I just got a copy of Gov. Pawlenty’s letter to Sen. Tom Bakk, the author of the Senate’s Tax Increase Bill. Here’s the text of Gov. Pawlenty’s letter:
Dear Senator Bakk:
In this historically challenging economic time, you have chosen to pursue reckless tax increases on nearly every Minnesota resident.
Minnesotans are tightening their belts and making hard sacrifices to manage their family budgets. State government needs to do the same. Now is the time to reduce government spending and prioritize programs, not increase taxes.
I am very concerned that your bill [SF2074 the Omnibus Tax Bill] embraces tax policies and practices from the past, rather than positioning our state for success in a hyper-competitive and rapidly changing world.
Your proposal not only raises $2.2 billion in taxes on every hardworking Minnesotan, it gives Minnesota the dubious distinction of having two of the top ten income tax rates in the country. The bill stifles job creation by escalating taxes on job creators, as 92 percent of businesses pay their business income through the individual income tax system. This bill has other troubling provisions such as the increase in the statewide property tax paid exclusively by businesses, and the 30 percent tax on interest income that would tighten credit access in a market already under extreme pressure. In addition, the bill repeals levy limits enacted just last year, which will only lead to higher property taxes.
I also find it troubling that you have included a provision in your bill that allows for an undefined increase in the Health Care Provider tax. the legislature has been in session for nearly five months and this lack of transparency regarding your planned revenue increases is irresponsible.
I appreciate that you included a few of my budget recommendations, including the upfront capital equipment exemption and the angel investment and Small Business Investment Tax Credit. However, your bill ignores many other important recommendations including reducing the business tax rate, Section 179 expensing, the reinvestment tax credit, capital gains exemption, and Green JOBZ. This session needs to be about more than just solving the budget deficit. We need to also focus on Minnesota’s economic future.
I have serious concerns about your bill. As it stands, it will be vetoed. I urge you not to raise taxes on the citizens of Minnesota in these challenging economic times.
First off, Sen. Bakk’s legislation is a dead-man-walking bill. It’s dead even before the House considers it. Let’s remember that it barely squeaked through a veto-proof Senate. That’s because 11 DFL senators voted against it. Sen. Bakk’s bill won’t get vetoed because it’ll be gutted in conference committee.
Generally speaking, the DFL tax increases aren’t going anywhere, especially after Rep. Pelowski’s attack of Ann Lenczewski’s Tax Increase Bill. Sen. Bakk and Rep. Lenczewski are bucking the DFL’s rank-and-file, who are opposing these increases on electoral, not ideological, grounds.
Gov. Pawlenty’s letter, coupled with Rep. Pelowski’s quotes, really puts the DFL’s tax increase agenda on the ropes. There’s no doubting that the DFL will try sticking to their increase agenda as long as possible. Likewise, there’s no doubting that Gov. Pawlenty, the House GOP and alot of DFL legislators from swing districts will oppose the DFL leadership’s agenda.
Gov. Pawlenty’s letter just emphasizes the DFL’s predicament.