To the editor:
Our state’s budget shortfall has shrunk by more than $1 billion since November, reminding us what can happen when consumers and job creators are confident.
State Economist Tom Stinson said Congress’ extension of the Bush tax cuts worked as a “stealth stimulus package,” helping improve the state’s budget. The extension continues a reduction in payroll taxes and delays increasing taxes on capital gains. These components helped raise consumer confidence and improved our economic outlook. Holding the capital gains tax rate at 15 percent instead of letting it bounce to 20 percent sparked investment activity and capital gains revenues rose.
This is how a stable, low-tax and pro-growth business climate at the federal level can generate revenue for Minnesota. But there is still vast room for improvement at the state level and we continue losing jobs to neighboring states. We recently learned a prominent Hutchinson company will shift its manufacturing operations to Wisconsin at a savings of $45 to $60 million annually. Our tax climate remains among the most unfriendly in the country and Gov. Dayton’s plans to raise taxes would put us at a further disadvantage.
You reach a point of diminishing returns when tax increases push our job creators out of the state, cutting off revenue streams we need for sustainability and a strong economy. Our neighbors – including Wisconsin – recognize this and declare themselves “open for business” instead of strangling the goose that lays our golden eggs.
Even though our budget gap is smaller than what was projected last fall, we still have a $5 billion hole to fill. I hope this information we’ve received resonates with our leaders at the Capitol to underscore the need for pro-jobs legislation that will generate revenue by widening the tax stream instead of digging deeper into the existing base.
Rep. Glenn Gruenhagen