In recent years, we have seen Minnesota slip on a variety of leading indicators of social and economic well being. Minnesota’s economic performance slowed significantly in the mid-2000s, as measured by growth rates for income, GDP and jobs. The income gap that separates the top earners from rest of us has widened. Meanwhile, the wealthiest Minnesotans pay a lower proportion of their income in state and local taxes than lower- and middle-income families.
Even though we know a majority of Minnesotans support making wise investments in people and places to build the state’s productive capacity, political considerations constrain the ability of lawmakers to spend more where it can make a difference. An anti-tax philosophy has contributed to the economic predicament we find ourselves in. And all of this, plus demographic changes over which we have little control, argues for a fresh look at how we raise revenues and invest in our state to encourage economic growth. So why haven’t we made progress on ideas that would be in our best interests? Because first, we have to get past some cherished but erroneous beliefs about taxes.