Rapp’s argument is simple: the corporate income tax is not paid by business owners. Instead it is passed on to Minnesota’s consumers. To compound the insult, it is very regressive in nature, burdening lower income Minnesotans more.  He also points out that it is a  very “volatile” source of income compared to other taxes, such as individual income and sales taxes. This volatilty leads to budgeting woes and errors.  Even more interesting, is that Rapp acknowledges that the elimination of this tax would create jobs and encourage investment. How can we compete with other states for good employers when we punish them for doing business in Minnesota? Rapp goes on to acknowledge the political challenges this poses for “tax the rich” Democrats (”a gift to big business”) and “no new taxes” Republicans (”this will create a hole in the state’s budget” ). 

We have made all these arguments here before about the corporate tax; we are encouraged and delighted to be joined by Mr. Rapp. We look forward to hearing more from him. You can read his article in full at:  http://www.startribune.com/opinion/commentary/83673327.html?elr=KArksc8P:Pc:Ug8P:Pc:UiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr

“Scheduled to attend Paulsen’s job fair are a wide variety of employers from health care, technology, retail and several additional employment sectors.  Last week, it was reported that unemployment remained at 10% during the month of December, with 85,000 jobs lost in the month alone.  “

“The recession has hit Minnesota workers hard, with jobs remaining very hard to find,” Paulsen said.  “By bringing together potential employers and Minnesotans who are looking for work, I’m hoping this job fair will open up some new possibilities as we continue to work through this challenging economy.”

The convention, intentionally or unintentionally, seemed to focus around one question; where does the movement go from here? That question remains one of the most difficult to achieve consensus on. Many would like to see the movement remain decentralized and grassroots, others would like to see the Tea Party Movement organize and field candidates.

Others question whether or not to be affiliated with a party. Many tea partiers see both Republicans and Democrats as out of touch and fiscally out of control.

However, the issues that divide the group are far lesser than the issue that unites them; the frustration of paying for a government they feel is beholden to special interests and a frustration with Washington’s addiction to deficit spending.

Regardless of whether or not any semblance of consensus has been achieved in Nashville, one thing is for certain; the whole nation will be watching what direction this new grassroots effort takes.

True to their pledge, DFL state legislators are pressing to pass a bonding bill quickly as they head into their first full week of the 2010 legislative session.

The chairs of the House and Senate Capital Investment Committees introduced their bonding bills on the first day of session last Thursday. DFLers on the Senate Capital Investment Committee leadership introduced their proposal as a committee bill and passed it onto the Finance Committee. Sen. Keith Langseth, DFL-Glyndon, the committee’s chairman, said he expects a vote on the $999 million bill by the full Senate on Tuesday.

The DFL bonding proposals rise significantly above the $685 million bonding package Gov. Tim Pawlenty proposed last month.

In one possible sign of political horse-trading to come, both the House and Senate DFL plans omit any funding for the biggest line item in Pawlenty’s proposal. The governor had recommended an $89 million expansion of the Moose Lake sex offender correctional facility.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said he expects that after legislators pass their bonding bill, Pawlenty will apply line-item cuts. He didn’t foresee any obstacles to passing a bill early.

“I don’t anticipate a big problem here unless someone creates one,” Pogemiller said.

He said he would be “surprised” if Pawlenty vetoes the entire bill, a move the governor has publicly warned he may make if he deems the Legislature’s bill too lavish.

Both House and Senate bills are just shy of $1 billion in general obligation bonding.

Pogemiller said Pawlenty has only mentioned line-item vetoes in private talks with legislators. House Capital Investment Chairwoman Alice Hausman, DFL-St. Paul, said the prospect of a full veto is “just on the verge of terrifying to me.”

Hausman, who said the process for passing a bonding bill in her chamber will be a little slower than in the Senate, told reporters on Thursday that she plans to have a bonding bill passed off the House floor by Feb. 15.

One of the key differences between Pawlenty and DFL legislators involves funding for higher education. DFLers, including Hausman, charged that Pawlenty’s proposal doesn’t borrow enough for projects on Minnesota’s public college campuses.

On the first day of session, the issue of higher education emerged as a problem for Republicans who are hoping to get funding for campuses in their district.

Hausman singled out Rep. Morrie  Lanning, R-Moorhead, who stands to lose some important higher education projects in his district if he supports Pawlenty’s bonding proposal rather than the House DFL bill.

“A Republican like that has a huge amount at stake,” Hausman said.

The pressure on Lanning is a case study in classic bonding bill politics.

Lanning is disappointed that his fellow Republican Pawlenty didn’t provide funding for two higher education projects in his western Minnesota district along the Red River. Pawlenty passed over funding requests for Minnesota State University-Moorhead and the Minnesota State Community Technical College in Moorhead. The House bill has $14.9 million for the university and $5.4 million for the community college.

Lanning, however, said he doesn’t support the size of the House bill.

“There are a lot of good things in this bill. But personally I feel this bill is too big,” Lanning said.

While Lanning thinks the overall House bill is too expensive, that doesn’t mean he’s decided to vote against it in its current form.

“I’m not going to say what my vote is at this point,” he said.

Lanning added: “Voting on the bill is one thing. Voting on overriding the governor’s veto is another thing.”

Lanning said other projects in the House bill should be nixed to make space for the two Moorhead campuses.

“I would not have a hard time trimming this bill down,” Lanning said.

This year’s bonding bill is igniting the usual fight for projects among lawmakers and lobbyists.

Rochester legislators and boosters are pushing for funding to start planning for a bypass of freight rail tracks around the city. Pawlenty’s recommendations provided $2 million for the project, which is ultimately expected to cost hundreds of millions of dollars. Senate Transportation Chairman Steve Murphy, DFL-Red Wing, said at a hearing in January that he opposes devoting any bonding money to the project.

Sen. Ann Lynch, DFL-Rochester, said that a long-term strategy needs to be crafted for the bypass.

“I’m not sure putting all the pressure on the bonding bill and this committee is the most logical approach,” Lynch said.

Some areas of the House and Senate bills underline stark differences between Pawlenty and DFL legislators. In the employment and economic development section of the bills, for example, Pawlenty passed over several projects that DFLers included in their proposals. Pawlenty didn’t include multimillion-dollar expansion projects for convention centers in Mankato, Rochester and St. Cloud. But while Pawlenty doesn’t fund those projects, he provides $25 million for the greater Minnesota business development/public infrastructure grant program, which neither the House nor the Senate included in their bills.

All told, the House and the Senate provide more than $120 million for economic development. Pawlenty is asking for $40 million in that category.

And the House and Senate have their own differences. Although the two chambers are controlled by DFLers, they will likely have to settle their discrepant priorities in conference committee before they have a bill to send to Pawlenty.

The Senate plan looks more favorably upon amateur sports projects. The Senate also includes funding for a St. Paul Saints stadium, while the House does not.

The bonding bills aggravate the classic rift between Republicans and Democrats on fiscal policy matters. DFLers presented their bonding proposals as important job-creation measures. Republicans questioned that and said the state should be wary of adding more debt than necessary now.

For DFLers, the bonding bills introduced Thursday represent a fulfillment of promises their leaders made last year when they pledged to use the 2010 bonding package to counteract growing unemployment. Langseth noted that interest rates are low and project bids are coming in low.

“This is the time to bond and build,” Langseth said.

Republicans pushed back against DFL claims that the bonding bill will help turn the state out of recession. Sen. Geoff Michel, R-Edina, said the $1 billion bonding bill is shortsighted as an economic development tool.

“We’re not going to come out of the recession because we remodel a dormitory,” Michel said.

Bonding proposals: Click for more information about the bonding proposals by the House and the Senate.

This article initially appeared in Politics in Minnesota.

Groups of conservative Democrats critical of runaway spending have emerged in both the House and Senate. One such member is North Dakota’s Sen. Kent Conrad, chair of the Senate Budget Committee. Conrad teamed up with New Hampshire Republican Sen. Judd Gregg to introduce legislation to create a budget task force (press release) to plot a more sustainable fiscal course.

The legislation has 31 co-sponsors including Minnesota’s own Sen. Amy Klobuchar.  In a press release yesterday, Klobuchar said:

“We have already seen what happens to our economy when Wall Street is fiscally irresponsible.  We cannot let our federal government do the same thing,”

“We need to change the way Washington works when it comes to our long-term fiscal outlook.  This is not about being a Democrat, a Republican or an Independent.  The Bipartisan Fiscal Task Force is about trying to get something done to stop unsustainable spending and restore our financial stability.” (Press Release, “Klobuchar Sponsors New Bipartisan Fiscal Task Force Legislation to Confront Nation’s Budget Crisis”)

The task force would have 18 members, ten Democrats and eight Republicans. The committee would also have bipartisan co-chairs.

Senator Gregg posted a fact sheet on the legislation here. For more information on the Bipartisan Task Force for Responsible Fiscal Action Act of 2009, click here.

The Value Added Tax

I posted on the Value Added Tax (VAT) back on October 9th when House Speaker Nancy Pelosi said in an interview that the controversial tax was on the table.

The Value Added Tax is in the news again this week because of an article in yesterday’s New York Times suggesting a VAT is gaining support on and off Capitol Hill. According to the article, the VAT is gaining support as the only feasible way to raise enough revenue to keep up with runaway federal spending.

Pelosi isn’t the only influential lawmaker eyeing a value added tax. Senate Budget Committee Chair Kent Conrad also believes a value added tax should be on the table. In an interview with the Washington Post in May, Conrad said,

“There is a growing awareness of the need for fundamental tax reform…I think a VAT and a high-end income tax have got to be on the table.” (Washington Post, “Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look,” May 27, 2009)

Whether through spending cuts, a new task force or a national value added tax, it is becoming clear that the cure for paying off the federal credit card isn’t as simple as raising the credit limit.

There is also disagreement between the two on how much money should be given to developing nations. China believes that developed nations should give upwards of 1.5% of their GDP to developing nations to help close the economic gap, a number much higher than the $10 billion per year pledged by first world nations.

Time will tell whether or not China and the US can come to an agreement, there are still nine days left in Copenhagen including a much anticipated visit by President Barack Obama.

The sentiment was echoed by the worlds media; according to the BBC an incredible 56 newspapers in 45 countries carried editorials “urging politicians to forget their differences and work together to forge an agreement.” The, “point of no return” theme permeates the conference. The sense of urgency combined with the unprecedented public attention creates a perfect storm of action; just what the organizers hoped.

We’ll be covering the event throughout the day, in the meantime you can watch it live here or below if your browser supports iframes.

Job creation was the focus with both sides pledging bipartisan efforts to combat the deficit.