The Minnesota Free Market Institute Weekly Update
Friday, May 15, 2009


In This Issue
Rally at the Capitol Planned for Monday, May 18th
Tax Reform and Economic Growth
Budget Hawks 3: The Final Showdown is May 14
Must Reads
In Case You Missed it from the Minnesota Free Market Institute
Rally at the Capitol Planned for Monday May 18th

Stay tuned for details about a rally at the capitol for the final hours of the official Legislative session at 5 PM on Monday, May 18.  This may be your lst chance to let your voice be heard as Legislators rush to beat the deadline. The 11th hour is when the deals get cut and your money gets spent so this will be a don’t miss opportunity.

Tax Reform and Economic Growth

The title of St. Thomas economics professor John Spry’s opinion in the Pioneer Press, “If Minnesota were serious about growth, we’d widen the tax base and lower the rate,” is almost as significant as the piece itself. In an excellent piece, Spry argues for reform of the tax code by eliminating some inefficient taxes altogether and cutting rates on other taxes while broadening the tax base by removing some sales tx exemptions. He makes his case based not on ideology, but on sound economic principle.

As I noted in a previous newsletter, “ought” as in “the Legislature ought to do such and such to achieve such and such a result” implies “can” – that the “such and such” the Legislature proposes “can” actually accomplish the objective it intends. Unlike moral and social engineering tax reform proposals, Spry’s tax reform proposals based on economic principles bridge the gap between “ought” and “can”: The Legislature “ought” to make reforms that enable economic growth, and Spry’s proposal “can” achieve that objective.

The point is this: The concept of “tax reform” is meaningless without an achievable objective. Intent does not endow achievability. The missing link in most of the tax reform proposals coming from the Legislature is the economic principle leading from the reform to the outcome.
Spry makes the connection between specific tax reforms and economic growth and by doing so implicitly defines the tradeoffs that his reform proposals require. If one doesn’t like those tradeoffs – a broader sales tax base, for example — fine; but understand that altering the reform means collecting revenue someplace else, less efficiently, and a consequent dampening of economic growth. As the article title says, “If Minnesota were serious about growth …” and as it implies, “if not ….” Economic principles always prevail over intentions; “can” always prevails over “ought.”
Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Budget Hawks 3: The Final Showdown is TODAY at 5pm
Join us for the third event which is timed to coincide with the end of the legislative session on Thursday, May 14 from 5-8 PM at Trocaderos in Minneapolis. Cash bar but munchies will be provided.  See the flyer here for details on free parking and for more information about the event. Although it’s not required, you can RSVP on facebook here.
Must Reads

David Frum. “The cap and trade racket.” This Week.
If you haven’t followed the Cap and Trade Debate, this article gives an excellent primer on how it masks the makings of a corrupt racket and a direct transfer of wealth from some industries to others, underwritten by taxpayers and ratepayers.

In Case You Missed It from the Minnesota Free Market Institute

Pat Anderson was on WCCO this week, providing a contrary view to protesters against Budget Cuts at the capitol. Video available here.

Craig Westover

John LaPlante State House Call

King Banaian SCSU Scholars

Notable Quotes

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.
Mark Twain

The ultimate result of shielding men from the effects of folly is to fill the world with fools.
Herbert Spencer, English Philosopher (1820-1903)

There is no distinctly native American criminal class…save Congress.
Mark Twain

What this country needs are more unemployed politicians.
Edward Langley, Artist (1928-1995)

A government big enough to give you everything you want, is strong enough to take everything you have.
Thomas Jefferson

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