Preferring Death Over Taxes?

A recent Center of the American Experiment blog post warned us to beware of the “Ides of April,” a reference to Shakespeare’s Julius Caesar. In the play, Caesar was stabbed to death in the Roman Senate by Brutus and other conspirators during the Ides of March. The blog post contends that “most of us have more reason to rue the ‘Ides of April’”—or more specifically, April 15, tax day.

It’s not clear who the “us” is in this blog post, but I assume it’s referring to upper income Minnesotans who absorbed a 2% increase in the tax rate on income in excess of $250,000 (married joint filers) as a result of the 2013 tax act. It speaks volumes of the right’s hatred of taxation that they think that a tax increase is more loathsome than being bludgeoned to death with multiple dagger wounds. In a choice between “your money or your life,” this crowd would apparently choose their money.

Setting aside the conservative ire over the 2013 tax act, let’s look at the facts. After the tax increases imposed through that act, Minnesota’s tax system is still regressive, meaning that high income households pay a smaller portion of their income in state and local taxes than do other less well off Minnesotans. Based on a Revenue Department analysis, the top one percent and the top five percent of all Minnesota households by income will continue to enjoy a state and local effective tax rate that is less than that paid by any other income group in the state—even after passage of the 2013 tax act.

Nationally, the share of wealth concentrated in the hands of high income households is greater today than at any time in the post-WW II era, while effective tax rates borne by the rich are near their nadir. Extremely high income households are enjoying a degree of affluence rarely enjoyed by any other group. In fact, the least civic minded and most narcissistic of the über rich can afford to hire armies of lobbyists and fund right wing spin tanks to foster the myth that they are somehow persecuted.

Based largely on anecdotal evidence, conservatives claim that the high income households—the alleged job creators—are fleeing Minnesota because of high taxes. (Weather is probably a much larger factor driving migration. Beware the Ides of January.) Claims of massive tax flight are contradicted by the fact that job creation, income, and GDP growth in Minnesota are comfortably outpacing the national average. In fact, progressive Minnesota is currently outperforming conservative Wisconsin in economic growth. The economic growth gained through smart investment in education, infrastructure, and other public assets seems to be sufficient to more than offset the impact of an unquantified number of high income households leaving the state due to taxes.

Fortunately, not all high income households are so deluded as to think that reduction in the degree of tax regressivity is tantamount to “class warfare.”  For example, consider the impressive list of “Patriotic Millionaires” who support smart public investments funded through progressive taxation. These individuals, along with the late Paul Wellstone, know that “we all do better when we all do better.”

Posted in Fiscal Policy | Related Topics: Income Tax  Tax Fairness 

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