In his final State of the State address last week, Minnesota Governor Tim Pawlenty said “our first priority is good jobs.” In a state that has the third highest corporate income tax in the developed world and an unemployment rate of 7.4%, Pawlenty has found the right solution: cut taxes on job providers.
In 2008 and 2009 the governor had proposed similar cuts to business taxes, but this year Pawlenty outlined a more specific and aggressive plan, noting that “we need to face the facts: Minnesota’s tax system is costing us jobs.” Pawlenty’s plan offers:
- A 20 percent cut in the corporate tax rate.
- A 20 percent exclusion from taxes for small businesses.
- A tax credit for “angel investors” who provide money to startup companies.
- A supercharged research-and-development tax credit.
- A capital-gains exclusion for qualified investments.
- Incentives for companies to invest in Minnesota small businesses
But how can a state cut taxes and pay off a $1.2 billion deficit? Simple. Pawlenty wants to cut Minnesota’s two-year $30 billion budget. The governor rightly notes that the budget has grown an average of 21% every biennium (as high as 46% in some years). And ATR has previously pointed out that the budget is unsustainably outpacing Minnesota’s own economic growth
In addition to cutting taxes and cutting the budget, Pawlenty wants to renew his program, JOBZ. The Job Opportunity Building Zones would offer tax breaks to businesses that locate or expand in economically stressed rural areas. He also wants a constitutional amendment to limit future spending commitments to the amount of revenue that is being collected, something ATR testified in strong support of last year
Pawlenty knows that real stimulus does not come from massive spending or by increasing the growth of public sector employment and wages,
but by promoting the private sector and removing the obstacles to growth that entrepreneurs face.
“If government listens to those who create private-sector jobs this is what it'll hear loud and clear: 'Get out of our way. Leave us alone. Make it easier, not harder,’” said Gov. Pawlenty. We couldn’t agree more.
To see the full article about Pawlenty’s State of the State Address click here
To read Governor Pawlenty's Final State of the State Address click here