Minnesota: Not As Rich As They Thought

posted at 8:48 am on September 20, 2010 by Mitch Berg

Mark Dayton, former Senator and scion of the Dayton’s department store fortune, is running for governor in Minnesota.  For months, he attacked his GOP-endorsed opponent, the Chris-Christie-like Tom Emmer, for “not having a plan”.

This past week, Emmer released the final details of his high-level plan to balance the state’s budget (currently slated to have a $6 Billion deficit).  It is, obviously, sparking much debate in Minnesota.

But Mark Dayton’s “plan”  - which is mostly built on the idea of “taxing the rich”; even the TV ads say so – oddly is getting less scrutiny.  Dayton Says: “Taxing the Rich” will raise four billion dollars.

In vetting Dayton’s plan, the MN Department of Revenue says:

This proposal adds a new top bracket at a rate of 10.95% starting in tax year 2011. The 10.95% bracket is set at $150,000 for married joint filers, $75,000 for married separate filers, and $130,000 for single and head of household filers. The new bracket is not adjusted yearly for inflation although the bottom brackets are adjusted for inflation in keeping with current law. The tax year impact is as follows:

And the end result, according to the MNDoR?

Tax Year Impact (in millions):

TY 2011 $752,800

TY 2012 $813,600

TY 2013 $879,100

So while Mark Dayton promised that “taxing the rich” would raise $4 Billion, almost closing the gap (but not quite; Dayton’s budget proposal (PDF document here) ends with the curious line “That leaves me $635.4 million to go”), in fact Dayton’s tax hikes will raise no more than $1.7 billion.

In other words, cranking the tax on “the rich” to a confiscatory 8 to 11% (actually 10.95, but let’s be honest here…) brings in less than half of what the Dayton budget “plan” says it will.

But even that is over triple the tax hike that the completely DFL-dominated Legislature could pass at the height of Obamamania; the Minnesota Senate passed a $400 million hike by one vote, long before anyone in Saint Paul associated “Tea Parties” with anything but Earl Gray.

Mark Dayton’s budget is DOA, even if he is elected, and even if the GOP doesn’t flip one of the two chambers back to GOP control.

The media isn’t reporting it that way yet, of course.

Cross-posted at Shot In The Dark.

Update (Ed):  Keep in mind, too, that MnDOR uses a static analysis to get those numbers — in other words, they presume absolutely no behavior will change with the creation of this new tax bracket.  But of course things will change; the new tax will take more capital out of the market, which will lead to less wealth creation and less income, so other tax revenues will start to shrink, or at least not grow as projected.  Also, those with means will move their wealth and income streams to more tax-friendly states like South Dakota … just as Mark Dayton himself has done.

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So, will Ed be having a moving sale soon?

lovingmyUSA on September 20, 2010 at 8:52 AM

But, but….I thought the rich were RICH?!

TugboatPhil on September 20, 2010 at 8:55 AM

As a long time MN resident, I am planning on moving to TN or maybe KY in the next couple of years.

Dasher on September 20, 2010 at 8:59 AM

Mark:
The rich ain’t dumb…

right2bright on September 20, 2010 at 8:59 AM

They need to cut funding to DNR and MNdot…but no politician has the guts to do this.

jbh45 on September 20, 2010 at 9:00 AM

Isnt that a microcosm of USA in general….there simply are not enough rich to cover the Liberal spending…..unless of course you define “rich” down to 35,000 & employed

Under Clinton Rich was defined as above 1 million—so the left has come along way baby……

sbark on September 20, 2010 at 9:00 AM

They just don’t see that it’s immoral to punish hard work and reward sloth. Reaping… sowing… you know?

Mojave Mark on September 20, 2010 at 9:01 AM

Seems a lying dem can make figures lie as well. Does he promise huge job creations as well.

Kissmygrits on September 20, 2010 at 9:02 AM

Keep in mind, too, that MnDOR uses a static analysis to get those numbers — in other words, they presume absolutely no behavior will change with the creation of this new tax bracket…

Glad you added this… saved me the trouble.

:)

mankai on September 20, 2010 at 9:03 AM

Dasher on September 20, 2010 at 8:59 AM

C’mon down!!!!

ladyingray on September 20, 2010 at 9:04 AM

put public workers on a 401k plan like everybody else and problem is solved.

moughon on September 20, 2010 at 9:04 AM

I would be screwed, blued and tattooed under the reign of Minnesota’s most distinguished lunatic.

But take heart. I got dragged on the Parade of Homes this weekend by the spousal unit and I was heartened to see exactly ONE Dayton sign in all of Minneapolis and Edina.

In fact, Emmer signs were everywhere and I mean everywhere, even in neighborhoods that normally still display Wellstone signs every year.

Bishop on September 20, 2010 at 9:10 AM

So Tim Pawlenty is leaving a 6 billion dollar deficit. He want’s to run for President…Good luck with that.

wheelgun on September 20, 2010 at 9:11 AM

This proposal adds a new top bracket at a rate of 10.95% starting in tax year 2011. The 10.95% bracket is set at $150,000 for married joint filers, $75,000 for married separate filers, and $130,000 for single and head of household filers.

Seems they keep moving the “rich” goalpost. Pretty soon being rich will be defined as being one dollar over the poverty line. Glad I don’t live in MN.

Johnnyreb on September 20, 2010 at 9:13 AM

So, will Ed be having a moving sale soon?

lovingmyUSA on September 20, 2010 at 8:52 AM

And Lileks! So who’s going to be buying Jasperwoods?

rbj on September 20, 2010 at 9:18 AM

So Tim Pawlenty is leaving a 6 billion dollar deficit. He want’s to run for President…Good luck with that.

wheelgun on September 20, 2010 at 9:11 AM

Not really — the $6 billion reflects the baseline budgeting priorities of the DFL, assuming a double digit level of growth for state government, which would be what would happen if Dayton (or Tom Horner) wins. If Emmer gets elected, that won’t happen.

Mr. D on September 20, 2010 at 9:18 AM

As a long time MN resident, I am planning on moving to TN or maybe KY in the next couple of years.

Dasher on September 20, 2010 at 8:59 AM

Better do Tennessee, there is no state income tax.

hip shot on September 20, 2010 at 9:19 AM

I moved from the PRM five years ago. Settled in South Carolina. Property taxes went from 7K to 2K on similar houses. Sales tax 7.5% to 5% and income tax dropped 2%. You guts can keep Franken, klobacor (sp) and Dayton. Heck even the bald headed fool left the state.

chicken thief on September 20, 2010 at 9:20 AM

Democrats are pretty smart. Tax the job creators, the spenders, the investors, the risk takers and you get … Voila! … disaster.

People are really getting tired of the democrats class warfare tripe.

So much money is taken out of private hands every year it’s staggering. Just imagine if 50% of that money was left in private hands. The resulting economic explosion would rock the world.

Cut government, cut spending, cut regulation and get the helll out of the way.

darwin on September 20, 2010 at 9:26 AM

Dayton would need to add an extra tax just to pay for his personal bunker on the grounds of the Governor’s mansion. Al Queda is targeting him directly so a bunker would be important.

Bishop on September 20, 2010 at 9:26 AM

So Tim Pawlenty is leaving a 6 billion dollar deficit. He want’s to run for President…Good luck with that.

wheelgun on September 20, 2010 at 9:11 AM

Pawlenty has the problem of a strong Democrat Senate, and a Democrat house in the state legislature. Which means there only solutions are to raise taxes and spend more.

Dasher on September 20, 2010 at 9:30 AM

It doesn’t take a genius to figure out that $150,000 is not rich—it’s professionals (middle-class). The reality is that the democrats have become socialists and it’s the goal of socialists to get rid of the middle class. You can’t “rule” people who are as smart or smarter than you…you must eliminate them. Right now they’re going about it economically. History has shown us how it can end.

texabama on September 20, 2010 at 9:32 AM

This past summer the Dems did everything in their playbook to inject racism into every part of the political debate. That didn’t work. For their next “act”, the Dems are employing the time honored class warfare blaming the “rich” for the woes of the middle class. The problem for the DEMS is they can’t convince a smarter electorate that they are the guardians of the middle class, when every policy and legislation passed by Obama and the Dems is hitting the middle class working stiff with more taxes along with their disdain for businesses who struggle daily.

Consumers aren’t buying the Dem’s “tax the rich” boogy-man or Obama’s redistribution of wealth policies that are destroying this nation’s economic engine. With the way the Dems and Obama fed the CBO with bogus figures to show their Health Care “Reform” to be deficit-friendly, it no surprise Dayton is attempting to do a similar tactic when the mainstream media won’t report it.

Rovin on September 20, 2010 at 9:33 AM

FTA- Tax Year Impact (in millions):

TY 2011 $752,800

TY 2012 $813,600

TY 2013 $879,100

Try (in thousands):

Barnestormer on September 20, 2010 at 9:34 AM

put public workers on a 401k plan like everybody else and problem is solved.

moughon on September 20, 2010 at 9:04 AM

Good luck with that. Pensions are like Social Security for union workers. There would be anarchy.

gleep on September 20, 2010 at 9:36 AM

I really hate to say it, but MN has the dumbest voters in the US. Franken is proof enough. But…

A few years ago voters approved a constitutional amendment to allocate vehicle excise taxes (sales tax) to no less then 30 percent to public transportation, and no more than 70 percent to roads.

Rewriting it slightly it becomes up to 100 percent for public transportation and to as little as 0 percent for roads. And this passed the muster of our voters. Even those in the sticks where there will never be public transportation. Definitive proof.

Dasher on September 20, 2010 at 9:38 AM

RIGHT ON TEXABAMA!!!!!!!! No truer words……..

I love when Obamalinsky says he’s trying to build up the middle class. I don’t think that’s what Marx, Lenin, or Alinsky had in mind. Obama doesn’t either…..

adamsmith on September 20, 2010 at 9:39 AM

Helps explain the explosion of out of state license plates here in Texas.

obladioblada on September 20, 2010 at 9:45 AM

Hence the influx of Minnesotans back to North Dakota.
I do wish you all would get your poop in a group.
I’m kind of tired of all these city folks moving to the country.
You’re crowdin’ my space.

Badger40 on September 20, 2010 at 9:46 AM

put public workers on a 401k plan like everybody else and problem is solved.

moughon on September 20, 2010 at 9:04 AM

As a public employee, teacher, here in ND, I would have no problem with that.
I really don’t know why we deserve better treatment than private sector folks.

Badger40 on September 20, 2010 at 9:47 AM

All the money of the rich will not make the poor any better.

Nor will it close the budget gaps in government.

Nor will it make the economy better and, in fact, make it worse.

Class warfare sucks like an Electrolux if you believe that taxing the rich more will get you these things, and will most likely leave you with a damaged economy, lack of jobs and no one able to get rich or even to the ‘middle class’ as they are the next target for confiscatory taxes.

Thus all these ‘nice’ programs end up making everyone poorer… even the poor as they will soon wind up with nothing once anyone who makes money is taxed to oblivion.

ajacksonian on September 20, 2010 at 9:51 AM

But, but….I thought the rich were RICH?!

TugboatPhil on September 20, 2010 at 8:55 AM

Dave Barry, humorist and a long-time columnist for the Miami Herald, once noted that politicians define “the rich” as any person who owns more than one shoe. He was correct.

oldleprechaun on September 20, 2010 at 10:05 AM

So Tim Pawlenty is leaving a 6 billion dollar deficit. He want’s to run for President…Good luck with that.

wheelgun on September 20, 2010 at 9:11 AM

If he hadn’t stopped what he could – it would be a heck of a lot worse

gophergirl on September 20, 2010 at 10:09 AM

Mark Dayton reminds me so much of Pinch Sulzberger, another dimwitted son of a very rich man. Why does that happen? You’d think that with the very best schools, pre-natal care and upbringing (?) these children would be smarter.

slickwillie2001 on September 20, 2010 at 10:10 AM

aaaand he needs to check with NY to see how well that works. “THE RICH” head elsewhere. Florida for example would like to thank NY for sending Limbaugh their way.

pgrossjr on September 20, 2010 at 10:17 AM

You’d think that with the very best schools, pre-natal care and upbringing (?) these children would be smarter.

slickwillie2001 on September 20, 2010 at 10:10 AM

A lot of high-end schools at multiple levels have practiced “social promotion” from grade to grade for years when it comes to the idiot children of the rich.

Also, there are a lot of programs at the college level which are very subjective in their ratings, mainly in the fine arts and liberal arts.

teke184 on September 20, 2010 at 10:18 AM

Class warfare solves the problem “How do I get elected?” It does not solve the problem “How do I balance the budget?”.

I don’t understand why we continue to be force-fed static analysis, when any reasonable person understands that there will be some modified behavior in response to tax policy.

Politicians always get to assume that people will run to take advantage of tax rebates, new handouts, or government contracts. But when it comes to policies that TAKE money from people, the official analysts predict no change in behavior.

hawksruleva on September 20, 2010 at 10:18 AM

FTA- Tax Year Impact (in millions):

TY 2011 $752,800

TY 2012 $813,600

TY 2013 $879,100
Try (in thousands):

Barnestormer on September 20, 2010 at 9:34 AM

Yeah, I was wondering about that…

Abelard on September 20, 2010 at 10:51 AM

You’d think that with the very best schools, pre-natal care and upbringing (?) these children would be smarter.

slickwillie2001 on September 20, 2010 at 10:10 AM

It’s analogous to the story about feeling sorry for the caterpillar trying to break out and become a butterfly. When your sympathy for the caterpillar’s struggle tempts you to help him break out of his cocoon, you’re not allowing him to strengthen the muscles he’ll need to survive. So instead of helping, you’re actually dooming him because he won’t have the strength to make it on his own. Always a good lesson for raising your own kids.

Once, when my daughter was trying to convince me to spend money on an unnecessary purchase for her, I asked why I should spend the money. Her response was, “Because you love me and you want me to be happy.” I replied, “Yes, I do love you. And happiness depends on your circumstances, which are always changing. And because I do love you, I’m far more concerned with your character than your fleeting happiness. NO.”

She’s now married, working a very successful job, and doing quite well. And she eventually forgave me.

oldleprechaun on September 20, 2010 at 10:54 AM

So Tim Pawlenty is leaving a 6 billion dollar deficit. He want’s to run for President…Good luck with that.

If the rest of the US knew the real story behind TPaw, he’d be a MUCH bigger contender than he is today.

For his entire second term, he’s been the ONLY GOP constitutional officer, and faced TWO DFL-controlled chambers in the Legislature – including a veto-proof DFL majority in one of them.

And yet he’s held to his 2002 “No New Taxes” pledge (for the most part); the only major tax hike was the $400M hit in the last biennium, where his veto got overridden.

Pawlenty was never really known as a conservative – and he’s not a movement conservative. But he’s governed as one, under almost insurmountable odds.

If he took that same style to Washington at the head of a Tea Party-controlled Congress, this nation would get back into AMAZING shape, but quick.

Mitch_Berg on September 20, 2010 at 10:56 AM

Abelard on September 20, 2010 at 10:51 AM

Ah, what’s three orders of magnitude among friends?

Barnestormer on September 20, 2010 at 11:00 AM

The “shrinking Middle Class” via semantics. Now that being rich is defined as not being poor, there is no Middle Class.

Freelancer on September 20, 2010 at 11:52 AM

Somebody making $130,000 a year is now “rich”? Who knew. And a family making $150,000 is rich? Interesting.

Monkeytoe on September 20, 2010 at 12:28 PM

Dayton v. Hanson. Dayton sounds like a jerk. May what goes around come around, and MN use the Constitution to fire Dayton, just as he fired Hanson.

unclesmrgol on September 22, 2010 at 1:17 AM