenhower, Nixon and Ford as wild-eyed extremists, you need to stop characterizing progressive taxation proposals as being somehow “radical.”

Finally, to my progressive friends, show some courage and leadership.  Don’t get so obsessed with shiny objects, like the Sunday liquor sales issue.  Don’t shy away from fighting to make our state and local taxation system more fair.  It’s time for DFLers who are “progressives” in name to become more progressive when it comes to substance.

Minnesota GOP’s Tobacco Tax Cut Is A Killer, Literally

There is a lot to dislike about the Minnesota Republicans’ tax cuts that were recently signed into law. For instance, increasing the estate tax exemption from $2 million to $3 million is an unnecessarily lavish gift to about 1,000 Minnesotans who won the birth lottery by being born into a relatively wealthy family.  Overall, the Republicans’ tax cuts will compromise Minnesota’s future fiscal stability by reducing state revenue by more than $5 billion over the coming decade. This is a particularly reckless move at a time when President Trump and his Republican congressional supporters are proposing to shift billions of dollars in future costs to states.   The next time Minnesota has a budget shortfall, remember the Republicans’ 2017 tax cuts.

But the stinkiest of the Republicans’ tax cut stink bombs was their tobacco tax cut, because in the coming years it will cause suffering and death.

Think that’s hyperbole?  A mountain of research shows that every time tobacco prices increase, tobacco consumption decreases. The corollary is also true – tobacco consumption increases when tobacco prices decrease.

This is particularly true when it comes to price-sensitive young Americans.

Here’s why that matters:  When tobacco consumption increases, tobacco-related suffering and death increases. Though we don’t hear about it as much as we used to, tobacco use remains the leading cause of preventable diseases and death in America. It causes a variety of deadly cancers, lung diseases, and heart diseases, among other serious health problems.  If you’ve ever seen anyone suffer from one of these illnesses, I promise you will never forget it.

If you don’t believe the legion of public health and economic researchers about tobacco taxes decreasing tobacco use, listen to the tobacco industry executives themselves. In a previously secret document that got disclosed during lawsuits, an executive from Philip Morris, the makers of Marlboro cigarettes, said:

“Of all the concerns, there is one – taxation – that alarms us the most. While marketing restrictions and public and passive smoking [restrictions] do depress volume, in our experience taxation depresses it much more severely.”

Likewise, an executive from RJ Reynolds, makers of Newport and Camel cigarettes, came to the same conclusion:

“If prices were 10% higher, 12-17 incidence [youth smoking] would be 11.9% lower.”

So if Republican legislators think their tobacco tax cut is doing a favor for Minnesota smokers, they couldn’t be more wrong.

Yes, financially speaking, the tobacco tax is regressive. That is, the higher costs of tobacco products that result from tobacco taxes disproportionately impact the pocketbooks of poorer Minnesotans.

But that’s not the end of the story, because the reduction in tobacco-related suffering and death that comes from higher tobacco taxes is progressive. That is, the life-saving health benefits associated with higher tobacco taxes disproportionately flow to poorer Minnesotans.  And by the way, the millions of dollars in savings from not having to pay as much to treat those tobacco-related diseases flow to Minnesota taxpayers and health insurance premium payers.

The bottom line is that cutting tobacco taxes, as Minnesota Republicans did this year, has two major impacts. It causes tobacco executives to profit more from increased sales, and it causes our family members, friends, and neighbors to suffer tobacco-related diseases.

Therefore, when it comes to tobacco taxes, Minnesotan leaders have to be cash cruel to be clinically kind. If the DFL Party wins control of the Minnesota Legislature in 2018, increasing tobacco taxes must be at the very top of their agenda.

An Unlikely Liberal Explains Himself

I have a nearly perfect profile for a political conservative. I check all the “right” boxes: I’m a straight white male. I’m a native born American, with northern European heritage, and my family’s immigration happened several generations ago.   I was raised in a middle class family with a stay-at-home mom in a small city in a bright red state. I attended a religious elementary school.

Now, I am married with three kids. I go to a protestant church. I worked in the corporate world for a while, and started my own successful small business 16 years ago.  I’m beyond middle age, in my mid-50s.  I’m financially comfortable.

That’s a whole lot of right wing risk factors. If you presented that profile to a political scientist or demographer and asked them to guess my political leanings, they’d surely guess that I’m a conservative.   After all, Pew Research has found the following about contemporary political conservatives:

More than nine-in-ten (92%) non-Hispanic white and 56% male. The oldest of the groups (61% ages 50 and older). Married (79%), Protestant (72%, including 43% white evangelical), and financially comfortable (70% say paying the bills is not a problem). Many are gun owners (57%) and regular churchgoers (57% attend weekly or more often), and fully 81% are homeowners.

Other than the gun, that is me. You might as well fit me from my Tea Party tricorne hat right now.

So how is it that the guy who would be Central Casting’s idea of conservative is a liberal?  My conservative friends speculate that I must be a) uninformed, b) brain-washed by the liberal media; c) deranged; and/or c) stupid.

But I have a different explanation: I’m liberal because I recognize a few fundamental things about myself.

I GOT A HEAD START, AND OTHERS DESERVE OPPORTUNTIES TOO. First, I recognize that I had a head start in life, and others deserve an opportunity to catch up. I have come to realize that being a straight, white, male, Christian American who was not born into poverty has given me unearned societal privilege.  After all, we’re a nation whose private and public sector have always been controlled by straight, white, male, Christians of means, and that fact has given me significant built-in advantages that others don’t enjoy.

I often try to deny it, and chalk up my successes to my hard work, charm and talent. But the fact is, in many ways I was just plain lucky. Through an accident of birth, I was born with traits that the ruling class shares, and that helped me enjoy extremely important things in life, such as a stable childhood, a solid education, good jobs, raises, wealth and equal protection under the law.

For this reason, I support public policies that bring equal opportunity for those who, through no fault of their own, didn’t have that kind of head start — poor people, non-whites, non-Christians, and new immigrants, among others. Fairness dictates that those folks have equal opportunities, and that’s why I support affirmative action, law enforcement reforms, targeted education scholarships, targeted income supports, pay equity legislation, progressive taxation, and civil rights laws.

Instead of protecting the privilege that fell into my lap as a newborn, the fair thing to do is to take steps to level the playing field for people who weren’t lucky enough to win the birth lottery.  Extending equal opportunity to less privileged Americans is how the American Dream of upward mobility lives on, and I want it to live on.

Equity_and_equality_graphic

I’M SELFISH, AND I NEED TO BE SAVED FROM MYSELF. Second, I’m a liberal because I recognize that I and all humans need to be saved from ourselves. I know that we are all continually tempted to do things that helps us individually, but hurt the community as a whole. For instance, to feather our own nest many of us will cheat on our taxes, pollute, mislead fellow citizens, or otherwise harm others. Given that unfortunate part of our collective human nature, we need governmental rules and enforcement bodies to deter us from selfishly harming the community on which we all rely.

Because humans are selfish, we need the IRS, cops, soldiers, environmental and business regulations and civil and criminal laws.  We need laws and law enforcement to have the stable, safe, fair and efficient communities that individuals and businesses need to thrive.  And if you agree that administration and enforcement of laws is necessary, you have to be willing to, sigh, pay for it.

I BENEFITED FROM GOVERNMENT, AND NEED TO PAY IT FORWARD. I’m also a liberal because I recognize that government played a big role in my success. To some extent, I actually did “pull myself up by my bootstraps,” as the conservatives like to say. After all, I studied and worked hard, and overcame difficulties. But fortunately, I wasn’t alone in my pulling.   I pulled, but so did past generations of taxpayers, with the government services and public goods they funded. The taxpayer-funded GI Bill, public schools, Social Security and Medicare pulled my parents up into the middle class, so that I could have a stable household in which to develop.  My parents’ generation of taxpayers pulled me and my wife up, so that we could attend subsidized schools and universities, own a home, and benefit, directly and indirectly, from a government-funded infrastructure, safety net, regulatory structure and security force.

A lot of folks in past generations paid to lift up my family, and I appreciate their sacrifices. So now that I have benefited, fairness dictates that I return the favor to the people coming up the ladder behind me.

I NEED GREAT COMMUNITIES FOR SELFISH REASONS. The things I just mentioned may sound very altruistic, and I do hope the Golden Rule underpins my liberalism. But there is also a very selfish reason I am a liberal.

I support liberal policies because I, my kids and my grandkids will all benefit from living in stable, pleasant, efficient, and stimulating communities full of a diverse group of happy and successful people.  It would suck to live in a gated community surrounded by a chaotic society, a crumbling infrastructure, crime, squalor and people who hated me, even if it meant my taxes were  lower. That’s a more selfish reason why I’m willing to pay to help the community-as-a-whole succeed together.

This is not to say that I support unlimited government.  Of course, I want government to continually strive to get more effective and efficient. Of course, I oppose illogical and unnecessary laws and regulations. Of course, I want incentives for people to work hard, and take personal responsibility for their actions.  Of course, I want equal opportunity rather than equal outcomes.

But there are still plenty of very good reasons for successful white males like me to support progressive policies.

Can Minnesota Leaders Stop The Death of the American Dream?

If the new DFL-controlled Legislature dares to raise the minimum wage, strengthen the social safety net or make the state tax system more progressive, reporters will surely characterize the moves as political payoffs to DFL constituencies.  Mainstream news reporters have fallen into a habit of covering policymaking like it is nothing more than a politically motivated auction of gifts for special interest.

To be sure, those policies help traditional DFL constituencies, and political motives are very much in the mix.  But beyond crass vote-buying, there is also a pretty darn good reason  to help low- and middle-income Minnesotans.

Minnesota is increasingly becoming a land of haves and have nots.  From the late 1990s to the mid-2000s, the Center on Budget and Policy Priorities notes that poorest Minnesotans have seen their incomes decrease by 3%, the middle quintile has experienced a 2% decline, and the wealthiest have enjoyed an increase of about 6%.  Therefore, Minnesota’s income inequality gap has been growing. Continue reading

Romney is Correct About Americans Being Government-Dependent

I hate to admit when Governor Mitt Romney is correct.  But when he said 47% of Americans are dependent on government, I have to face the facts.   Romney had it right.

He just understated the claim by 53%.

After all, 100% of us are dependent on government, and it’s been that way for the entire history of the nation.  One hundred percent of us are dependent on publicly funded national defense, roads, highways, bridges,  police, fire, water, sewage, environment and health protections and education.   We can’t compete and succeed without those things.  We are dependent. Continue reading

Dayton: Even a Flat Tax Better Than Minnesota’s Current Regressive Tax System

Not so long ago, there was a strong national consensus in favor of progressive taxation.   In the 1980s, conservative Ronald Reagan was running around telling his followers:

 “We’re going to close some of the loopholes that allow some of the wealthy to avoid paying their fair share.  In theory, some of those loopholes were understandable.  But in practice, they sometimes make it possible for millionaires to pay nothing, while a bus driver is paying 10% of his salary, and that’s crazy.

…Do you think the millionaire ought to pay more in taxes than the bus driver or less?

(Crowd:  “More!”)

That was then, but this is now.  Now, conservatives call conservative Reagan’s pro-progressive tax position “socialism” and “anti-American,” a sign of just how radicalized Republicans have gotten in their desperation to pander to conservative talk radio hosts, wealthy donors, and Tea Party primary challengers.

Among the most radical things that Republicans now push is a flat tax.  While a flat tax is attractive at first blush because it is simple compared to the maddeningly complex federal income tax, it is the polar opposite of the progressive income tax that Reagan championed.  While a progressive tax is designed to take a larger percentage from the income of high-income earners than it does from low-income individuals, the flat tax takes the same percentage from everyone, whether you are a bus driver or a billionaire.

As the Founding Father of the modern conservative movement said, “That’s crazy.”

Yesterday in a Minnesota Public Radio interview, Minnesota Governor Dayton made an interesting point on this subject.  When asked what kind of tax reform he favors, Dayton said:

 I still believe in a progressive income tax.  But I sure don’t believe in a regressive income tax, which is what we have now.  …Conservative Senator Rod Grams was always talking about a flat tax.  Well that would be an improvement in Minnesota!  We have less than that now.

Ponder that.  A flat tax – which embodies the radical anti-progressive notion that conservative icon Ronald Reagan not so long ago mocked as “crazy” to the delight of his conservative followers – actually would be an improvement over the regressive tax system that Minnesota currently has on the books today.

Millionaire Mark Dayton is often characterized, by opponents and even by mainstream reporters, as favoring a “soak the rich” ideology.  That’s a silly characterization, because what Dayton actually proposes is not to “soak” the wealthy.  What Dayton recommends is simply a return to the common sense notion of progressive taxation supported by a strong majority of Minnesotans, and even the founder of the modern conservative movement.

 – Loveland