Via my former radio partner Mitch Berg, the Associated Press brings us an example of willful political blindness from right here in my home state. Patrick Condon reports on prominent businessmen who have built and/or run successful organizations, and yet never realized that their support for the DFL (Minnesota’s name for the Democratic Party) and Mark Dayton would mean —gasp — higher taxes. Now that Dayton and the DFL-controlled state legislature has pushed through its higher-spending agenda, they want to hike taxes on those same businesses. Suddenly, the scales have begun to fall from their eyes:
Dik Bolger is a lifelong Minnesota Democrat, a gray-bearded baby boomer with a braid down his back whose Minneapolis printing company’s plant displays work by local artists and sculptors. He backed Mark Dayton for governor, but his take on the Democratic chief executive’s plan for new business taxes could be the voice-over for a Republican campaign commercial.
“We’re screwed,” Bolger said, if the tax goes through. His 79-year-old company competes nationwide and overseas for work with major brands like Chanel. “If you’re bidding for a $100,000 job on a national basis and tax expenses push you a couple of percent higher, then I’m not competitive.”
What about people whose business is to manage money and wealth? Shouldn’t they have been able to do the math on the DFL’s big-spending agenda?
“I’m the kind of person willing to pay more in taxes because of all the attributes and benefits Minnesota offers,” said John Taft, CEO of Minneapolis-based RBC Wealth Management. “But you do reach a tipping point where the cost of government gets too high and this would push us past that tipping point.”
Excuse me, but one can always pay higher taxes voluntarily. What Taft means in this case is more like this: I’m the kind of person willing to force everyone else to pay more in taxes, until it hammers my own bottom line. That’s apparently the tipping point for Taft, Bolger, and the other businessmen who supported Dayton and the DFL without reconciling the need to actually pay for all of the “attributes and benefits” that they promised.
These taxes will hammer small businesses harder than large businesses, as do most tax and regulatory policies. Larger businesses are more self-sufficient and can avoid more business-to-business transactions, but also their economies of scale mean that they can spread the costs out more efficiently, allowing them more flexibility on prices and profit pressures. Small businesses don’t have those advantages, and this means that these tax hikes will impact their ability to compete against larger players in their fields.
Of course, people like Taft and Bolger have options, as neighboring states have already begun to remind Minnesota business owners:
To the east, Wisconsin is like a photo negative of Minnesota politically. On the day Dayton unveiled his tax proposal, Republican Gov. Scott Walker said he might “put a little bit more of a push” into luring Minnesota companies. He had already put Wisconsin “Open for Business” billboards along Minnesota borders; he’s now pushing for a $340 million income tax cut.
South Dakota Gov. Dennis Daugaard‘s administration has sponsored print and radio ads and direct mail directed at unhappy executives.
“Tired of Taxes? Call Me,” read the postcards.
Bolger says he won’t move, but he won’t be able to keep his staffing at the current size, either:
But he said his Bolger Printing company had to shed more than 100 of his 320 jobs because of the recession, and “I never want to go through that again” if he starts losing jobs to lower cost competitors.
“I’m a 58-year-old Minnesota boy. Wisconsin is probably not in my future,” Bolger said. “But I would have to shrink employees, decent middle class jobs. I thought that’s what this is about.”
Not really, no, and many Minnesotans knew that before the election — obviously, not enough of them, though. To the rest who are shocked, shocked by DFL tax hikes on businesses and sales tax (including the clothing exemption that brings out-of-state shoppers to the Mall of America), this Captain Louis Renault award is for you.