Letter to the Editor: Letter writer misses the point of Mueller position

Published 6:30 am Saturday, March 13, 2021

In the March 6 edition of the Daily Herald, a reader accused State Rep. Patricia Mueller of spreading false information concerning Gov. Walz’s proposed tax increases. Clearly, the reader has completely missed the point of Rep. Mueller’s position on this issue.

That point is that Gov. Walz’s taxes are unnecessary (MN state government now a projected surplus), and regressive (costs will fall of Minnesotans least able to pay) at a time when many Minnesotans are struggling to recover economically from the effects of COVID.

It is well-understood by economists, policy-makers, and yes, even politicians, that the person or business paying the tax does not necessarily bear the actual burden of the tax. In other words—the guy who writes the check is not who pays the price.

This is such an important issue that every two years, our Minnesota Department of Revenue publishes a report called the Minnesota Tax Incidence Study, which details this effect. This report is frequently cited in the rhetoric of both parties—and in this case by Rep. Mueller—when the subject of tax increases is debated in the legislature.

The details of the study are beyond the scope of this letter, but the general conclusion is: Businesses don’t pay taxes—they simply act as efficient tax collectors for the state. The cost is paid by people. And a substantial portion of business taxes fall on employees and consumers in ways that are not readily apparent— higher prices, lower wages, and slower job creation. A similar, though somewhat weaker case can be made for the effects of higher income tax rates on high earners.

The bottom line: Gov. Walz’s proposal takes tax money from Minnesotans, passes it through the state government bureaucracy (which first takes a sizable cut for itself and its friends), and then gives it back to Minnesotans. A better solution would be to simply ‘do no harm.’ Eliminate the middleman. Let Minnesotans keep their money and get the state government out of the way.

Readers who are curious for more details should read two recent articles: “Taxing the rich is trickier than it seems”—D. J. Tice — Star-Tribune—Jan. 30, 2021, and “Walz’s ‘tax-the-rich’ plan doesn’t just tax the rich” — Peter Callaghan — MinnPost — Jan. 29, 2021. These are not just GOP talking points. Both these publications are decidedly left-of-center and are generally supportive of DFL/Walz positions.  Nevertheless, they both conclude that it is not just ‘the rich’ who will pay Gov. Walz’s proposed new taxes.

Dennis Schminke

Austin, MN