Republican tax bills come bearing gifts for the rich

Under one GOP tax plan, owner homes worth more than $1.5 million (like this Edina mansion, formerly Kirby Puckett's) would be eligible for a fat new tax deduction.

Under one GOP tax plan, owner homes worth more than $1.5 million (like this Edina mansion, formerly Kirby Puckett's) would be eligible for a fat new tax deduction. Spacecrafting

Before the Minnesota Senate’s floor session last Thursday, chaplain Mike Smith stood at the rostrum, reminding members of that body it was the National Day of Prayer.

“It will be a time when people are not lobbying, or asking, or demanding anything,” Smith said, hopefully. “Throughout our state, we’re going to be praying for you.”

Smith read Psalm 103, with its depiction of a God who “does righteous deeds, brings justice to the oppressed.” When he was done, it was Senate Republicans’ turn to fight for their version of the oppressed: Minnesota’s richest people and biggest corporations.

Their mission was to square Minnesota’s tax code with the federal Tax Cut and Jobs Act of 2017, that early present to the rich President Donald Trump signed on December 22. In Minnesota, the law’s name was a lie. Unless our tax law is rewritten, filers here would pay a combined $500 million in tax hikes next year.

Gov. Mark Dayton wants to avoid that, and put forth a plan to offer tax credits to anyone earning less than $140,000, plus working families.

What’s that you say, governor? Cut taxes? Republicans thought you’d never ask.

“Our tax system is going to kill us,” Sen. Roger Chamberlain (R-Lino Lakes), chief author of the Senate bill, told colleagues Thursday, adding that Minnesota’s taxes are “abusive.”

After years mired in deficit, Minnesota has run a surplus for several consecutive budget cycles. Economists see this as sound fiscal policy. Chamberlain sees it as theft. His bill includes a “trigger” mechanism, whereby any time Minnesota accumulates a surplus of a certain size, income taxes on individuals and corporations would be reduced automatically.

In introducing his plan, Chamberlain bragged that he’d borrowed his scheme from North Carolina. That state’s tax-cut trigger is a favorite of Americans for Prosperity, the Koch Brothers’ lobbying group, which credits the measure with helping North Carolina cut its unemployment rate to 4.5 percent. Minnesota’s is 3.2 percent. Remind us: What is it Minnesota wants to learn from North Carolina?

The Senate bill would also raise the threshold on the estate tax—known as the “inheritance tax,” or, if you’re getting your news from conservative think-tank tweets, the “death tax”—from the current $2.4 million to $5 million. About 2.3 million Minnesotans pay taxes each year. The estate tax affects 350 of them a year; Chamberlain’s bill would spare 250 of them.

Republicans in the House are also going out of their way to help those least in need. The bill passed by that chamber last week would cut the state’s corporate income tax, which, Republicans promised, will lead businesses to increase wages and hire more people.

“Supply-side economics is no longer just a theory,” said Rep. Eric Lucero, R-Dayton, one of several Republicans to cite the Trump tax cut’s immediate impact on corporate stock prices, profit projections, and the announcement of wage hikes—or, in many more cases, one-time bonuses—for employees.

As support for his claim that high taxes would drive away Minnesota’s job creators, Lucero read a headline from CNBC: “800,000 people are about to flee New York, California because of taxes, say economists.”

If only he’d kept reading. The CNBC story says those economists “fail to mention that very few” people who move from high-tax to low-tax states are “high earners.” And “the number of millionaires in those high-tax states is actually growing, not shrinking.”

Even thinner was the argument from Rep. Jerry Hertaus, R-Greenfield, who pronounced himself sick of “anti-corporate rhetoric.” Hertaus blamed the state’s tax climate for young people leaving Minnesota. He’s half right: Minnesota takes in about 21,000 young people each year, and loses about 29,000, according to a study, which says keeping “college-bound young adults at in-state institutions” could be a “key strategy to long-term population retention.”

Of course, in Hertaus’ construction, this has less to do with a miserly higher education budget—Minnesota spends half what North Dakota does, per college student, and a third as much as Scott Walker’s Wisconsin—and more to do with business taxes. How’s a 17-year-old supposed to plan her future, he wonders, with a 9.8 percent corporate income tax rate?

The House tax bill would also raise the maximum property tax deduction from $10,000 to $30,000—a boon to the very few of us who own houses worth more than $1.5 million. Maybe this bill would lead to wage increases for their butlers?

The House’s corporate cut, and the Senate’s tax-slashing surplus “trigger,” are a threat to the state’s well-being. To conservatives, they’re an act of survival. Republicans need corporations and the wealthy to spend tens of millions of dollars to help get them re-elected. These bills, along with last year’s ruinous cuts in corporate property taxes, are GOP lawmakers’ end of the deal.

Dayton, who is retiring after this year, doesn’t need anything from anyone. He inherited a $6 billion deficit, which, through tax hikes on the wealthy, he turned into a stable budget and a surplus. As his final act in office, Republicans want him to sign all that away.

In a sobering moment during the House tax debate, Rep. Rena Moran (DFL-St. Paul), one of two black members in the 134-person House, said her constituents are not watching their 401(k)s and planning leisurely later years, as Republicans said. They’re cutting coupons, and planning next week. “They don’t have a retirement plan,” Moran said. “They’re not watching the stock market.”

When their medical bills come due, they’ll need help. For now, all they can do is pray lawmakers haven’t given it away.

More from Mike Mullen:

In Minnesota, Minneapolis-St. Paul plays the villain (and pays the bills)

Remember, legislators: Mark Dayton's more popular than all of you put together

Field notes on the Uptown Minneapolis bro