Taxes? Cuts? To economy, it's all the same

  • Article by: PAUL ANTON
  • Updated: May 20, 2011 - 8:51 PM

Theory and evidence suggest that the state's fortunes will be little altered by budget decisions. But more data would be good.

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vorenus2May. 20, 1111:04 PM

"a major point of contention seems to be what is best for the state's economy". - The answer is pretty easy! Quit spending more than we take in and stop with the class warfare already! Raising taxes on anyone will not solve what is wrong in this state - out of control spending by liberals.

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ironguruMay. 21, 11 8:24 AM

Paul's viewpoint makes sense but, I'm sure the one percenter's will disagree!

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kleindropperMay. 21, 11 8:29 AM

Reducing state spending positively impacts the economy because the money is then kept in private sector hands for spending OR investment based on demand. State spending is directed toward the whims, pet projects, and payoffs of the politicians, much of which ends up down the drain. In the private sector, the market maximizes the efficiency of the direction of dollars.

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my4centsMay. 21, 11 9:05 AM

Part of Mr. Anton's argument for higher taxes as opposed to simply reduced spending is that "some portion of the taxed dollar would have been saved." And this is makes higher taxes a better alternative? We need more savings in this country. Not only does that lead to a more stable economy because individuals are prepared for temporary setbacks, but it also provides investment capital for those who are willing to take some risks with new or expanding businesses. The LAST thing we need is a new state agency to do economic research (or anything else). If these types of things have never been researched then we should disband much of the MN Dept. of Revenue. They spend too much time and money compiling tax incidence studies that they then discount themselves because there are many variables that are not included.

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jdelmarMay. 21, 11 9:29 AM

Well, I'm all for looking at a cost/benefit study of state programs but having the departments do it seems a lot like a cost/benefit analysis of the hen house authored by the fox.

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jdelmarMay. 21, 11 9:37 AM

And, I'm positive there are state initiatives where all experts agree that the benefit is not justified by the cost. The problem: the cut is going to gore someone's ox. The solution: legislators with a little courage.

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briechersMay. 21, 11 9:50 AM

Mr. Anton says that if you shorten the time horizon long enough…he think 2 years…public policy choices between raising taxes or cutting spending doesn’t make a difference. This is clever but not very useful unless the government is planning to go out of business in 2 years. This is like saying that if we cut product development to zero for the next 2 years, it will have very little impact on sales. Probably true, but dumb. Staying with the analogy, can we just turn product development back on in 2 years? Will engineers will flood back to the company and pick up right back where they left off…I don’t think so. If we raise taxes in Minnesota, will investors just assume that taxes will go back down in two years and not affect their investment decisions over the next 2 years? He cleverly says, “I’m not aware of any careful studies that support” the contention that higher taxes will negatively affect the long-term economic growth. Really…he has been on the council of economic advisors for 26 years and it never occurred to him to go look to see if there are any “careful” studies out there? I hope this was a non-paid position. His commentary creates more confusion than clarity to a complex problem. I can imagine people quoting it without referencing the 2-year caveat and/or excluding his personal disclaimer about any studies on the long-term economic impact. Good grief Charlie Brown.

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peterconnorsMay. 21, 11 9:52 AM

Paul Anton's article was illuminating and thoughtful. I think his suggestion for study should be taken up. In the meantime perhaps politicians of both sides should drop their arm chair economic analyses since Anton shows they are not supported by the existing research. That gets us down to what the real issue is. What services should government provide, how should they be delivered, how should they be evaluated and how much should be spent on them? There is plenty to keep politicians busy within that realm with no need for rhetorical forays into economic science or divisive social issues.

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cstoney48May. 21, 1110:11 AM

Paul Anton is much too reasonable as demonstrated by several of the ideological comments made above. Neither the Rabid Right nor the Loony Left will heed his recommendation. It interferes with their unshakable delusions about the world.

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Willy53May. 21, 1110:18 AM

Mr. Anton, I disagaree with your assertion that raising taxes to stimulate the economy through infrastructure spending (transportation and higher ed) has a non-effect on the economy. Perhaps in the short term but long term those types of expenditures have been shown to have tremendous paybacks as well as short term stimulative effects. Would you rather pay unemployment or pay money into jobs producing infrastructure. There is some trade off there. The studies showing the effects of tax supported public spending on infrastructure (or even putting money in the system through the unemployed) vs. the stimulative effects of tax cuts show a large difference. The former actually multiplies the effect while the latter doesn't quite return the money invested. Those are all the facts I need. Mr. Anton's approach is much the same as Obama's, Bush's, Clinton's and Reagan's and has produced a consumption economy with a middle class no longer able to consume. Prolonged recession here we are. What we really need is an entirely new perspective free of the eroneous assumptions used by former Fed Chairman Greenspan who has tragicly admitted he was completely wrong.

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