Today, Gov. Tim Pawlenty delivered his State of the State Address. His speech focused on eliminating the current deficit, creating jobs and re-inventing government. His greatest emphasis, though, was on job creation. The cornerstone of Gov. Pawlenty’s job creation plan is lowering Minnesota’s business tax rate. That’s one of the things that won’t sit well with the DFL.

As part of his Job Recovery Act, Gov. Pawlenty proposed cutting “Minnesota’s business tax rate in half, from the current 9.8 percent business tax rate to 4.8 percent over the next 6 years.” Telling a DFL legislator that the way to create jobs is by cutting the marginal tax rates for businesses by 50 percent is like flashing a wooden stake in front of a vampire. They surely won’t like this section of his speech either:

Imagine a typical Minnesota kitchen table. A mom and dad have just tucked the kids into bed with a kiss and a prayer, and they come back to the table to confront economic reality.
On the table are bills, notices and a notepad with a budget that’s tighter than it’s ever been. Hope and fear are also at the table.
How do we pay these bills? How do we fix the car? How do we pay this mortgage? How are we going to afford college or even retire someday?
The same emotions, concerns and urgency at that Minnesota kitchen table must be at all the tables we sit at here at the Capitol, the budget hearing table, the agency tables, and the negotiating tables.
And this day, on behalf of Minnesotans sitting at their kitchen tables, I ask each member of the legislature:
Please don’t add to their burden by increasing their bill from government.
Please don’t take more of their hard earned money.
Please don’t raise their taxes.
The couple at the kitchen table begin by setting priorities. What’s most important? What can we afford? What do we give up? How can we do things differently? We need to ask and answer the very same questions.
The budget I’ll be proposing in just a couple of weeks will rely on significant reductions in state spending, as well as using other resources currently available. The details of that budget will be presented and debated fully very soon. Today, I’m going to focus on the strategic steps Minnesota needs to take to prepare for the future.

Gov. Pawlenty’s job growth agenda is aggressive in nature. Here’s another part of his job growth agenda that’s sure to get alot of attention:

These days, lack of financing is a major barrier to small business success. To jump start small business job creation, I’ve proposed a 50 million dollar package of tax credits that will create over 100 million dollars in new investments.
In addition, I’m proposing a 25 percent refundable tax credit for small business owners that re-invest in their business quickly in order to stimulate our economy.
I’m also proposing a capital gains exemption for qualifying investments in small Minnesota businesses. This will encourage investment in Main Street and help grow jobs.
And here’s another thing, companies shouldn’t have to do a bunch of paperwork so they can qualify for a bureaucratic rebate from the sales tax they pay on equipment. Let’s just give them a 100 percent exemption from the sales tax – right away when they buy the equipment.

There can be no mistaking Gov. Pawlenty’s plan with the albatross being cobbled together in our nation’s capitol. Gov. Pawlenty’s investments will actually spur increased entrepreneurial activity. The DC stimulus package just spends alot of money on the special interest’s wish lists.

The best way to compare the DC stimulus package and Gov. Pawlenty’s package is with a firearms metaphor. The DC package isn’t focused on anything, kind of like shooting a sawed off shotgun. After pulling the trigger, there’s alot of lead flying but it’s flying in so many directions that you don’t know what will get hit.

Gov. Pawlenty’s package is the opposite. It’s focused like a target rifle with an expensive telescopic sight. It’s focused on giving small businesses incentives to re-invest in their company. It’s focused on saving these businesses money so they hire more employees. It’s focused on giving small businesses the incentive to start a job growth revolution.

This is welcome news for me. Last fall, I talked frequently about the DFL’s habit of raising taxes to pay for another bonding bill which would then turn into public works projects. While there’s always a need for public works projects, there’s been a veritable famine for increased entrepreneurial activity for longer than I’d like to remember.

Gov. Pawlenty’s job growth program will create jobs by letting small businesses keep more of their money and by giving them incentives to re-invest in their companies.

A number of legislators have told me that we “can’t build a fence around Minnesota to keep jobs here”, meaning that we have to give them incentives to stay here and give businesses the incentive to move here. Lowering the marginal tax rates for businesses from 9.8 percent to 4.8 percent is a fistful of incentives.

That’s what happens when politicians take a focused approach to dealing with the economy.

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