All Aboard the Tax and Spend Train

As I posted in my previous article, the increase in the food and beverage tax to fund the new Arena is a bad idea. But, the vote is over and Duluthians, in what is a very pathetic turnout, approved the new tax. I can't help but drop a few more comments on this as it goes South. Of course our local State Legislators will support and likely aggressively lobby for this project. Whether it will survive other skeptics in the Legislature and the Governor's Office remains to be seen.

The thing that gets under my skin is the comments by many of those who supported this project, that Duluth is an anti-business City. To all of you who supported this and bitch about how Duluth is anti-business, you have lost your right to complain. Are higher taxes favorable to business? The answer is an obvious and unequivocal no. How do those who support this and complain about the anti-business environment reconcile these opposing views? Well, it takes understanding the way Duluth and Minnesota do business and approach big projects. We have a long history of pork and taxpayer funded projects. It is viewed as an acceptable approach to funding practically anything. We currently fund various forms of entertainment, the Visit Duluth marketing program, other civic organizations and seed money for Grandma's Marathon and the In-Line Marathon. Are these truly appropriate uses of our tax dollars?

The bottom line to be made is that taxes in any form thwart business growth and contribute to a stagnant economy. In Duluth, however, we seem completely incapable of learning that lesson. On a national scale, a reduction in the capital gains tax resulted in greater activity in the stock market and others affected by the reduction. Reducing the capital gains tax from 20% to 15% resulted in an increase in revenue received by the government. On the other hand, when the capital gains went from 20% to 28%, it resulted in a net decrease in revenue. If Duluth and Duluthians truly want growth, economic vitality, a better job market and opportunities for enterpreneurs, we have to collectively get our heads around this priniciple. Taxes and taxation do not stimulate economic growth and in the long run, result in lower government revenue. Increasing taxes thwarts economic activity. Reducing taxes stimulates economic activity and growth resulting in significant and substantial increases in government revenue as more taxable transactions take place. Oh well, for the next 25 years, we will still not get an opportunity to test this theory in Duluth.