True North

I’ve seen a number of posts on Larry Pogemiller’s comments at a town meeting at the Brian Coyle Center in South Minneapolis that have edited his comments like this:

"I think it's simplistic and naive to say people can spend their money better than the government."And he went on to include... "The notion that everybody can individually spend their money better than government I, I just think is trite, wrongheaded and anti-democratic."

That’s accurate, but if I’m Pogemiller I’m going to come back and say that what’s excised out of the quote is important to the context of his remarks. I’d have to agree with him. However, I think including the missing segment is even more indicative of Pogemiller’s disingenuous approach to governing. Here, according to a recording of the event is Pogemiller’s full comment:

I think it's simplistic and naive to say people can spend their money better than the government. And the reason is, the reason we have government is to build community assets. And I don't care how rich you are, you can't build a freeway system by yourself, and that's why we have taxes. And I don't care how rich you are, you can't build a public education system by yourself. You can get you own child educated, but in this state we have something called universal education for all children. And so I think the notion that everybody can individually spend their money better than government I just think is trite, wrongheaded and anti-democratic."

The middle part of that quote is important because Pogemiller cites two examples of why government matters. The items he cites are both government obligations under the Minnesota State Constitution. While conservatives might disagree that Minnesotans are getting the best value for our tax dollars spent on a freeway system or public education, few would argue that those are not legitimate government functions for which Minnesotans should pay taxes.

The point Pogemiller misses about taxes and community assets is that Minnesotans are paying for these legitimate functions of government and a host of other things that are not the business of government. One could substitute “hockey arenas” for “a freeway system” and “regulate unhealthy personal behaviors” for “a public education system” and Poegemiller’s comments take on a whole different perspective.

Pogemiller’s DFL levied $6.6 billion dollars in new taxes to fund transportation obligations. Now the DFL is using existing tax revenue to forge a $1 billion bonding bill that contains many millions of dollars for "extra-constitutional" projects like hockey arenas and zoo exhibits. At the same time, the Legislature is quietly under funding the constitutionally essential judicial and public defender systems while expanding the state's role in health care.

Conservative thinking would spike the non-constitutional projects in the bonding bill, fully fund the judicial system, prioritize transportation projects based on necessity (not political and geographic equity) and protect Minnesotans from government interference in their medical decisions. It is disingenuous to loudly demand tax increases for constitutional obligations while quietly spending existing resources on expanding the scope of government.

Two years ago, Pogemiller was chair of the Senate Tax Committee. In that role, he demonstrated not only elitist arrogance, but ignorance in action taken on the marriage penalty legislation. Pogey fans might find a column I originally wrote for the St. Paul Legal Ledger of interest.

Tax panel deliberations can be a bit hard to stomach

Listening to a committee discussion on tax legislation can leave you wondering whether lawmakers know what they are doing.

As the saying goes, if one ever watched sausage being made, one might never eat it again. Extending the metaphor, if one regularly watches legislation being ground out, one might not so easily swallow political rhetoric.

Case in point is the Senate Tax Committee deliberations on Senate File 3550 on March 31. The simple intention of this bill, according to tax committee chair Larry Pogemiller, DFL-Minneapolis, is fixing the alternative minimum tax and the so-called marriage penalty.

The subsequent debate was political sausage making at its most gruesome. You might think that if anyone, members of the tax committee would understand the tax code. You’d be wrong.

To carry out the intention, Pogemiller noted, you “need to generate revenue internally.” In other words, fixing a taxpayer problem is okay, as long as it doesn’t cost the state any money. When some individuals are being over-taxed, the obvious real problem is others must be under-taxed.

To make SF3550 palatable for the Legislature‘s spending appetite, the legislation proposes a new tax bracket of 8.15 percent for married couples earning over $270,000, up from 7.85 percent. Of course, that’s not a “tax increase” because the state isn’t gaining any new money -- the bill is “revenue neutral.” Trimming fat from the state budget to fix the tax code clearly isn’t an option.

Before the committee voted on SF3550, Sen. Julianne Ortman, R-Chanhassen, introduced an amendment considering the plight of taxpayers who are thrust into the new higher bracket because of one exceptionally good year. Her amendment would tax those people at the old 7.85 percent rate.

Pogemiller responded to Ortman’s amendment, “Isn’t that how income averaging works, already? Doesn’t that take care of the issue?”

“Mr. Chairman, I don't believe we have income averaging under the Minnesota income tax,” replied Ortman.

There is a long pause while that sunk in. Pogemiller still doesn’t get it, but he had an answer -- accountants.

“Lot of people have incomes that go [up and down],“ he noted. “Isn't that why they have accountants and things?. They figure that all out?”

Sen. Rod Skov, DFL-Clearbrook then wondered if selling a business or a farm wouldn't be taxed as capital gains?

“If my memory serves me correctly, I don't think Minnesota has a capital gains treatment either. We got rid of that a long time ago,” Sen. Warren Limmer, R-Maple Grove, reminded the committee. Ah, but Pogemiller had the answer again.

“Keep in mind that we work off of federal taxable income. I think [capital gains] gets factored back in there in some fashion, doesn’t it?” Pogemiller said.

The experts from the Minnesota Department of Revenue were then consulted. Turns out that because capital gain is compensated for in the federal rate structure and not in the definition of “federal taxable income,” Minnesota taxes capital gains essentially the same as earned income. Oops, better not go there.

Sen. Dave Tomassoni, DFL-Chisholm, suggests that if Ortman wanted to make an impact, her amendment would focus on those in lower brackets moving up rather than saying “if you’re a multimillionaire you get a tax break when you move up to the next bracket.”

When it’s pointed out that someone making $270,000 is not exactly a multimillionaire, Tomassoni’s reply is “Well, I don’t feel sorry for someone making $270,000. I don’t know they deserve a tax break.”

Obviously what they do deserve is the obligation to fix a tax code that this committee clearly doesn’t understand. The bill eventually passes the committee, with Ortman’s amendment. It awaits a full Senate vote.

Is the tax code now fixed?

What about the income averaging question? What about Minnesota’s treatment of capital gains? What about a break for people in lower brackets for whom a “good year” pushes them up a bracket, but not into the top bracket? What about the complexity that requires average folks to pay, in addition to taxes, accountants to prepare their returns in order to follow a code the legislators writing it don’t understand? Guess we shouldn’t get carried away on this reform stuff -- just eat a hot dog and swallow the rhetoric.

This commentary originally appeared in the St. Paul Legal Ledger in April 2006.

Craig Westover is a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute (www.mnfmi.org). His e-mail address is This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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