A Bolivian soldier guards a narrow gauge railroad operated by Antofagasta Chile and Bolivia Railroad on the Bolivia/Chile border. This track serves mining fields throughout the region. Antofagasta Mining has taken full ownership of Twin Metals, one of the nonferrous mining projects being developed in Northern Minnesota, further globalizing a local controversy. (PHOTO: Dimitry B, Creative Commons)
Reeling from lack of investor confidence, Duluth Metals allowed itself and its Ely, MN, mining development Twin Metals be acquired by the Chile-based Antofagasta Mining Company two weeks ago. An earlier gambit to get Antofagasta to buy part of the company had fallen apart, and in a shrewd bit of international wheeling and dealing, Antofagasta ended up getting the whole company for about $84 million.
Twin Metals is a Northern Minnesota nonferrous mining project similar to PolyMet. While PolyMet has absorbed most of the headlines and controversy because it is several years ahead of the Twin Metals project, Twin Metals is an even bigger proposal in an even more controversial location — a few miles from the Boundary Waters Canoe Area Wilderness.
Both of these companies started as development shells to do do research, attract investors and get permits. Both will eventually need international investment to actually do the mining, which means we have not really doing business with the people who will do the mining.
With Antofagasta’s buy of Twin Metals, we now know one of the players. The news can be spun many different ways, but as Marshall Helmberger of the Timberjay pointed out this is probably best regarded as a mixed bag for supporters of new mining in the region.
From Helmberger’s Nov. 4 story:
The dramatic announcement appears to rescue a project that had appeared close to financial collapse and provides the operation with a limited infusion of much-needed cash. Under the acquisition, Antofagasta will provide approximately $2 million U.S. in working capital and will defer repayment of the bridge loan for another 12 months.
Dundas said he doesn’t expect any drastic changes in the current operations of the Twin Metals venture, which includes the field office in Ely, but he acknowledged that such decisions will be up to Antofagasta in the future. Antofagasta, for its part, issued a short statement on Monday about the long-term potential of the venture. “The acquisition of Duluth provides Antofagasta with a long-term option to develop a large polymetallic resource in a stable and proven mining region. We believe that the Duluth Complex is an attractive deposit and upon closing of the offer we will commence the process of re-evaluating the project’s design while also continuing with the permitting activities.”
The investment was sorely needed, but Antofagasta’s purchase turns Twin Metals from a big fish in a little pond, to one of many little fish in a global ocean. Again, from Helmberger’s story:
Still, the acquisition raises new questions about the venture’s timeframe. In comments earlier this summer, Antofagasta officials made it clear they are currently focused on the redevelopment or expansion of existing mines for the foreseeable future. Unlike Duluth Metals, which was focused entirely on a single project, the Twin Metals venture represents one of more than a dozen longer-term prospects currently being overseen by Antofagasta. Some industry analysts noted this year that the recent ramp-up of copper production around the world has the metal poised to go into surplus, at least in the mid-term outlook. By locking up a large potential copper resource at a very attractive price, Antofagasta is in a much stronger position to develop, or to withhold from the market due to price considerations, the resources associated with the Twin Metals venture.
The mechanics of all this is why I so forcefully advocate for a strategy of economic diversification on the Iron Range. It’s not that this new mining can’t or won’t happen, or that it won’t create jobs. It’s just that we cannot count on the timeline of these new projects to deliver enough jobs in time to save our declining Iron Range communities. It’s not even entirely a permitting discussion; it is one of global capital and economic demands that are not knowable at this time.
We’ve had this “economic diversification” for years now but you can’t seem to get to page two of the discussion. That is – what needs to change to encourage and attract new businesses?
Let’s understand what made Minnesota (including the Range) once upon a time, so great. (And it wasn’t because we had high taxes, unions or large government). What then brought prosperity to Minnesota, to the Range? Entrepreneurs!
Entrepreneurs like Henry Sibley, Weyerhaeuser, Tom Walker, H.C. Akeley – all early loggers who created the industry which supplied lumber to build the Upper Midwest. This created jobs, lots of jobs. Oh…and guess what? Then came the Walker Art Center.
The loggers also supplied pulp to build Minnesota’s paper industry…built by entrepreneurs like West, McGill, Smyth, Brown, Bigelow and Reif. More jobs created, more nice schools built. Oh…and then came the Reif Center.
The denuding of two thirds of Minnesota of white pine opened the opportunity for farming…which created the largest flour milling & boxed food operations in the U.S. All built by entrepreneurs like Will Cargill, Charles Pillsbury and others. More jobs created, more nice libraries & civic center’s built.
All these industries created the need for railroads built by James Hill (unlike the NorthStar choo-choo from the Twins Stadium to Big Lake which wasn’t built based on need…but by a government driven boondoggle). Oh….and then came the Hill library.
At the same time, the Merritt brothers, Henry Oliver and Rockefellers drove investment in Minnesota’s iron ranges. This created lots of jobs, and more grand city halls & high schools were built.
All this and not to mention McKnight (3M), Norris (Control Data), Rand (Remington Rand), Paulucci (Jeno’s), etc….and the huge banking business. All these business men created many, many jobs. More wealth, more schools, more ice arenas.
I think you get the point. Individuals taking risk are what build businesses. Businesses are what create jobs. Businesses create wealth. With wealth comes nice schools, comes good teachers, comes an educated society, comes nice city halls & civic centers.
What role should citizens / government play to bring risk takers back into the area to build businesses and therefore create jobs and wealth? We must create a favorable “risk taking” environment!!
Talk to existing business owners. Talk to potential business creators. Ask them what they want. Woo them. Tell ‘em you want them to stay. Tell them you want them to come. Show them why. Love ‘em. You do this and the existing ones will stay and the new, young ones with exciting ideas will come flocking in.
On the contrary, treat them badly and watch ‘em leave, or not show up at all…no more wealth, no more nice streets and poor schools.
So, ask yourself, ask the IRRRB, ask your local representatives – How “business friendly” is the Range? Is this an area which encourages entrepreneurs to move in? Let me know what you hear.
Yeah, bring back the rich exploiters of nature to again wreak havoc on the wilderness. Rich assholes from other states and nations who only care about money, and then you little idiots can have the “JOBS!”. You should live in a filthy urban shithole if those are the people you admire.
There is much more to life than shitty jobs, money, four-wheelers, snowmobiles and getting drunk on cheap beer in your trailer. Fuck the businessmen and fuck you, “Ranger47”.
Good news Ranger, Forbes’ current list of states good for business chose Minnesota, #9 citing strong economic climate and quality of life as biggest reasons. Not surprising ND is #2 although, I doubt quality of life is great in the boom towns. Sadly, Wisconsin is #32.
kissa – #9, that’s good news! So what would it take to get us to #1?
To get to number one, we need to stick to the proven methods of economic growth and job creation we have followed in the the past. Those include a commitment to education at all levels from pre-K to graduate studies, including making post secondary education, especially in the STEM-BEE fields (science-technology-engineering-math-business-economics-education,) affordable to working class kids. It also includes a commitment to infrastructure for transportation, sewer, water, internet connectivity, and power at a level that does not just repair our aging and damaged infrastructure to the no-more-bridges-falling-into-rivers level, but to levels needed for both people and businesses in the 21st century. Finally, we need to continue a commitment to research at the U of M and other institutions that feed businesses the technology they need for innovation.
That costs money, and that money has to come from taxes. That is why the “lower taxes, especially for high earners” approach in Kansas, Wisconsin, Indiana and elsewhere, has led to poor economic performance and job creation. Except for oil states, all the leading states for growth are states whose citizens are willing to invest in themselves — Virginia is a partial exception because most of its growth is driven by federal investment in the parts of the state that abut Washington, D.C., but in Virginia tax dollars are driving the train as well, although mostly federal tax dollars.
There is a particularly amusing letter to the editor that posted in the DNT earlier this week in which a someone laments the Dayton re-election and celebrates the achievements of Scott Walker. If the writer had bothered to look up the facts about every single data category he sites — job creation, business climate, rate of unemployment, and so on — he would find that Dayton’s results are much better than Walker’s over the same period. This is so lopsided that Dayton is actually playing in a whole different league than Walker — the majors versus double A.
As far as your examples of entrepreneurs, you will find that every entrepreneurial development since WW II has been created either directly or indirectly from government efforts in research and development. Control Data and Rand came directly out of DOD and national science funding, 3M made the jump from sandpaper to its modern status on the back of research initiated at government institutions. The entire development of the large medical device industry in Minnesota came out of government and university sources. Even Jeno learned about frozen food in the army. The entire taconite industry, of course, came out of research at the U of M — without it there would only be memories of the red ore era left for the mining industry on the Range.
There is no free lunch, and if we don’t want to pay for the investment that is the foundation of economic and job growth, we will have to do without it, as other states are now finding.
Aaron’s comments about diversification on the Range are just an attempt to implement this formula on the Range, rather than condemning the area to third world status as an extractive economy dependent on the whims of foreign investment and the volatility of the world economy for its boom and bust cycle of gradual descent into economic collapse. He keeps repeating this because it remains true.
Geraldine….Here’s an idea. Let’s push for the Iron Range to secede from the state. If we’re successful, you and all the Range DFL’ers could raise the Range taxes to your hearts content. Then in 20 years we’ll compare the success of the Range to…let’s say, well whatever you pick.
Oh…you’re a liar when you say “3M made the jump from sandpaper to its modern status on the back of research initiated at government institutions”. It’s simply not true.
Sorry, you’re wrong. In the 50’s and 60’s 3M’s major business expansion was in magnetic tape and recording technology, which they dominated for a period of time. The technology for both the tape and the machines was originated in Germany in the late 20’s and 30’s, dominated by the German companies AEG and BASF based on German government funding, some of which was Wehrmacht sources. The technology was seized as war booty by the American army at the end of WWII, and was then passed to US companies for commercial use. A great deal of the developmental research in improving and expanding the technology after that came from Bell Labs, nominally private but funded almost entirely by DOD and NSF money, and from engineering schools also working with DOD and NSF financing.
The magnetic tape recording technology then collided in the 60’s, 70’s, and 80’s with the rapid expansion of the IT industry, and was the standard information storage media for that era. The IT industry, of course, was developed based on research from the DOD, NASA, and from funding and steering from the National Science Foundation, the sources which provided most of the developmental funding for research at Bell Labs, universities, and development groups like Rand, Hewlett Packard, Xerox Parc, and so on in development of the technology that drove the IT revolution.
3M got rich on this by building commercial applications based on information acquired from government funded sources.
One recent spectacular example of government money as a source of a major commercial development is the internet, which began as a system linking university and foundation research labs to facilitate exchange of information by scientists developing research of interest to the DOD, and was a DOD financed project.
When I came home to Northeast Minnesota in 1990, the internet backbone linking us with the outside world was a line running to the Twin Cities contracted and operated by the U of M. Private firms interested in using the line contracted for bandwidth on it. At that time, internet infrastructure that was reasonably “high speed” for the era was too expensive for the fledgling commercial IT industry to finance.
The other big tech innovation of the last half of the 20th century was genetic engineering. That research was also based on work done at government financed institutions, diffusing to private companies only when basic research yielded commercially exploitable applications.
US sources do not have a monopoly on this. The world’s first World Wide Web server was in the CERN Lab in Switzerland, primarily under sponsorship of EU governments. Medical technology like CAT scanning, MRI scanning, modern mammography machines, modern angiography techniques, vascular intervention techniques, modern endoscopy, endoscopic surgery, many modern drugs, and other innovations all came out of government funded labs in Britain, Europe, and Japan, but were then perfected as commercial applications by private companies in the EU, Japan, and the US.
Basic research is generally too expensive and too risky for corporate interests, and is pretty much a monopoly of government funded university programs and agencies. Even research performed at nominally private firms is usually funded by government sources in the form of grants and research contracts. Research then diffuses to corporate interests if it matures to show commercial promise.
Also, we don’t need to re-run the experiment you suggest. It’s already been run over the last 50 years. If you exclude the oil empires of Texas and now North Dakota, the most successful state economies are Minnesota and a set of states on the Pacific Coast and in the Northeast that conservatives revile as “high tax” states, but which also are characterized by strong education, infrastructure, and research commitments financed by tax dollars as well as better economic growth, better job creation, higher post-tax take home pay, lower unemployment, and more robust and rapid recovery from economic downturns. As everyone knows, it takes money to make money, a rule that applies to state economies as well as to corporate efforts.
Sorry, ain’t no free lunch.
I have always thought that the Iron Range should be its own little state, too!
Geraldine – 1) Government money was insignificant in 3M growing it’s once successful mag media business. 2) The Range has always been controlled by St. Paul liberal interests, melded with it’s own. It’s never been independent…secede. 3) We agree, there is no free lunch and our $18 trillion and counting indebtedness will come home to roost…sooner than you think. And our “free” stimulus packages, “free” cash for clunkers, “free” giveaway phones, “free” GM bailout, “free” healthcare and “free” war on poverty won’t be so free anymore.
The whole mag media business was initially handed to 3M by government sources, via patents seized from German companies after WWII. 3M did do a lot of development on perfecting the technology for commercial use, although the basic engineering of the recording machines that ran it continued to be developed through government funding sources at universities and research labs.
That is the typical pattern of government/business partnership in the US: government finances the basic science research and the most speculative phase of initial practical development. Proven technology is then available to private companies to develop commercially. The companies and their employees pay taxes that fund future research. A virtuous cycle.
The inflation hawks have been predicting the collapse of our economy due to government debt since Reagan ran up his record deficits. Still has not happened. In fact, if you are paying attention you will notice that our inflation rate is near record lows, that our economy is growing — unlike Europe where they take the inflation hawks seriously — and that the major world problem is deflation, not inflation. Thirty years of being wrong does not seem to have phased the inflation hawks, since they are secure in their belief that real world facts are much less important than their mythical ideas, and that lack of civility trumps knowing what is going on.
You’re Grubering us Geraldine..
I think the fact that you obviously consider calling me a woman’s name to be the height of insult says all anyone needs to know about the GOP and women. I am sorry that citing facts about the way the real world looks has driven you around the bend. Take a break.
Poor R47, trying to counter facts with name-calling (“liar,” “Geraldine”), shows the weakness of his arguments. Obviously, government investment and research helps business in many ways. And what’s the big deal about that? It’s a positive thing–a virtuous cycle, as Gerald says. Why deny it?
I’m all in favor of a lawful, constitutional abiding government. It can and has done wonderful things. But nothing positive comes from implying reckless government spending created the earth and all things good…calling it virtuous is as evil as the act itself. That’s Grubering..
The difference between us, R, is that I read what people actually write, while you always attack what you think people are implying. Instead of battling shadows, you should try basking in reality sometime. It’s a liberating experience.
Thanks to Mr. Brown, Gerald S. and John Ramos., voices of reason. I appreciate reading sensible, well thought out comments/
Higher taxes and education spending has nothing to do with students who succeed. Washington DC spent !8,667 per student in 2012 while Utah spent 6,064 per student, Utah students out performed the DC kids in every category. Home schooled students out perform public school kids steady. Education of children K-12 comes from families demanding their children learn not from teachers. How did the Govt help car industry, mining, textile mills of the east coast, steel mills of US, coal mining industry and so many other industries that made the american middle class after WW2? The insane idea that trickle down doesn’t work but top down govt spending does just blows my mind. We are in the era of crony capitalism that should make us all sick and liberals want to give more tax dollars to very folks that lie to us daily. Trickle down: iron ore found, evil rich man buys equipment hires miners, teachers, Doctors, service people follow a town pops up. Another evil rich person sees money to be made and the same scenario is repeated, Range is built. Top down Govt spending: auto industries get BILLIONS in tax payer money, unions paid off, tax payers lose Billions of dollars and it is called a success. Bank bailout same thing, Fanny Freddy same thing Billions lost and it is claimed as a success.. Unreal. Just forget that 18 trillion debt that is hanging over our heads, Obama called the 10 Trillion debt he inherited from Bush “immoral” then added 8 trillion to it in 6 yrs. They are all crooks and we want to give them more money.
Just a few facts.
The bailout of GM did lose money, but the bank bailouts, the Fanny and Freddie bailouts, and the AIG bailout all made a profit in the end — the government actually got back more money than they spent.
Both Bushes (and Reagan) ran up huge deficits in times of economic prosperity. Obama had to deal with the disaster of the Bush recession, which gutted tax receipts and led to huge deficits. The initial stimulus program, as anyone who can read a line graph knows, started the country on the road to recovery, but that program was ended by the GOP takeover of the House, and sure enough, the line headed back down. Government has actually shrunken under Obama, including layoffs of hundreds of thousands of Federal, state, and local employees, something that anyone who knows anything about economics could easily predict would exacerbate the recession, which it did.
Nonetheless, the deficit has shrunken every year for the past five years, and is now lower than under Bush — much lower when figured as a fraction of the GDP.
Median household income in neighborhoods and cities is almost an exact predictor of academic achievement in schools. The fact that, to our national shame, Washington is a massive sea of deep poverty is a powerful predictor of school failure.
Minnesota has led the Midwest — indeed, led any state that does not touch an ocean and does not have oil resources — in economic prosperity for some time. It is not an accident that it also has one of the best set of education outcomes and strongest commitments to education spending as well.
There is an extremely close correlation between education effort — spending — by states and economic performance. Financial commitment to higher education is also an important correlate. Excluding states with oil booms, the list of states spending the most on education and the list of states enjoying the best economic growth, the lowest unemployment, the highest post-tax take home pay, the best rated business environments, and the greatest influx of young people with college and technical training are virtually identical. For states, spending on education and infrastructure is investment in their own future, and it pays off.
The notion that the smokestack industries grew without government help is not correct. The auto industry benefitted from massive state, local, and federal investment in roads and bridges, federal loan programs that built the suburbs, and a national policy favoring cars over mass transit. The textile industry benefitted from aggressive use of protective tariffs, the steel industry from the effective subsidy of the auto industry as well as tax incentives for commercial building that absorbed the output of the mines and mills Mining prospered because industries benefiting from those policies needed everything from coal to copper.
And most important, the story does not go “rich man finds ore…” The story goes “rich man finds ore, hires miners for lowest possible wages, hires thugs to beat and shoot them if they object, considers school for miners kids a waste of time when they should be working in the mines, fires miners who want better wages, imports immigrants from impoverished countries to work for even less…” Those industries, which indeed did build the middle class, became builders of the middle class only after the union movement made them sources of good wages and safe working conditions. Before unions, coal miners worked seventy hours a week for near starvation wages, steel workers made tiny incomes and lived in dismal urban tenements, textile workers could not support a family, and all of them worked under conditions that killed and maimed workers by the thousands and inflicted crippling and often fatal work related diseases on workers who survived long enough.
So yes, unions and government did build the middle class. If you want to preserve the middle class, back policies that provide education that trains for good jobs, that finance universities that do research that creates new industry, that strengthen unions, that maintain and expand transportation and other infrastructure, and that create a progressive tax structure that puts money in the pockets of women, working families, and the middle class while increasing tax collections from the wealthy that subsidize that good government.
Bears repeating:
“Thanks to Mr. Brown, Gerald S. and John Ramos., voices of reason. I appreciate reading sensible, well thought out comments “
My father worked for the mines prior to unions and after unions his take was “best thing to happen to the mines and the worse thing to happen to the mines”. He loved the fact that you had a regular pay check without going to hiring shack every morning. By 1978 he felt the unions stole the work ethic and changed the culture to arbitrate every perceived injustice. Drove him nuts. He, my 13 uncles, my 2 grandfathers never mentioned beat downs by mining companies. I never heard of one of your thugs beating down 2 generations of guys who actually worked in the mines prior to unions….. I’m sure in thousands of hours we sat around talking about the Range they forgot that small detail…. So let me get this straight, if you want a strong middle class take more money from successful people and “put it in the pockets of women and working families and subsidize that good govt” . Wow, if only the enlightened liberal elites would help out us old folks and get us to understand that simple concept we would all be so happy… If you want a strong middle class get them a good job!!!!!!! So old fashioned…
Remember the 50’s?
Taxes — highest in our history — and public spending, that’s how it worked then, and we not only had a viable and growing middle class and much more even distribution of wealth, but the strongest economy in world history. Of course we also had two parties that were both interested in creating strong government that worked — that’s back when GOP governor Elmer Anderson said “taxes are how we join together to do good things,” and when Eisenhower created the NSF, the NIH, the NEF, and poured resources into schools, higher ed, and research, not to mention the largest public infrastructure project in the history of the world.
Now we have one party that believes, as a matter of record, that government is incapable of doing anything good, that education, social security, Medicare, and public services should be privatized, and that the best way to proceed is to make sure that the top 1% continue to accumulate an ever greater percentage of wealth and income while the middle class collapses, and that the US having the worst economic opportunity and mobility in the developed world is not a problem. Not an opinion: facts documented by public statements by the GOP and by actual economic data.
And do you seriously believe the only thing unionization on the Range accomplished was getting rid of the hiring shacks — that the companies were paying fairly, treating workers fairly, providing good benefits, and insuring safe conditions before the unions existed? And that it is an accident that the collapse of unions nationally has been accompanied by the collapse of the middle class? Or that the real battles for steel worker unionization were not fought at places like the Homestead massacre, where people died for unionization?
Slogans are nice, personal stories are good, but sometimes it is nice to examine actual history and real facts.
Some times it is nice to talk to an actual person who went through the times. My grandfather came from “The Old Country”, did not speak english and was thrilled to have a job long long before unions saved the miners. He always said in his broken english, “I have family, friends, a house and a job… America is the place where dreams come true” and all his fellow legal immigrants would nod in approval…By the way the 1% you hate so much has grown faster under Obama than at any other time in history: see crony capitalism. That is after he held both House and Senate his 1st 2 yrs…… See JFK 1962 speech on taxes to see where the USA stood on taxes and its impact on economy and middle class.. Most times when I talk to folks who make the most sense on business, it is business men that actually started companies and employ others… I have yet to talk to a career politicians that has a clue… Easy to read books on starting businesses, very hard to do…. If it was easy everyone would run their own business….. Liberals nightmare, no Govt involvement…
Just the facts:
Despite what JFK said in 1962, the period from 1946 to 1968 was the best period in US history for the middle class and for balanced distribution of wealth, and the best period for economic growth. That is statistically indisputable. You can look it up. You can also look up what the tax rates were.
I do not hate the 1%. Many of my friends are part of the 1%. The 1% should just pay its fair share, is all I am interested in. That is especially true since they are the ones who have benefitted most from our system, taking advantage of education and public spending to create their wealth. My comments above discuss that at length. As of now, the 1% actually pay a smaller — often much smaller — share of their income in taxes than the rest of us, a fact well demonstrated by people from Warren Buffet to Mitt Romney.
Unbalanced distribution of income has been repeatedly demonstrated to handicap economic development in study after study in economics. The US has the most unbalanced distribution of income in the developed world. That is hurting our country.
We also have the lowest level of opportunity, as measured by mobility of people from lower income groups to higher income groups, of any developed country. That is something that most Americans would find disturbing, if they were aware of it, instead of the sloganeering and myth about the land of opportunity.
Obama did make some progress on this issue from 2009 to 2010, including raising taxes on high earners while improving benefits for low income people and pushing for greatly increased regulation of the financial industry following the debacle that led to the Bush recession. However, in our government system the power to control spending and taxation lies in the House of Representatives, not the executive branch, and every dime of spending and every dime of taxation has to pass through the House. You know who has controlled that for the last four years and whose cronies have benefitted, and whose control and cronies we can look forward to for the next two years.
So who gets to decide what fair share is? what is fair for a guy who has built a business for years scraping by but making payroll every 2 weeks who get’s a once in a life time contract and makes 300,000$ for 3 yrs. He by definition is a 1%’er. I will repeat that at no time in history has the 1% gotten more wealthy than in the last 6 yrs including 09-10. Just the facts. Do some research on Freddy/Fannie you’ll see where the CBO said the total outlay of cash was 317 billion by “we the people” the administration said it was 135 billion at first but raised it to 187B when caught lying, so their claim at being profitable at 195B return was a classic boondoggle. As far as AIG they sold back 14B of the 17B they borrowed from “we the people” somehow the other 7B came from the Fed reserve (an independent bank entity we can’t audit) so their claim that “we the people” made a total 21B on a 17B investment stinks to high heaven.. Just the facts…. Glad you trust those people, I have some ocean front property by Togo for you, it’s a real steal.
Actually, the 1% rolled backward in 2007 to 2010 like the rest of us, with considerable shrinkage of assets, but then quickly recovered and then some.
Money borrowed from the Fed during the bond buying program years is still money, and the bond debt is still debt. Last I heard the Fed was not forgiving any loans. Fannie and Freddy had not only paid back their debts but wants to start declaring dividends again.
It is certainly possible to make up scenarios of all sorts and to develop all sorts of theories, but the fact is that the treasury has gotten back everything except the GM money, where they did absorb a loss. Since GM is actually the only one of the bailout deals originated by Obama — all the rest were Bush programs, although Obama did continue them after he took over — it is possible to say that GM represents an Obama failure. However, the taxes paid by the tens of thousands of workers directly employed by GM and the hundreds of thousands, including many on the Range, who owe their employment to GM seem to me to be worth the investment, particularly contrasted with the dollars that they would have gotten from unemployment and other benefits had the company been allowed to collapse.
When we start getting into conspiracy theories and land in Togo, I think it is time to stop, so I am signing off here.
I’m pondering how the average American worker would have gotten job safety regulations, decent pay and working hours, health care coverage and pensions and more without unions and resulting laws enacted which also brought non-union businesses up to speed. I can’t come up with anything. I suppose we could have hoped and prayed that business would do that on their initiative but I think we would look more like a third world country today is we had counted on that instead of a country that grew a thriving middle class, at least until a few decades ago. Union numbers are at all time low now. If unions went away, what would keep all the workers’ gains in the workplace from disappearing too? Where there are flaws in unions, people need to work to change that, not throw the baby out with the bath water.
Someone writing in a local paper said that after this midterm election with the GOP gaining control he thinks American companies will start to bring home their billions in reserve. Why would they when their money is making money overseas. Why would they enlarge their businesses or start up new ones when consumers aren’t consuming as they did pre-recession. There still aren’t enough jobs to go around and many of those jobs’ wages have dropped. Many workers who did keep their jobs have not had a raise in years yet are working more due to companies reducing staff.
Trickle down/supply side/Laffer economics doesn’t work. David Stockman has had some things to say about that. Giving the very wealthy and big corporations tax breaks which don’t need them certainly hasn’t trickled down to “creating” jobs since the Great Recession which should be obvious. Then to make up for lost revenue the first place conservatives look is to make the middle class, working poor and poor pay for it by cutting/privatizing Medicare, SS and much more. It’s a twofer! Win, win.
The extremely wealthy have made out like gangbusters. For every $1 an average American worker makes, a CEO takes in more than $350, a Gilded Age for the 2000’s. The stock market is doing extremely well which is nice for those who can put a lot of money into that. So why all the whining from so many of them, CEO’s etc, lecturing the rest of us that “we” can’t afford SS and that Fix The Debt baloney? What chutzpah.
Just he facts
Top 10% of wage earners in 2013, paid over 70% income tax for the nation. In 2013 the median inflation-adjusted income was $2,100 LESS than Jan 2009 when Obama took over, really helped those middle class families you think he’s helping. As Obama played to the jealousy factor of his liberal base, he cut tax breaks for rich while preserving G.W. Bush’s tax cuts to middle class then instated a tax hike with the employee payroll tax from 4.2 to 6.2%. All of this taking place while he had total control of all 3 branches or 2/3rd’s control of our govt…… I know those pesky GOPer’s screwed the hell outta middle class with no control or 1/3 control for past 6 yrs…. by the way when an average worker makes as much as a CEO that is called communism (never worked yet). I ran many non union companies that had health care, fair wages, safe working conditions and happy employees amazingly all without unions…
I am guessing that you are well enough informed to know that the backward trend in real median adjusted median household income dates clear back to the first Reagan administration.
Upward trends in real median income were steady from 1945 until they peaked in 1979. It bumps around sometimes, but has been steadily flat to down decade by decade since then. Its last brief upward trend was in the late 90’s during the Clinton boom, but has been below 1999 levels for the whole century so far.
The opposite trend in the income of the top 1%, and even more the top 0.1% is obviously well known, but it is clear that gains from productivity, which has continued to rise steadily, have all gone to the top earners while the middle class gets none of it.
Of course the top earners pay the largest gross share of income taxes. They make the largest share of income. However they still pay a smaller share of income to taxes than people in the lowest 20%, although the low income people pay in payroll tax, sales tax, gas tax, and property taxes (usually in rent payments, which are of course not tax deductible.) Top earners usually pay lower rates than most middle class earners as well. But of course 14% of $30 million is more than 28% of $25,000.
Oddly enough, this growing imbalance in who gets the money from work productivity exactly parallels the collapse of unions in the private sector. Imagine that.
And of course the “raise” in payroll tax you cite was actually a cut in payroll tax as part of Obama’s stimulus package, followed by cancellation of that tax cut as part of the GOP demands during the government shut down. The payroll tax now is the same as in 1990.
“Top earners usually pay lower rates than most middle class earners as well. But of course 14% of $30 million is more than 28% of $25,000”. – Geraldine, Nov. 21, 2014
You’re Grubering us again ’cause this is certainly not “just the facts”. However, just for the moment if we assume it was, the solution is staring you in the face, simply lower the 28% rate to 14%..
Mitt Romney’s 14% tax rate is fairly typical of taxes paid by the most wealthy Americans. As billionaire Warren Buffet has pointed out repeatedly, he pays a lower tax rate than his secretary.
Taxes of course do not mean just “income tax.” The bottom two quintiles pay a very low income tax rate, but flat taxes like gas tax, property tax, sales tax, and payroll taxes hit them very hard, driving up the percentage tax they pay.
I think you would make a lot better impression if you dropped the talk radio persona and restricted yourself to factual arguments that you actually researched. And if you hid your contempt for women a little better.
And Geraldine, please stop your attempts at trying to Gruber us. “Just the facts”, please!
Congressional Budget Office
Non-partisan analysis for the U.S. Congress
Distribution of Household Income and Federal Taxes, 2011
Report, Nov. 12, 2014
“Overall, federal taxes are progressive, meaning that average tax rates generally rise as income increases. Households in the lowest income quintile ($24,600) paid about $500 in federal taxes in 2011, on average, which amounted to an average federal tax rate of about 2 percent, CBO estimates. Households in the middle quintile ($66,400) paid about $7,000 in federal taxes, and households in the highest quintile ($245,700) paid about $58,000 in federal taxes, which results in average federal tax rates of approximately 11 percent and 23 percent, respectively”.
Better.
The income tax is technically progressive if — a big if — you exclude treatment of capital gains, dividends, and interest, special treatments for certain other income, as well as the impact of deductions and credits. The top 1% (over $385,000) actually pay an effective income tax rate of 23.5%.. The top 0.1% much less — Romney’s 14% is typical. If you calculate the impact of those special treatments, the effective rate starts to turn down at somewhere around $250,000, as privileged income starts to make up a larger portion of reported income. Off shore income — like Romney’s trust established in the Caymans — magnifies this even more.
Here’s a link: http://money.cnn.com/2014/04/04/pf/taxes/top-1-taxes/
As I noted above, the taxes that impact the people in the bottom half of the income distribution are not income tax but the flat taxes on gas, property, and so on. The FICA tax is actually reverse progressive — people who make less than $117,000 pay a larger percentage tax than those above, and the tax gets so small on the highest earners that it almost disappears as a percentage — the CEO of United Health Care, the highest paid employee reporting in MN, paid 7 one thousandths of one percent for FICA, while the woman who cleans his bathroom paid 6.2%.
You started out just fine, 23.5%. But then you start Grubering, picking out exceptions, misleading & deflecting. This gets us nowhere Geraldine. A good debate requires honesty.
But as long as we’re there, how ’bout the 50% who pay no federal tax? Does that make sense?
We’re goin’ round and round
We’re never gonna stop
Goin’ round and round
We’ll never gonna get where we’re goin’
(Dedicated to R47)
Just a suggestion, but the “Geraldine” thing completely takes away from anything of any value what-so-ever that you might write with it. The first time you did it, I thought maybe you were drunk-commenting and I actually tried to change the subject to help you out, but it really is old now. If everyone started addressing you as “Rangeress47” or “Rangerqueen47” or “Ranger-Girl-47” or “Ranger-Lady47” – that would be sort of silly, would it not? I do really often try to at least consider your points of view, but this silly name thing is just making your ideas here sort of fade into irrelevant, at least for me.
Ok Amy, I understand…plus I give Gerald credit, he/she (who knows) never bit. It started on a whim as most all true Rangers have nicknames. Thought that might have been his/hers. I guess not..
Thank you : )
First, almost no one pays no federal tax. Many low income people pay no federal INCOME tax, but they do pay FICA, Medicare tax, federal gas tax, and many other taxes. Many low income people actually pay more federal tax on a percentage basis than people who do pay income tax — for example a person working as a casual worker earning low or minimum wage pays a higher percentage of their income — 12.4% FICA and 2.9% Medicare, or 15.3% total — for payroll taxes alone than Mitt Romney pays for his entire federal tax obligation — 14% — on his 8 figure income. That much is indisputable, since Romney had to reveal his tax records as part of his candidacy. Romney is absolutely typical of very high income earners, who are able to use loopholes and exceptions in the tax structure to reduce their obligation to very low levels. When you can afford high paid lobbyists, political donations in the six to 9 figure range, and expert legal and accounting advice, trimming your tax bill to very low levels is easy.
However, we have gotten far off topic here. The actual issue under discussion, way back above all the nonsense comments, is how to best stimulate the economy and create jobs, both in general and on the Range.
So let me summarize the facts on that, for those of you keeping score at home.
Tax cuts for middle and lower income people do stimulate the economy, simply because those people spend the tax cuts in the consumer economy and create multiplier effects that cause the stimulus.
Tax cuts for high earners have never proven to stimulate the economy. Ever since Laffer’s pronouncements in the 1970’s, this data has been carefully tracked on multiple occasions. Cuts of that type result in loss of government income — despite Laffer’s theory there have been exactly zero incidents in which tax cuts for high earners have led to increased tax collections. Loss of government income results in reduced spending for government programs — even under the hated Obama — and increased deficits. If the government unit has to balance its budget — states, for example — more cuts to government programs are necessary to balance the budget, something we are now seeing in Wisconsin, Indiana, Kansas, and other Tea Party states. If the government unit can run a deficit, the tax cuts lead to higher deficits — Reagan and Bush II ran the largest deficits ever in non-recession conditions. If the cuts also happen to coincide with a deep recession — the Bush recession, for example — the cuts and the recession combine to cause even greater deficits — that’s Obama’s first three years; the raise in rates for high earners that took effect in 2013 resulted in returning deficits to levels below the Bush and Reagan years, both in actual numbers and especially as a percentage of the GDP.
States have few choices as to where they can cut their budgets. Health care and education are their two largest budget items, followed closely by transportation. “Welfare” cash payments to individuals — despite its popularity as a rallying cry, actually accounts for less than 1% of Minnesota’s budget and less than 0.1% of Minnesota’s own spending — the rest comes from federal sources given to the state, and the state has actually been playing games with that money, diverting it to other uses to help with budget issues from the Pawlenty era. Health care is a large part of the budget, but most health care spending is tightly linked to large federal contributions — the feds pay between 60% and 95% of the state’s costs, depending on program. Because of that, the state cannot cut health care significantly without losing some or all of this money from the federal government. Under Pawlenty, the state cut single and childless adults out of Medicaid (MA,) but that was about all that was available without losing the huge contributions from the feds.
That leaves transportation and education. Transportation is tricky, because large parts of the transportation budget are constitutionally bound to transportation use, and cannot be spent on other costs. Pawlenty dealt with that issue by “borrowing” funds from the transportation budget to use in the general fund. That resulted in large amounts of “deferred” maintenance and projects, including the famous falling bridge on 35W. The major result of that has been that the state now faces a budget crisis in transportation that will require $1 billion a year spending in the next 20 years just to stay even — to stop any more falling bridges — and $2.5 billion a year to bring transportation to standards required by citizens and businesses for the 21st century. And before you start talking about rail issues: very large shares of the rail spending come from federal funding, so much so that rail spending by the state is a wash when the tax collections from the stimulus from building are calculated.
That leaves education. Under the GOP, $2.8 billion was “borrowed” from education funding — until the DFL raised taxes on the top 2%, there was no real hope that would ever be paid back, but technically school districts were promised they would get it eventually in the sweet by and by. Huge cuts to higher ed resulted in large raises in tuition, reversing the percentage of spending from the mandated 66% state sources and 33% student tuition to 33% state sources and 66% student tuition, effectively excluding many working class kids from access to higher ed and technical training.
Now we know, from collecting data in many settings, that business growth in any given area is related to three things: education and technical training, which creates a workforce that adds value for employers and attracts businesses eager to use that workforce; research developing new technology and applications that create new business; and infrastructure, including roads, bridges, rail, air transport, sewer, water, power, and these days internet connectivity, all of which provide the tools that are needed to run businesses, get supplies, and send products to market.
All of those things come almost entirely from government sources. Places that have strong education, infrastructure, and research facilities always experience the best growth over time. Places with weak commitments to those things tend to stagnate. The only exception to that rule is extractive industries, especially oil. However, extractive industry based economies tend to have trouble in the long run because the resources always run out, and because price volatility for extracted resources leads to yo-yo patterns of employment and economic growth as profit variation leads to cycles of shut down and re-opening. We have all seen that first hand.
Minnesota as a state has had an excellent history of business development, running parallel to a strong commitment to education, research, and infrastructure and strong competitive performance in those areas. The Range, however, has been committed to an extractive economy model. That has led to all the typical extractive economy problems with employment, economic growth, and cyclical fluctuation. Aaron is a long term advocate of weaning the Range away from extraction by improving education and infrastructure to encourage development of diverse industry that pays well and does not open and close depending on commodity prices and the whims of managers in Zurich.
Finally, in contrast to Minnesota, we can examine states like Wisconsin, Kansas, and Indiana, which are in the same geographic position as we are. Starting with the recovery from the Bush recession and the beginning of the Dayton, Walker, and other administrations, Minnesota has significantly outperformed those states in terms of economic growth, job creation, unemployment rates, take home pay after taxes, inflow of young educated and trained workers from elsewhere, and stability of the state budget. As I said way above, Minnesota is playing in a whole different league than those states. Could we do better? Yes. Will we do better if we continue the Minnesota recipe of education, infrastructure, and research? Almost certainly.
But can we endanger this by copying the tax cuts for the wealthy and austerity programs that those other states follow? Absolutely. There is not a single economy in any state or country — barring extractive bonanza sites like North Dakota and Abu Dubai — that has not shown that the way to success is the Minnesota model, and that the austerity model has failed and sent economies into recession and stagnation, from Wisconsin to Britain to even Germany.
Unfortunately, there are powerful economic and ideologic myths that keep tempting people back to those approaches despite the overwhelming evidence that it is a big mistake.
Meanwhile, Aaron is advocating trying to break the Range out of its cycle of failure and its history as the dead spot in the state economy by use of these proven techniques.
Wow , Gerald ! Thank you so much for a clear, detailed, factual response.
Ken, Can you clarify what you mean by “non-union companies who had health care, fair wages, safe working conditions and happy workers ‘amazingly’ all without unions”? You seem to imply that unions which gained foothold in companies transforming them from feudalistic workplaces did not have a substantial influence on non-onion companies to follow suit. History and decades of data prove they did but perhaps you were being facetious.
No one believes a worker should be making the same pay as a CEO. Ridiculous but maybe that’s your idea of a joke too.
CEO compensation adjusted for inflation which started rising steeply beginning in the 1990’s, rose 937% between 1978 and 2013, more than double the growth of the stock market in that time. Workers, otoh, got just 10.2% raise. CEO pay even grew faster than pay of top 0.1% of wage earners which also indicates that the CEO compensation growth does not reflect the increased market value of their skills in a competitive market. It appears executives are rigging pay in their favor, routinely gaming the system. From the studies of the 350 biggest American public companies, the average CEO compensation was $15.2 million last year, an increase of 21.7% since 2010. Of the best paid CEO’s of the past 20 years, nearly 4 in 10 have been fired, caught committing fraud or oversaw bailouts of their companies. The large increase of CEO earnings and compensation and the expansion of and the high compensation in the financial sector is responsible for the greater distribution of household income upward. Meanwhile, workers have lost a decade of wage growth despite consistently increasing productivity.
To say people are jealous or envious of the top 0.1% or top 1% is just plain hooey. I know I don’t evny these folks at all nor have I ever heard anyone I know say or indicate jealousy either. What people do talk and stress about is that they have had to take on more duties on their job, work longer hours while raises are rarer and smaller. They are delaying retirement or wondering if they will be able to retire at all. And they are aware that American business are hoarding money like hiding cash under a mattress. Fact: US spent $3.5 billion in fiscal 2013 while corporations hold liquid assets equal to all the money the federal government spent that year plus 2012 and 3 months of 2011. Tax dodging that we are paying for.
Ironically, the people who are constantly talking about class envy or jealousy are the extreme wealthy. Somehow, they feel they are victims of persecution at the mere mention of the mounting income disparity. Larry Summers told Politico, “The politics of envy are the wrong politics in America. The better politics are the politics of inclusion where everyone shares in economic growth.” The problem with this kumbaya spin is that the super duper rich talk a lot about building the economy but do almost nothing about it. There’s a lot of take and a lot of keep, but not much giving back.
Blah, blah, blah Gerald…“Top earners usually pay lower rates than most middle class earners as well. But of course 14% of $30 million is more than 28% of $25,000″. – Gerald, Nov. 21, 2014
You’re Grubering us again ’cause this is certainly not “just the facts”. However, just for the moment if we assume it was, the solution is staring you in the face, simply lower the 28% rate to 14%..
So again, back to the topic at hand. If we all agree, the middle incomers are paying too much, why are you against lowering their tax rate?
Not at all against lowering the tax rate for middle income people — the DFL did that this last biennium in MN and I would like to see more.
However, bear in mind that tax cuts, like expenditures, have to be rectified in the budget, otherwise we will just end up with higher deficits.. Just as an expenditure must consider how it is to be paid for, a tax cut must consider the same thing. That requires proposing either cuts to services that have been paid for with taxes or raising taxes elsewhere. It will come as no surprise that I generally favor increasing taxes on high earners as a way to rectify middle class and low income cuts, but I would be willing to listen to proposals for alternative ways of budget rectification, as long as low income people, working people, and middle class people were not harmed.
Once again, the taxes paid by low income people are mostly taxes other than income tax, while income tax accounts for almost all the tax for high income people. That seems to confuse you. See the example above.
No confusion on this end Gerald.
So to what level, from and to, do you (the DFL) claim to have reduce taxes during the last biennium? Better yet, include the past two bienniums. Facts only. And to what level would you like to see them reduced to this biennium?
Keep it simple. Again, facts only, no ad nauseam Grubering, please. We’re looking for clear practical solutions.
The overall tax collections in MN increased, but only because there was a 2% increase in taxes on the top 2% of earners — over $280,000 for couples. Taxes decreased for everyone else, in the form of $55 million in targeted income tax cuts for middle class people (tax deductions for college savings and tuition are one example) and a refund of up to 20% for property tax and renters’ credits, partly compensating for the large raises in property tax made necessary by cuts to school aid and local government aid under earlier GOP leadership.
The only other tax raise was the tobacco tax. That was primarily done not as a revenue source but as a public health measure, since there is abundant evidence that higher tobacco prices are the most effective tool in discouraging teen smoking. Preliminary evidence shows that that is working in MN. Reducing teen smoking is, of course, an important source of savings on health care, including health care paid by the state.
So there you have it. Since we are talking about taxes on middle and working class earners, that is an excellent example of middle income cuts paid for by small increases — two cents on the dollar — on high income earners, which proved to be an effective policy, including ending years of budget crisis and creating a surplus, simply because so much of the income in MN and the US is in the hands of the highest earners.
Those reductions in tax were for the past biennium. That was the only time in the last 20 years when the DFL controlled state government. In the previous biennium, control was split between the GOP and the DFL, and the GOP shut down the government rather than enter into agreements to reduce middle and low income taxes, provide property tax relief, restore eduction and local government funding, and balance the budget with a rainy day surplus because they adamantly opposed any increased taxes on the wealthy, even as low as 2 cents on the dollar. That is pretty much the story of partisan politics at all levels in the US.
Just the facts. Sorry if it does not fit the talk radio echo chamber myth.
As far as I can tell, Gerald hasn’t repeated himself once, let alone gone on “ad nauseum.” Stop Grubering us, R47.
“Just the Facts” Gerald…That’s really poor clarity, downright misleading, Grubering at it’s best…again.
“The overall tax collections in MN increased, but only because there was a 2% increase in taxes on the top 2% of earners”. Gerald the Gruberer (GG) Nov. 24, 2014
What high school did you attend? Certainly not a high quality Range school. The top tax bracket sees an increase of 25% (7.85% to 9.85%) and you call it a a little ole 2% increase? That’s sophomoronic Grubering at best…and terrible policy at it’s worst. Study after study has shown that heavily taxing a sliver of it’s citizens is a highly volatile source of income. Hard to believe, but even the Red Star editorial broad published a scathing opinion against Dayton & his cronies for doing this.
Sorry, 2 cents is 2 cents. You can spin it as you like. An increase from 7% to 9% is an increase of two percent. That’s they way arithmetic works. Try it: one, two, three…
And, unfortunately, you are dead wrong on the economic facts. Please stop the nonsense and cite one of these studies.
In good old MN, that tax has been accompanied by a drop in unemployment to record lows, growth of the economy and jobs far in excess of neighboring states in the Midwest, the highest take home pay in the Midwest — after taxes, by the way, and an increasing influx of educated and technically trained young people. A booming economy. That is absolutely typical.
What you are actually saying is that “statement after statement by people who have not bothered to check the real world says taxing causes economic problems.” In real life, it is the states and countries that are willing to invest in themselves that have the economic growth, and the states and countries that cut taxes and services that experience stagnation: Wisconsin, Indiana, Kansas, Britain, etc, etc. etc.
Try looking at some real numbers, not just listening in the echo chamber.
Oh GG…You not mentioning how much of an increase the cigarette tax was elevated (a massive 230%) qualifies as soft Grubering, but none the less, Grubering. But trying to justify it on moral grounds is disgusting and ironically – immoral.
First, higher taxes are rarely morally defensible. If anything, moral considerations dictate lower, not higher, taxes.
Forcing other people under threat of violence to turn over their money to someone else is wrong, immoral.
Having some people give at a greater percentage rate than others is wrong, immoral. The biblical notion of tithing, for example, is entirely universal. Everyone gave a tenth what he had. (No one was forced to give half while others gave a tenth).
Allowing those who pay no tax (such as the federal income tax) to vote on how much others will be forced to pay is wrong, immoral. (Even you admit it’s difficult to morally defend the fact that about half of Americans pay no federal income tax, yet they determine how much the other half will be forced to pay).
The higher the taxes, the more decent people become “cheaters”. Encouraging cheating is wrong, immoral. At a certain level of taxation, virtually every honest person is reduced to cheating either legally or illegally.
The higher the tax rate, the lower the charity rate. This is universally true. The more people give to the state, the less they give to their neighbor, to those in need…even to members of their family. This is promoting immoral behavior.
The higher the taxes, the less people are inclined to work hard. Why should they? At a given point, people just conclude that work is for suckers.
So….don’t tell me you’re trying to help the poor and “stupid American” cigarette smoker by raising their taxes. The moral case against higher taxes is far more powerful than the moral case for them.
But you know this and are simply ad nauseam Grubering…again. You’re forgiven though. It’s in your liberal DNA, you can’t help it.
Once again, for anyone not paying attention in class: the point of the tobacco tax is to discourage smoking, especially starting smoking by teens. There is very good evidence from multiple countries and states that youth tobacco use is heavily influenced by price, and that the higher the price the fewer young people smoke. From that point of view, a 280% increase is just a good start.
You are probably old enough to remember the tobacco trial, when MN proved that tobacco was costing the state billions in health care expense, and won a huge settlement from the tobacco companies — since squandered on failing budgets in the last decade. The fewer young people there are who are smokers, the lower our outlays of state (and federal) money is going to be. If the higher tax drives down smoking and collections of tobacco tax, that is a big win, because we will more than get the money back in lower health care spending.
I love the part of the Bible where Jesus bitches about high taxes.
I know it’s tough for you to stay on topic John, but give it your best shot. Better yet, ask for God’s help, he’ll guide you. 🙂
I think it was you that suggested that taxes are immoral. Do you want to check the Koran instead of the Bible for your reference? Or is this based on the gospel according to Ayn Rand?
Meanwhile, of course, every religious philosopher from Buddha to Jesus to the pope is saying the opposite.
I love it when people start suggesting that taxes are immoral, it is so funny — the world turned upside down. As John suggests, it would be nice if you provided a reference for that. Also like to see the data on your claim that taxes stop charity. The opposite is true in the US, of course, where the tax deductibility of charity actually encourages higher donations.
I’ve had enough of echo chamber slogans and refusal to pay attention to facts. I’ll be back when sense breaks out.
…and no, I did NOT say that it is difficult to justify that almost half of Americans pay no income tax but still vote. What I said was that almost no one pays no federal tax, and that many people who pay no federal income tax actually pay a larger percentage to federal taxes than many people in high income brackets: Mitt Romney vs. his gardner.
Despite what the Koch brothers think, US citizenship is not calculated on net worth, and the poll tax ended with Jim Crow.
And by the way, tithing is not the duty to the state or the poor, it is the duty to the church. Jesus specifically approved of taxes — the “coin of tribute,” and “render to Caesar what is Caesar’s,” remember?
The real immorality here is that we are living in a country that is the richest in the world, but where one fifth of children live in poverty, where who your parents are does more to determine where you end up economically than in any other developed country, and where the value of work is constantly being degraded while the value of wealth constantly becomes more important.
Oh well, my work here is done.
John Ramos, Kudos.
Thanks GG…we agree. You and the DFL’ers claim the 280% increase in tobacco tax was needed to save the uneducated American smoker…and sold as a “moral” issue. Yet we all know morality can’t be legislated and a waste of time. (Had to smoke you out though to admit it was 280%).
And interesting you’d focus on the tithing issue…only one example of many as to why taxing based on moral issues is wrong. Seems to be a sensitive topic with you…and John. Are you struggling with your spirituality. Let go, let God. It works, it’s sensible.
Oh GG….”An increase from 7.85% to 9.85% is an increase of two percent, not 25%. That’s they way arithmetic works”. – GG, Nov. 24, 2014
Seriously, what grade school did you attend??
9.85% minus 7.85% equals ??? Come on, you can do it. Its OK to use your fingers.
Here’s one study GG..
Revenue Volatility in New Jersey:
Causes, Consequences, and Options
A report prepared by Capitol Matrix Consulting
May, 2012
In part – “New Jersey has experienced a significant increase in volatility in recent years – as measured either by the standard deviation around its long-term growth trend or by its estimated short-term elasticity with respect to personal income. This increase can be linked to two related factors:
1) Increased concentration of income taxes at the top end. Tax payments have become much more concentrated at the top end of the income distribution over time. The share of total gross income received by the top 10 percent of filers rose from 41 percent in 1991 to a peak of 51 percent in 2007, and taxes paid by this group climbed from 58 percent to 73 percent over this same period.
2) Dramatic fluctuations in earnings of high-income taxpayers. The increased income concentration is important because income earned by those at the top of the distribution has historically exhibited much greater volatility than income earned in the lower and middle ranges”.
In addition, high income earners are not fooled by Grubering. For the most part, they are not “stupid American taxpayers” and take legal action to minimize their tax bill, including moving…Darn!
GG, the Red Star article you asked for also..
Minneapolis Star Tribune Editorial Board Warns Legislators Against Higher Taxes on High-Income Earners
March 27, 2013
The Minneapolis Star Tribune has published a scathing denouncement of the proposal to raise taxes on high-income earners.
“The House DFL proposal to double down on an upper-income tax increase, risks launching the state’s top tax rate into an anticompetitive stratosphere. It’s an idea that ought to disappear faster than March snow”.
The paper-of-record’s editorial goes on to warn that higher taxes on wealthier taxpayers is poor tax policy, bringing Minnesota into the same camp as high-tax California and Hawaii:
“That’s not good company for a state that wants to continue to be home to more Fortune 500 companies per capita than any other. Those big businesses aim to attract top talent from around the country. A supersized state income tax for top earners would make their recruitment more difficult, and could cause some companies to ask whether they ought to do their hiring elsewhere”.
The DFL’ers should have thought more carefully about how they decided to collect revenue. The editorial board states revenue should be raised in a way that minimizes economic distortions and doesn’t put Minnesota at a competitive disadvantage. Dayton and his cronies would have done well to follow the Star Tribune’s advice.
Because they didn’t, us “stupid Minnesotans” took away his checkbook a few weeks ago..
No, I didn’t ask for an opinion piece. I asked for data on your assertion that: “Study after study has shown that heavily taxing a sliver of it’s citizens is a highly volatile source of income.”
Facts, not opinion, please.
Sorry GG…didn’t realize you haven’t studied percentages yet…still on pluses and minuses only. If you get beyond + & -, let me know if you need help. I know a great remedial (that means students who are experiencing learning difficulties) teacher.
Another Bible verse that I like is where Jesus talks about Grubering.
Sigh…ok GG, another study:
Revenue Volatility
In California
ELIZABETH G. HILL • CALIFORNIA LEGISLATIVE ANALYST
“Following the boom-bust revenue cycle in recent years, concerns have developed about volatility in California’s General Fund revenues. This brief quantifies the amount of revenue volatility experienced in California during the past quarter century, identifies the main causes of the volatility, and discusses the outlook for volatility in the future.
Key Factors Contributing to California’s Above-Average Revenue Volatility:
Characteristics of the Tax Structure
• The largest tax, the personal income tax (PIT), is highly volatile.
• The progressive rate structure magnifies income fluctuations.
• Volatile capital gains are fully taxed.
In particular, California has become highly dependent on the personal income tax. Specifically, the PIT’s share of total revenues rose from 37 percent in 1979-80 to a peak of 57 percent in 2000-01, before retreating some to 48 percent in 2003-04. The increased dependence on the personal income tax over time is significant because this tax has two features that have contributed to above-average
volatility:
First, it has a highly progressive tax rate structure, with marginal tax rates ranging from 1 percent to 9.3 percent. (don’t mean to confuse you with percentages GG. We know you haven’t grasped that concept yet. You think going from 1 to 9.3 is only an 8.3% increase. So this study might be beyond your intellect). Many view this as a positive attribute from a policy perspective, in that it links tax burdens more strongly to the ability to pay. However, this progressive structure also magnifies the effects on revenues of the earnings volatility of higher income households.
Second, California, unlike the federal government and most other states, does not provide preferential tax rates on capital gains. Full taxation of capital gains has increased California’s dependence on this volatile revenue source relative to most other states.
Revenue volatility has long been present in California’s tax system, but it became dramatic in recent years. Several other factors—in particular, California’s dynamic economy and the state’s current heavy reliance on a highly progressive personal income tax—mean that revenue volatility will remain a feature of California’s current-law tax system in the future”.
Ah. You are talking about economic cycles and tax collections. Fun! The answer is true, true, and unrelated.
Fasten your seat belts, we are going into the real world. Or Grubbering, as Rush Limbaugh and his friends say.
The assertion that income tax is an unsatisfactory form of government revenue reminds me of Winston Churchill’s famous statement, “Democracy is the worst form of government, except all those other forms that have been tried.”
Income tax receipts are volatile, and especially tend to go down in periods of economic contraction. The is especially annoying because government spending tends to rise during economic contraction, due to higher demand for safety net programs and, if people are smart, higher capital spending for stimulus and to take advantage of low contractor bids and low interest rates.
Unfortunately, despite the editorial from the California legislative aid above, economic activity taxes like sales tax (especially if food, clothing, and energy are exempted,) its cousin the value added tax, and various business activity taxes also decrease during economic contractions because — well — there is an economic contraction going on.
Asset taxes like real estate tax or personal property tax also decrease if real time valuation is used, since real estate prices often decrease, total value of property people hold decreases, and there is increased payment default.
Commodity taxes like liquor, tobacco, fuel, and so on and “separation” taxes on things like oil and ore also tend to decrease.
Fortunately, there are solutions to this problem.
At the federal level, we can and do use deficit spending. Deficit spending not only can but probably SHOULD be used during economic downturns, since maintaining government spending is critical to recovery (see Bush Recession: United States versus Britain and Germany, United States 2009-2010 versus United States 2011-2012, Sweden 2008-2012 versus 2013-2014.) In times of economic expansion, we SHOULD then use increased tax revenue to pay down the resultant debt (see Clinton, William.)
Like all human endeavors, it is possible to screw this up. If you drink too much tax cut Kool Aid, you can actually create a situation where you run record deficits during times of economic expansion (see Reagan, Ronald and Bush, George W.) It is critical that tax receipts in flush times be used to cover the down times.
At the state level, we cannot run deficits, bonding excepted. Therefore what needs to happen is that the state government needs to establish fiscal reserves during economic expansion to bridge times of economic contraction. In Minnesota we historically did that until the early part of the last decade, when in what in retrospect was a major error we not only gave away the existing surplus but cut taxes deeply enough to cause ten years of budget crises, ended only when the DFL increased taxes on earnings over $150,000 for individuals and $250,000 for couples by (to avoid confusion in the audience) two cents on the dollar. The deficit went away, money “borrowed” from eduction was repaid, aid to local government was restored, tax refunds for property tax that had shot through the roof during the late unpleasantness were given to middle class people, and a state reserve fund was re-established.
Hopefully, the presence of a reserve will not tempt newly arrived representatives to go crazy, since in Minnesota we really need a reserve fund of at least $3 billion, and preferably $6 billion, to assure future budget stability, and we can only hope to collect that during times like our current state economic expansion.
So the answer, not surprisingly, is that while income tax has its drawbacks, including that no one really likes to pay it, it certainly is better than other choices, none of which can solve the volatility problem posed above.
And the important lesson is, as George R.R. Martin says, “winter is coming.” We can borrow to cover winter at the federal level, but need to start paying it back in the summer, not create a nuclear winter instead. At the state level we need to save proactively. In both cases, maintaining revenue streams is critical, and in both cases progressive income tax is the most effective and most fair way of doing so.
Geeze sorry I missed the fun on this thread. Chasing deer just throws off you off schedule. Ranger47, nice job of not letting all the haters get away with talking points the lefty’s love to throw around. Kissa, at its highest point ever union membership was guessed to be around 30%, in the early 60’s when they started tracking it, the high has been 20%. So in your world view those 2 in 10 workers revolutionized the work force and without unions no one would have a good paying job. I was involved in running a non union shop that was competing with other non union shops in the state. If you were not competitive with wages and benefits they left your shop. The cost of losing good workers and training new people was enough to stay more than competitive. It is called the free market. Our workers voted many times NOT to unionize, that company did well and so did it’s employees. That was not read in a book or talked about in a lecture that was an actual shop that actually existed and both employers and employees did well. Unions, state or fed govt had nothing to do with it….
Ken, we owned a business for 20 years and were non-union but when our competitor businesses on the Range that were unionized raised rates and wages, we did too as did other non-union businesses. It was necessary or perhaps lose some employees. Training even one new employee costs time and money.
You were competing with not only other non-union shops but also union shops. It’s interesting that you think that unions, state or federal government laws and regulations have absolutely nothing to do with businesses and employees doing well.
In the heyday, unions dominated auto manufacturing, steel, aluminum, mining, railroads, trucking, the construction trades, other heavy industry, clothing and textiles, water transport, dockworkers, electronics manufacturing, airlines and plane manufacture, and a few other fields. From their start in the early 20th century, they successfully led that movement to make work in those fields pay what we would describe as a living wage, leading workers out of dollar a day lives in tenements and company towns into the middle class, as well as leading the successful fight for reasonable work weeks and work days, overtime pay, safe working conditions, health care, and retirement benefits.
As you have said, non-union shops in these and related fields had to set wages, benefits, and working conditions that competed with union shops for employees. It is true that in many businesses, especially small employer owned and operated businesses, in the context of working conditions set nationally and locally by unions, workers did not feel it was necessary or beneficial to join unions.
Unions never have had much penetration of white collar and pink collar jobs except for government workers, of agriculture, or of very low wage jobs with high employee turnover. During much of the era of union success, large numbers of people were farmers or farm workers or worked in very small businesses that they owned or worked for in small communities. During the union heyday, government workers were mostly not unionized, with their unionization becoming both legal and common only after unions began to decline elsewhere. Consequently, despite their enormous influence on working conditions and wages, unions probably never did have more than 30% of workers enrolled, if that.
As the power of unions has been broken by a whole series of trends in the US, union membership decreased as people found unions less useful.
In that same period, we have seen stagnation of wages for working class and middle class people, reductions in benefits of all types, and high earners in management and investment classes absorbing nearly 100% of the financial benefits of the great increase in productivity that has continued in the US over those 30 to 40 years without any of the benefits reaching middle class and working people. The value of work compared with the value of capital has fallen continuously in that time.
Meanwhile, elsewhere in the world, unionization has remained strong in Japan, Germany, Scandinavia, and other EU countries. In those countries, worker income has continued to rise, benefits continue to be generous, working hours continue to be much less than in the US. Although those countries right now are suffering from the continued impact of the Bush recession longer than the US, most of that can be tracked to economic policies that have decreased government spending at the expense of economic growth. Over decades, those countries have grown at least as well as the US, and in some cases were doing better following the recession than we were until they decided to shoot themselves in the foot.
Interestingly, the other major country that has undergone collapse of unions is Britain, and interestingly they are the second worst country in the developed world for economic inequality and stagnation of worker incomes.
Of course correlation is not causation. There have been no real experiments with this, but the overwhelming evidence of real world experience is that strong unions are associated with strong middle class growth, weak unions with weak middle class economic growth, and that that remains completely predictable.
As far as “lefty talking points,” in 40 years working in a highly technical field, if I learned one thing it is that data trumps experience, objective trumps subjective, and that believing in myths and cliches in preference to data driven findings is a path to disaster. So far in this discussion, aside from personal anecdotes, talk radio style trash talk, and personal or borrowed opinion, none of the conservative posters have offered any real information at all. My grandma thought that if you went outside with your hair wet you would catch a cold. Now most of us believe colds are contagious diseases caused by viruses. Believing in myths about tax cuts for the wealthy causing economic growth, unions not having any role in working class welfare, and the development of our highly technical world coming from Ayn Rand style business heroes is the same as my grandma’s ideas about wet hair — it might sound sensible, it might even fit with your personal experience, but it is just not correct.
GG – All those words from someone who truly believes raising taxes from 7.85% to 9.85% is not a 25% increase, but a 2% increase. Where’s the credibility?
What a waste of good electrons…
Ken – I happened to be out looking for deer also, but only the first weekend. Wow, what an absence of shots fired, and deer, in our area.
Gerald, As far as I can tell, for some people their beliefs are absolute facts, not subjective opinions so it makes some kind of weird sense that they then automatically believe that other people citing data driven findings are just spouting talking points. One of my favorite tweets which I may have posted before: Overwhelming, inarguable scientific evidence is no match for a guy who “just knows.”
working for over 40 yrs in the real world I have found experience trumps data every time…. Many a person has started a business with all the data and went broke, experienced business folks usually succeeded. The average age of small business owners is at least 45 with 15% of them over 65…. Data trumps experience only in the classroom where it is all theory….. Just the facts….