Duluth News Tribune: A Thriving Middle Class Will Put Minnesota on Path to Success

A­ News Tribune editorial on Aug. 29 (Our View: “Don’t die in Minnesota — it’ll cost too much”) left out important information about a new gift tax the Minnesota Legislature passed this year as part of our balanced budget. Most importantly, the editorial reached the wrong conclusion about the best way to grow Minnesota’s economy. A thriving middle class, and not multimillionaires alone, is what is needed to put Minnesota on the path to success.

The editorial failed to mention who will pay the new gift tax: those fortunate Minnesotans who have the wealth to give away more than $1 million. This point bears repeating. The first $1 million in gifts any Minnesotan makes may be transferred tax-free.

That said, we all value the hard work and innovative thinking that contributed to the success of so many Minnesota multimillionaires. We want them to stay here and continue their contributions to our state. That is why the larger argument made in the editorial was so disrespectful to the vast majority of successful Minnesotans who stay and enjoy Minnesota’s high quality of life into retirement.

The editorial repeated the unsubstantiated claim that the multimillionaire gift tax will lead Minnesotans to flee our state in droves. At the editorial board’s urging, I reread the Center for the American Experiment study that was relied upon to reach this conclusion about “tax flight.” The study actually acknowledged that “people move for all sorts of reasons,” including (in the case of Minnesota) warmer weather. That is confirmed by a host of other economic studies showing that tax rates have little correlation to migration patterns. This is all part of the myth often trumpeted by those seeking to protect the wealthiest special interests that the way to grow our economy is from the top-down instead of from the middle-out.

Let’s also acknowledge that people who can give away more than $1 million have not been suffering over the past decade. Since the recession ended, around 100 percent of income growth has been captured by the top 1 percent. Instead, it has been the vast majority of Minnesotans in the middle who have paid more. Cuts to schools, higher college tuitions, property tax increases, and more out-of-pocket health-care costs are the direct middle-class pocketbook impacts resulting from choices our state made over the past decade while protecting the very wealthiest Minnesotans.

The good news is that in the last session we made a change. We chose a more balanced approach, including asking the wealthiest Minnesotans to pay a little more. As a result, we made significant progress, and middle-class Minnesotans will reap the benefits.

We balanced our state budget without gimmicks such as borrowing from schools, and already our state’s credit outlook has been upgraded due to our state’s “strong fiscal management.”

We invested in education at all levels, including all-day kindergarten for every Minnesota child. We know a world-class work force will help Minnesota’s economy thrive in the future, and our investments will help put our kids ahead of the curve.

We froze college tuition for students. After a decade of tuition hikes and mounting debt, Minnesota college students and families will receive needed pocketbook relief.

We reduced property taxes for Minnesota families. Property taxes are projected to decrease for the first time in a decade, thanks to the property tax-relief measures we passed in this budget.

Opponents to the budget we passed are free to argue against a multimillionaire gift tax. But it’s only fair they argue that tax-free multimillion-dollar gifts are a higher priority than property tax cuts for middle-class Minnesotans, more education funding for our kids, or tuition relief for our students. It is a matter of priorities. This year, our priority was investments for a stronger middle class, and we in the Legislature believe Minnesota’s economic future is stronger because of that choice.