Comments on: Minnesota surging https://michiganfuture.org/2015/03/minnesota-surging/ A Catalyst for Prosperity Wed, 18 Mar 2015 21:02:05 +0000 hourly 1 By: Lou Glazer https://michiganfuture.org/2015/03/minnesota-surging/#comment-7995 Wed, 18 Mar 2015 21:02:05 +0000 https://www.michiganfuture.org/?p=6464#comment-7995 In reply to RP_McMurphy.

Thanks for the 538 link. Hadn’t seen those ratings before. Not sure there is much evidence that Michigan has had corrupt spending in transportation and education, even revenue sharing that are important to future economic growth. What we have had for two decades is a belief that lower taxes mattered more than those kind of investments to growing the economy. Minnesota took––and is still taking––the opposite path. The results are pretty clear who has and is doing better. Despite all the predictions of a Minnesota collapse.

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By: Lou Glazer https://michiganfuture.org/2015/03/minnesota-surging/#comment-7994 Wed, 18 Mar 2015 20:54:04 +0000 https://www.michiganfuture.org/?p=6464#comment-7994 In reply to Don.

Agreed. What is most noteworthy about Minnesota is not their recent tax increase. But that for the last two decades while nearly every other state has been cutting taxes supposedly to grow the economy they didn’t cut taxes. Somehow they have kept a bipartisan commitment to making public investments rather than giving away their tax base. That over the long run has served the people of Minnesota very well.

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By: RP_McMurphy https://michiganfuture.org/2015/03/minnesota-surging/#comment-7987 Wed, 18 Mar 2015 03:09:14 +0000 https://www.michiganfuture.org/?p=6464#comment-7987 In reply to Don.

“First, there is always a chance that the state government could be irresponsible or incompetent, squandering or wasting the additional tax dollars.”

Here’s a good guide to the likelihood of that scenario: http://fivethirtyeight.com/datalab/ranking-the-states-from-most-to-least-corrupt/

Michigan could definitely raise income taxes; Minnesota collects more than $2 billion more despite having a little more than half of Michigan’s population.

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By: Don https://michiganfuture.org/2015/03/minnesota-surging/#comment-7982 Tue, 17 Mar 2015 17:57:42 +0000 https://www.michiganfuture.org/?p=6464#comment-7982 Minnesota really seems like they are in a sweet spot, already providing a high level of services, especially in education and infrastructure. Apparently the higher level of taxation is worth it to provide these services. I do think that higher taxes can lead to better services and economic growth, but we also have to be careful. I see at least two things that could go wrong and therefore we have to watch out for them when raising taxes to provide services. First, there is always a chance that the state government could be irresponsible or incompetent, squandering or wasting the additional tax dollars. Minnesota seems to be doing a good job at managing its higher tax revenue, but some other state may not do as well. Second, economists often talk about marginal returns on investments. This means that the benefit of each additional dollar amount of investment will eventually yield less returns. Minnesota has proven that their marginal income tax rate of 9.85% is not yet too high. But at some point it could get too high, so Minnesota, Michigan or any other state has to monitor the benefits vs the cost of tax increases. Minnesota has a surplus, so they can increase services without a further tax increase at this time. In Michigan, we do not have a significant surplus, so we probably will need to raise taxes somewhere if we want better schools and roads. I would prefer a higher gasoline tax to repair roads, but that does not seem to be an option right now. I also do not see any possibility or raising the state income tax right now, so I plan to vote in favor of the sales tax increase. I think more infrastructure funding is needed which will probably require some revenue increase.

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