Like a bad meal, brought up again, the Republican dominated Senate repeated the old myth that business tax breaks will create jobs (“Minnesota GOP proposals would phase out state property taxes for businesses”; Pioneer Press 3/21). There are only three things wrong with this claim: it is unproven … it damages our state’s financial health … and it is (as frequently the case) being proposed by legislators with little or no real life business experience.
Let’s start with the latter claim, because everything else following may have more credibility. I DO have real life business experience – like more than 50 years of running my own businesses. After serving in the USAF for 3 years active, and having gone to flight training, af friend of mine owned an advertising agency, and advised me that his largest account sold communications equipment to the Air Force. He asked me to join him. A few years later I became a partner in my own agency, and owned several more over the decades. From that day on I have been entrepreneurial, my own boss, and a quintessential small businessman. Additionally, I have owned small businesses in the aforementioned advertising, real estate, health care – and at 79 still own and operate my own successful businesses today. I make payrolls, put my own capital at risk, and pay taxes gladly when I make a profit (more about that later).
Julianne Ortman (R-Chanhassen, and Senate Tax Committee Chairwoman) who is spearheading tax breaks for business, has spent virtually all of her professional life as an attorney and/or in government service. Nevertheless, she stated: “If you’ve got business with more income … not paying taxes…they are going to invest it. That’s the kind of economic activity that will grow our economy”. Not necessarily so Senator.
To begin with, for most business people, taxes absolutely do not drive business decisions. High on the list are marketing, staffing, business practices, product/service development, etc. Taxes on a business person’s agenda are far down the list. Taxes never impeded me – or encouraged me – to change my marketing or growth goals and strategy. It is simply a myth that they drive business decisions.
Ortman further stated business tax breaks would be a huge benefit for job creators, but admitted that it would be a deficit adding move. Well, Minnesota cannot afford more deficit adding legislation. Moreover, Minnesota, which conservatives have complained about for decades as a “high tax state” has done quite well in job creation without further tax reduction. As of January 2012, we were the 8th best state in terms of unemployment rate; obviously among the most robust job creators in the country. In fact, over 32,000 new jobs in the past three months, without the GOP added tax breaks. The fact is there is no correlation between taxation and jobs. Some of the states better than Minnesota (i.e. Vermont) actually have higher tax rates; some well below us (like Nevada or Mississippi) have low, or no, state income tax, yet their economies are in the tank. To accept the proposition that lowering taxes will create more jobs is simply a false assumption. Frankly, at best it is a trite political sound bite; at worst, it has no basis in fact, As previously stated, it is an ongoing myth.
Earlier I stated I “pay taxes gladly”. Well none of us really like to pay taxes, but there are definite advantages to taxation that do help a business grow and succeed. That’s because what businesses must have for success are an ample well educated work force. They need solid transportation, and easy access to markets beyond their location – domestic and foreign. They desire amenities that will allow them to better enjoy life with the fruits of their labor. They want good schools; and strong professional police and fire protection for their home and family. And an effective government at state and local levels. All these take money. Taxes! That’s what attracts business more than token reduction in taxes.
The bottom line is this. As a long term, successful, and experienced small businessman, I resent being told what is good for me by a bunch of politicians who know not of what they speak…have never had to make a payroll…are basing proposals on political positions rather than factual suggestions that might have merit for small businesses….and, in fact, are proposing policies that might actually be harmful to such businesses. Now you have heard from an experienced, long time small businessman about the realities of taxes and job creation. The question then becomes…are you listening, Senators?
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