Education and the corporate tax

Pawlenty is wrong in looking to cut the state’s corporate tax rate.

Minnesota is facing a crippling $5 billion budget deficit and what does Gov. Tim Pawlenty suggest to ease the tension? Cutting corporate tax rates in half to 4.8 percent over the next six years. To bolster his proposal, the governor argues MinnesotaâÄôs corporate tax rate is among the highest in the nation, stifling business development and job creation. But PawlentyâÄôs logic doesnâÄôt hold up to more complex corporate tax reality in which depreciation standards, business exemptions, deductions and tax credits basically chisel corporate taxes down to tolerable levels. In a certain sense, Pawlenty has things backwards. Tax revenues, including corporate taxes, provide necessary funding for the quality health care and education systems that draw companies like 3M, U.S. Bancorp, Medtronic and General Mills to Minnesota in the first place. Long-term economic development will surely reap rewards for the state down the road, but corporate tax cuts are not an appropriate means to this end. Before Minnesotans jump on board with another Pawlenty economic development project, consider how successful his first has been. According to recent reports by the Minnesota Legislative Auditor and Minnesota 2020, a St. Paul think tank, PawlentyâÄôs âÄúJOBZâÄù initiative has been an âÄúinefficient use of taxpayer dollarsâÄù whereby lavish corporate tax breaks have been presented to companies who would have remained in the state without them. ThatâÄôs worse than a bail-out âÄî itâÄôs corporate charity. If the governor intends to protect and grow jobs in the state, he should make a u-turn on his proposed 8 percent cut to higher education funding. Investment in an educated work force is economic development: Smart employees attract business.