Watch for some ironic hoopla this week on the 10th anniversary (June 7) of President’ Bush’s tax cuts, the largest federal income tax rate reductions in modern history, and which were preceded in Minnesota by similarly historic cuts in the state’s income taxes.
The main “celebrants” are progressive policy groups who are critical of those tax cuts, and considering the economic picture of the last decade, it’s obvious why the anti-tax, anti-government zealots are not lighting the candles. Chuck Collins, an heir of the Oscar Meyer fortune and a key national leader of several groups seeking to eliminate those cuts for wealthy taxpayers, makes the case in a recent op-ed that the “magical” conservative “one-point plan” for everything has been an abysmal failure on every front, except the enrichment of the already rich.
As outlined in a 10-point analysis published by the Economic Policy Institute, the Bush income tax cuts were overhwelmingly “expensive, ineffective and unfair.” The United States budget went from black ink to red ink in short order, suffered two downturns and twice as many recessions as previous decades, and folks in the top 1 percent got 38 percent of the tax breaks, even as their take of total income and wealth increased dramatically. And you don’t have to take the word of progressive policy groups on ranking the decade. A recent report by Investors Business Daily ranks the last decade as the worst for private-sector wage growth since the 1930s.
Tax cuts can have a positive effect on private-sector growth and no serious liberal economists would argue that tax increases, by themselves, have zero effect on business decisions. But reasonable conservatives also know that the right kinds of taxes and government investments in human capital, research and physical infrastructure are a foundation for long-term growth. Relatively high income taxes and smart investments in those business-building goods and services has been Minnesota’s formula for success, endorsed by moderate Republicans and DFLers for decades.
At the state level, we think one of the most insightful takes on the subject recently was offered by one of Minnesota’s more prominent local economists, Paul Anton, who in a recent Star Tribune op-ed suggested that differences between the states in tax increases and spending cuts have little effect on jobs and economic growth. Recent articles by business columnist Eric Wieffering offer similar hard-headed wisdom on the value of public investments over tax cuts as a business stimulant.
The case for repealing those trillions (at the federal level) and billions (at the state level) of accumulated tax cuts for top incomes seems to grow daily, as federal and state budget shortfalls escalate.