How Minnesota's governor performed an economic miracle by raising tax on the rich and increasing minimum wage

By every measure, Minnesota governor Mark Dayton's five year run as governor has been a stellar success: while Tim Pawlenty, his tax-slashing, "fiscally-conservative" Republican predecessor presided over a $6.2B deficit and a 7% unemployment rate (the mere 6,200 jobs added under Pawlenty's 7-year run barely registered), Dayton added 172,000 new jobs to the Minnesota economy, brought Minnesota down to the fifth-lowest unemployment rate in the country, and brought the average Minnesotan income up to $8,000 more than the median US worker, while posting a $1B budget surplus.

How did Dayton do it? He raised the state income tax on individuals earning more than $150K, from 7.85% to 9.85%; he raised Minnesota's minimum wage and guaranteed equal pay for women.

Gov. Dayton didn't accomplish all of these reforms by shrewdly manipulating people -- this article describes Dayton's astonishing lack of charisma and articulateness. He isn't a class warrior driven by a desire to get back at the 1 percent -- Dayton is a billionaire heir to the Target fortune. It wasn't just a majority in the legislature that forced him to do it -- Dayton had to work with a Republican-controlled legislature for his first two years in office. And unlike his Republican neighbor to the east, Gov. Dayton didn't assert his will over an unwilling populace by creating obstacles between the people and the vote -- Dayton actually created an online voter registration system, making it easier than ever for people to register to vote.

The reason Gov. Dayton was able to radically transform Minnesota's economy into one of the best in the nation is simple arithmetic. Raising taxes on those who can afford to pay more will turn a deficit into a surplus. Raising the minimum wage will increase the median income. And in a state where education is a budget priority and economic growth is one of the highest in the nation, it only makes sense that more businesses would stay.

It's official -- trickle-down economics is bunk. Minnesota has proven it once and for all. If you believe otherwise, you are wrong.

This Billionaire Governor Taxed the Rich and Increased the Minimum Wage -- Now, His State's Economy Is One of the Best in the Country [C. Robert Gibson/Huffington Post]

(via Naked Capitalism)

Notable Replies

  1. So what yer' saying is Trickle Down Economics is nothing more than trickle piss in the face of working Americans?

  2. The trickle-down folk tend to yammer incessantly about 'job creators', by which they generally mean corporations and business owners. In reality, a place these types avoid like the plague, jobs are created by the people who empty the store shelves. If nobody is buying your goods, you sure ain't gonna be hiring anyone. Following their lead will drive us into becoming a banana republic, and we're kinda headed that way as it is.

  3. GOP talking point for the next gubernatorial cycle: The labor-friendly governor was taking credit for the previous Republican administration's success, and when we win the executive branch again and things go to shit it will be because of the previous governor's failed attempt at socialism.

  4. It's amazing how many people don't bother to do basic arithmetic before deciding that the lies they've been told must be true, because the people who told those lies have the same prejudices they do.

  5. It's not really a miracle if it's entirely predictable and replicable, is it?

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