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Tax cuts make some rich uneasy

Date Published: 07/12/2006

Author: Rob Zaleski


"Rich Minnesotans want to pay more taxes"

No, that's not a headline from The Onion.

But, believe it or not, it is a headline that appeared over a recent story in the Minneapolis Star Tribune - a story that's generated considerable controversy in the Land of 10,000 Lakes and has led some to suggest that perhaps greed isn't as rampant in this country as many of us presume.

OK, the actual headline said "some rich Minnesotans want to pay more taxes." But some in this case means more than 200 prominent individuals, all of whom support the notion being promoted by the nonprofit think tank Growth & Justice that the state's wealthiest people should pay higher taxes to fund government programs.

And just in case anyone doubted its sincerity, the group took out a full page ad in the Star Tribune on June 22 detailing why it supports the idea.

Among the signers: Four members of the famous Dayton family; business leader Jim Pohlad, the son of Minnesota Twins owner Carl Pohlad; former Minnesota senator and Democratic presidential candidate Walter Mondale, his wife Joan and son Ted.

Moreover, another 200 well-to-do Minnesotans signed up within days after the ad appeared, notes Angie Smithmier Eilers, director of research and policy for the progressive think tank, which was created four years ago by Joel Kramer, ex-publisher of the Star Tribune.

(Smithmier Eilers says it was "incredible timing" but a "total coincidence" that the ad appeared just days before billionaire investor Warren Buffett announced he was distributing $31 billion of his stock to the Bill and Melinda Gates Foundation.)

In brief, the "Invest for Real Prosperity" proposal calls for raising state income taxes a total of $2 billion a year in a progressive manner. Households making more than $275,000 would pay an extra 2 cents on every dollar earned, while taxes for those making less than $45,000 would stay the same. Taxes would rise slightly for those in between.

Why would the rich support such an idea?

Because the group believes that Minnesota is slipping and sorely needs the additional money to fund education, health and transportation initiatives, Dick McFarland, retired CEO of Dain Rauscher and a Republican, told Star-Tribune columnist Lori Sturdevant.

And because wealthy people can afford to pay more taxes, said McFarland, who pointed out that his federal tax bill has dropped by more than 40 percent because of the Bush tax cuts.

"The fact is, we're not paying our fair share," he said.

To be sure, not everyone was thrilled by the idea, says Smithmier Eilers, who got her Ph.D. in educational policy and administration from UW-Madison in 1998 and is a 1981 graduate of McFarland High School.

"The folks who believe in paying their taxes and understand the role of taxes in a civilized society were elated and energized," she says, adding that it would be interesting to see how many wealthy Wisconsinites would support such a proposal.

"And those who can't stand the idea of giving up another penny or two pennies on the dollar were a combination of sarcastic and a little caught off guard, I'd say. You know - how dare anyone would bring up the "t" word.

"The 't' word has become something you don't discuss any longer in polite conversation. And our group clearly believes it's times to bring up the 't' word again."

Not surprisingly, no one was more sarcastic than Tim Pawlenty, Minnesota's Republican governor.

Pawlenty disputed the group's contention that the state needs additional revenue. He also issued a "friendly challenge" to those who signed the ad.

"I invite the people on the list to send in a voluntary contribution to the state, above and beyond the taxes they already pay, of $250,000 to $2 million each," he said in a statement. He added that he would "personally pose with each of them for a commemorative photo in the governor's Reception Room accepting their contribution and issue them a certificate of appreciation."

Smithmier Eilers says the group wasn't fazed by the governor's response and is hoping the initiative becomes a hot topic in the state's gubernational contest later this year. But even if it doesn't, "it certainly is our plan to inject this into the political discourse nationwide."

Politicians in both parties may cringe, she says, "but we're saying that it's OK and appropriate to use the 't' word."

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