After checking numerous articles, that’s the consensus of the various reporters. Here’s one such article:

Governor Pawlenty says Minnesotans are concerned about a fragile economy, and that’s more reason than ever to avoid tax increases. Pawlenty delivered his State of the State speech at the St. Cloud Civic Center Wednesday morning. The Republican governor is using the address to highlight several proposals he’s already put before the Legislature.

Pawlenty also added a new proposal to the mix: a special commission to recommend business-friendly tax changes that would drive job growth and economic activity. Pawlenty is also reminding lawmakers that the state is looking at a projected budget deficit. He says he won’t hesitate to use his veto to hold down taxes and spending.

Here’s the Pi-Press’s Bill Salisbury’s said:

Faced with a budget shortfall and a skeptical Democratic Legislature, Republican Gov. Tim Pawlenty proposed only a few modest initiatives in tax policy, education reform and energy development in his State of the State address here today.

Pawlenty devoted most of the speech to his previous themes, such as holding the line on taxes and spending and changing the way we pay for health care.

In his only new initiative, the governor announced he would create a “21st Century Tax Reform Commission” focused on improving the state’s job climate. He will fill it with entrepreneurs, investors and others experienced in creating private sector jobs.

“We need to reduce taxes and regulations that discourage job growth, income generation, investment, entrepreneurial activity, research and exports,” he said. “We’ll need to do that in a manner that also leaves us with a state budget in stable condition.”

Here’s the opening paragraph of Scott Wente’s article in the WC Trib:

Gov. Tim Pawlenty praised Minnesota’s agriculture and mining sectors and reiterated his opposition to tax hikes in a speech Wednesday that some lawmakers thought lacked a plan to address the state’s lagging economy.

Here’s Sen. Pogemiller’s reaction to Gov. Pawlenty’s 21st Century Tax Reform Commission:

But Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said the state has
conducted many tax studies in recent years, and policymakers don’t need another one to know what to do. “Continually admiring the problem is not the most important thing to do,” he said.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said lawmakers already know how best to improve the tax system, including by closing corporate tax loopholes.

“We don’t need to study the issue any longer,” Pogemiller said, though he added that the Legislature will go along if tax committee leaders wish.

Is Sen. Pogemiller saying that the only thing that needs to bring Minnesota’s tax system into the 21st century is to close one loophole? I might be wrong but it sounds like Sen. Pogemiller is arguing for the status quo. I’d love to hear Sen. Pogemiller explain how closing tax loopholes encourages entrepreneurial activity or improves the job climate. I’m willing to see if Sen. Pogemiller gives a coherent explanation on his beliefs but I’m not holding my breath on that.

Look at the different messages that Sen. Pogemiller & Sen. Senjem delivered after the speech:

“If we can’t grow Minnesota business we can’t sustain all the services that government wants to do and perhaps needs to do,” said Senate Minority Leader Dave Senjem, R-Rochester.

But the proposal of a tax commission fell flat for Senate Majority Leader Larry Pogemiller, DFL-Minneapolis.

Pogemiller said the state’s tax system has grown increasingly less fair by forcing property tax increases on homeowners, renters and businesses and by failing to close corporate loopholes.

“I think continually admiring the problem is probably not the most productive thing to do. Anybody can cut things. It takes creativity and leadership to bring revenue to the table,” Pogemiller said.

I’ll respectfully disagree with Sen. Pogemiller. It doesn’t take “creativity and leadership to bring revenue to the table.” All it takes is an insatiable appetite for adding additional burdens to families who are already hurting.

In fact, I’d argue that keeping tax rates high has an adverse effect on our economy. Here are some ways in which high marginal tax rates hurt Minnesota’s economy:

• High tax rates are ruining Minnesota’s ability to attract new businesses into the state,
• High tax rates are discouraging existing businesses from investing in their business.
• High tax rates reduce a business’s profits, all but eliminating their motivation to expand.

Sen. Senjem is right on the target. The key to increasing revenues is growing Minnesota’s economy, not increasing the tax burdens on Minnesotans, especially when the cost of everything else is rising. Minnesota’s tax system has created a lousy business climate. It’s been that way for decades. In the past, we’ve been able to overcome it by giving people a better education & by making quality of life arguments. That worked in the 1960’s, 70’s & 80’s.

That isn’t working in the 21st century because other states are offering lower tax rates while offering high quality education options. The other thing that’s likely happening is that Minnesota’s college graduates are being hired by businesses in other states.

Until we scrap the DFL’s tax increase mindset, we won’t be competitive in creating new businesses & new wealth.

Technorati: Taxes, Economy, Tim Pawlenty, Dave Senjem, MNGOP, Tax Increases, Larry Pogemiller, DFL