When Gov. Dayton visited St. Cloud on Tuesday, March 26, he said some things that are getting challenged. Jason Bernick, a board member of the Minnesota Chamber of Commerce, issued a statement challenging some of Gov. Dayton’s statements. Here’s part of Mr. Bernick’s statement:

After Teresa Bohnen pointed out concern by the business community on the impact of Governor Dayton’s 4th tier income tax on S-Corps I felt his response was disrespectful. He implied that businesses are “OK” with disparities in tax rates of businesses compared to middle income earners. He called the Minnesota Chamber destructive. Then he implied that Teresa and other businesses were unrealistic about the facts.

I don’t mind having debate on what the facts are but I’d like to understand the source of the Governor’s facts as they are in conflict with the MN House research department, I have attached a 2011 document on S-Corps. He stated that only 6% of businesses in Minnesota are S-Corps, when the research states 16.5% (96,000) businesses file under S-Corp. If he in fact “cares about all businesses in Minnesota” then he must realize that his proposal will affect 96,000 businesses and their ability to maintain current employment levels (Jobs). Even if the Governor’s 6% figure is correct, the higher rate won’t impact the “wealthy” Minnesotans that currently are getting loopholes in order to pay the lower rate.

That’s the diplomatic, polite way of putting things. I won’t be that diplomatic. First, Gov. Dayton’s statement wasn’t accurate. Gov. Dayton said 6% of Minnesota’s businesses are S-Corps. In fact, 16.5% of Minnesota’s businesses are S-Corps. That’s especially important considering the fact that S-Corps get taxed as though they were either single people or as married couples filing jointly.

Those businesses would potentially be subject to Gov. Dayton’s proposed income tax increase on “the wealthy.” A healthy percentage of these taxpayers would consider themselves blue collar workers. They’re people who own a retail outlet or a construction company. They might do landscaping or commercial lawn mowing.

They’re the types of people who work all day at their day job, then come home at night to do their books and get their equipment ready for the next day’s assignments.

These entrepreneurs frequently work 6 days a week, often working 50-60 hours a week. They’re the people that Bill Clinton once described as people “who work hard and play by the rules.”

That’s rather stunning. The people that Bill Clinton described as working hard and playing by the rules are the people Gov. Dayton and President Obama think aren’t paying their fair share.

That isn’t Bernick’s only disagreement with Gov. Dayton. Here’s another point of contention:

As to the Governor’s implication that business owners are “OK” with paying lower rates than the middle class, I find that offensive. It must be some sort of loophole that’s creating that environment and creating a new top rate won’t fix loopholes. It will only make it harder for small businesses to survive or maintain a Minnesota presence. For the record, I’m not “OK” with the wealthy paying a lower rate than the middle class. We already have progressive rate scale in Minnesota and, at the federal level, this progressive scale is extremely burdensome for small businesses.

That’s extremely disrespectful. Though Mr. Bernick will be more respectful, I won’t hesitate in arguing that Gov. Dayton’s language was provocative, misleading and unfitting for a man who’s supposed to represent all Minnesotans.

Gov. Dayton’s incendiary language won’t help create a better Minnesota. They’re creating a more divisive political climate in Minnesota, which certainly isn’t productive. That point isn’t lost on Mr. Bernick:

I’ve often heard Governor Dayton say that “you’re entitled to your own opinion but you’re not entitled to your own facts.” I have a great deal of respect for Governor Dayton as he has always been a good listener who has maintained a respectful discussion. However, since the beginning of this session, I have noticed this quality has been degrading and becoming disrespectful in Governor Dayton.

Gov. Dayton has the votes to pass his tax increase proposals. The question he should ask himself is whether it’s counterproductive to raise taxes. With the economy just starting to recover, his tax increases will cause businesses to postpone hiring or move to another state.

If Gov. Dayton’s proposed tax increases hurts Minnesota’s economy, he and the DFL will own that failure. Politically speaking, he’ll be the one who’ll take the biggest hit. That’s because Gov. Dayton and the DFL legislature will own Minnesota’s economy at that point. They won’t be able to blame anyone for their policies.
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4 Responses to “Gov. Dayton, business community at odds on tax increases”

  • Chad Q says:

    What did we expect from a guy who has never held a private sector job and has his money in an income tax free state?
    As for Dayton being a good listener, is he listening or just drifting off in a day dream? I would bet the latter happens more than the former.

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