I ran across a conservative / liberal yell fest on Facebook concerning Minnesota and Wisconsin taxes and economies, and I ended up writing a rant of my own. I thought I’d just reproduce it here. I thought it came out rather well.
Seems to me you can have a lovely name-calling fight, or you can look at the numbers and realize that MN is doing quite well in an era of higher taxes that some might like, and ask yourself why that might be. MN, unlike North Dakota, hasn’t had an amazing natural resource discovery.
Under Walker, WI economy has not done especially well and his promised spurt in job creation hasn’t materialized – last I looked. Maybe I’m out of date.
Or let’s look at Kansas. Governor Brownback and the legislature drastically dropped tax rates 6 years ago, and sat back and waited for the economic prosperity make up for the resultant holes in the state budget.
Didn’t happen. Kansas is in a huge mess and Brownback is going the way of Arthur Laffer, his advisor and the guy who came up with the discredited Laffer Curve, which suggests that dropping taxes increases tax revenues because of the economic growth spurred by the drop in taxes. But Brownback still desperately clings to his kant, suggesting he’s not nearly the bright boy that he used to be advertised as.
The mistaken assumption in all this is that taxes ALWAYS suppresses economic activity. That’s turned out to be wrong, but conservatives still believe it (and something I probably unconsciously believed when I was young). My suspicion, probably already proven by economists, is that there’s a bell curve involved – too high of taxes is bad for the economy, but so is too low of taxes, because taxes pay for necessary services, from roads to schools, all of which are the foundation for solid economics. Established companies want happy employees; happy employees have families and children and homes that demand good schools, roads, and a stable society. They want to go out and hunt, have entertainment … and all that leads to taxes. Because they pay for the social environment that provides all those good things.
The important thing? It’s a bell curve. Not a single slanty line that let’s you say “taxes are BAD!”. It’s a curve, and that means figuring out the shape of the bell curve … and that’s hard.
