Young Minnesota Republicans Attend Center of the American Experiment 2015 Annual Dinner

The Gopher State Politics Institute had the privilege to sponsor an enthusiastic group of young Republicans from the College of St. Benedict and St. John's University.

The group of students and alumni were led by Dr. Matt Lindstrom, Ph.D.

Thanks to all that attended.  We hope to see you at future events.

Matt Lindstrom, Ph.D., (left), P.J. O'Rourke (center), Robert L. (Bob) Smith, 3rd, Founder (right of P.J.) and the students and alumni of College of St. Benedict and St. John's University).               Photo by Mark Prokosch

Is The Tax Code Driving Taxpayers From Wisconsin?

To: MacIver Institute, Madison, Wisconsin                                              October 17, 2014
      Attn: Nick Novak and Matt Crumb
                              and
      National Center for Policy Analysis (NCPA), Dallas, Texas
      Attn: Pamela Villarreal

Re: Is The Tax Code Driving Taxpayers From Wisconsin?
      August 2014.  An Analysis of Wisconsin Taxes
                                                                           
Some of us in St. Paul have been reviewing your study on Wisconsin taxation.  We believe we understand what you’re trying to accomplish.  We do, however, have uncertainty about a few of your assumptions and the parameters used.

Using an assumption that all will live to age 100 and die penniless does seem to defy known reality and logic. Indicating that all states have the same job availability and advancement potential, especially for couples, may be a stretch.  It is probably not a good idea to equate Florida property taxes as half of Wisconsin’s without factoring in the high cost of property insurance and exclusionary risks plus the dire straits of property insurance in Florida.

We can sympathize with your outflow of IRS adjusted gross income (AGI) at $136 million per year.  Minnesota does beat you with an outflow of $340 million.  That’s $2.50 to $1.

We published an article in December 2013, “The Great Minnesota Exodus Tax Acts of 2013”, available at gopherstatepolitics.blogspot.com showing a Wisconsin retiree paid about two-thirds of the state income tax that a Minnesota retiree would pay.  Identical figures were used.

For a more detailed look and taxpayer population movement, you might consider going to the Center of the American Experiment’s April 2013, “Minnesotans on the Move to Lower Tax States” (americanexperiment.org).  This considers the highest 10 states contributing AGI to Minnesota and the 10 who received the most outflows from Minnesota.  Wisconsin is not shown because of lesser back and forth activity.  The study covers the period 2005-2010.

If we add the data for Wisconsin-Minnesota moves, we find that a few more Badger taxpayers moved to Minnesota than did Gophers to Wisconsin.  However, the Minnesotans bring with them a slightly higher AGI and Wisconsin ends up being a net beneficiary of $33.9 million over that timeframe.

We find that only North and South Dakota sent a lower AGI to Minnesota than did Wisconsin to Minnesota.  The only other figures in or out of any of the states in the study lower than Wisconsin’s are the average Minnesota outflows to North Dakota.

Wisconsin net AGI flows to Florida, Arizona, Texas, Colorado and North Carolina   according to the NCPA-MacIver report.  Minnesota net AGI flows to Florida, Arizona, Texas, Colorado, Washington, South Dakota and North Carolina.

Minnesotans moved to South Dakota at a population-adjusted rate of almost exactly twice that of moving to Wisconsin and also three times the rate of moving to Iowa.  See gopherstatepolitics.blogspot.com, “Why Do Minnesotans Move to South Dakota?”  To complete the neighboring states please see the same web site, “The Shame of Minnesotans Having to Move to North Dakota”.

This brings us full circle back to the question of why does Minnesota lose $2.50 of AGI for every $1 of Wisconsin’s?

The population numbers are close, the gross state products (state GDP) are relatively close, the tax climates are not too far apart, the regulatory loads are about the same, the weather is similar and the people are pretty much alike.  So why the stark difference?

We haven’t discussed estate taxes.  North Dakota, South Dakota and Wisconsin have none.  Iowa has an inheritance tax but it does not apply to lineal heirs.  Only Minnesota taxes you when you die.  Do a number of wealthier Minnesotans head for the hills of the “no estate tax states”?  Florida, Arizona, Texas?  Good question.

Wisconsin, you’ve been sending Minnesota your poorer taxpayers.  Please send us your wealthiest.  St. Paul has very high property taxes so they’ll feel right at home.  Send those with the highest incomes to Edina where they can reap the 9.85% income tax bracket named in honor of the progressive Edina voters.  And, Minnesota Revenue will love their estates.

Bob Smith 3rd
Gopher State Politics Institute
GopherStatePolitics.blogspot.com
480 St. Clair Avenue
St. Paul, MN 55102
651-222-6888

Judge Judy is Humiliating Minnesota… Dunderhead Population at Risk.

For Immediate Release:                                                                      Contact: 

November 2014                                                                                  Bob Smith 3^rd

                                                                                                            480 St. Clair Ave.

                                                                                                            St. Paul, MN  55102

                                                                                                            (651) 222-6888

Special Feature from the Gopher State Politics Institute,   GopherStatePolitics.blogspot.com

Judge Judy is Humiliating Minnesota… Dunderhead Population at Risk.

Can government help sway the Tide?

Your Gopher State Politics Institute received a plea for assistance in halting the increasing use of Minnesota subjects on the Judge Judy small claims court, national TV show watched by millions.

This is a little bit of an unusual request, but we need to be open-minded and flexible to see if there is a proper role for government in this issue. At first blush, we could start by asking the Attorney General to write a cease and desist letter to Judy.

However, we first ought to examine and analyze this situation carefully.  Judge Judy has a recruiter here who seeks out misfortunate pairs to be on the show. To be fair, we can take out the calculator and divide the 250 shows by 50 states and say that a reasonable quota is five pairs per year. Not the three or four a week that is currently aired  on TV.

“Fargo” set the tone for using Minn-ah-soh-tah to push us off our above average ledge and Judge Judy refined it to new heights in securing Minnesota Dunderheads at an alarming and depleting pace.

So, if we think this through thoroughly, the problem really belongs in the lap of the Department of Natural Resources (DNR).  The recruiter is really a hunter seeking prey,  the Minnesota Dunderheads in pairs. At that rate the show is using them up, they could become an endangered species.  Hence, the need for Minnesota to legislate and regulate.

The recruiter / hunter should be licensed at a considerable fee, limit set at two pair per calendar quarter,  a five-figure per day removal fee established for each dunderhead pair taken out of the state and a DNR enforcement charge levied.

Presto! That is a creative use of political power to save the endangered species Minnesota Dunderhead from being over-harvested let alone protect Minnesota’s reputation as a State where all children and-by extension-adults are above average.

Problem solved. Take that, Judge Judy.

Visit us at:

Gopher State Politics Institute

http://GopherStatePolitics.blogspot.com

Robert L. “Bob” Smith III

bob333smith3rd@gmail.com

The Veterans Affairs Mess

Don’t throw the baby out with the bath water...

We at the Gopher State Politics Institute generally try to stay clear of federal matters. The U.S. Department of Veterans Affairs- the "VA" – health care issue centering on misleading dates of provider services has surfaced genuine anger among us. People are furious over this and it is not partisan. The VA must get its house in order. How?

Relieving the Secretary and Under Secretary for Health of their posts is not the way to go. They are the two who could best change the course quickly, if at all. Congress passing new laws will do little to right the course. The system needs to be managed on truth, not the political management style of making the system and higher ups look good.

Please understand that the overwhelming majority of VA employees are good persons dedicated to serving their veterans. The system has put them in a position where data fudging is almost a must. The scheduling issue is the poster child. The metrics model has to go and go now. How?

This is a very emotional issue. Cool heads need to prevail. This should be done in a dispassionate, rational, business-like adult problem-solving manner. Get rid of the political management style and replace it with a management responsible for detecting local problems and solving them, focusing on the veteran receiving quality care in a reasonably timely basis, to the extent that is possible without forcing speed.

The doctor who blew the whistle at Phoenix suggests an amnesty period where each facility can get it‘s house in order without fear of reprisal. Each facility needs to put out a true picture of where they are at with care, waiting lists, and other factors.

Management now knows where they’re at and their job should be to find, identify, and correct problems. The absolute truth must stand out and be addressed. Making one’s facility look great when it isn’t is a political management con. Leadership is in order and the VA needs only one instruction from the Administration and Congress.

Fix it! - Then stay completely out of the way.  Bob

Open Letter to Governor Dayton and the Minnesota Legislature

May 12, 2014

Open Letter to Governor Dayton and the Minnesota Legislature

RE: Gift & Estate Tax and Population Migration

Thank you for repealing the gift tax and for increasing the estate tax exemption. This clearly was the right move for the future of the Minnesota economy and job growth.

We at Gopher State Politics have been examining IRS AGI tax data for the 2005-2010 periods. Using the Minnesota to Wisconsin taxpayer migration as a base of norm, we found that a population adjusted movement to South Dakota was almost exactly twice the rate of movement to Wisconsin and almost exactly three times the rate of movement (See our Blog: Why Do Minnesotans Move to South Dakota).

We also looked at the movement to North Dakota and to our chagrin and embarrassment discovered that out of 21 states those Minnesotans moving to North Dakota had the lowest average AGI of all 21 states and it appeared that we were providing a migratory labor force for North Dakota. Our lowest earners went to ND and our taxpayers having three times the average AGI of those going to ND went to Florida. (Blog, The Shame of Minnesotans Having to move to North Dakota). We were also surprised to learn that Bismarck had grown to 64,000.

It was also difficult to imagine how well Sioux Falls has been flourishing. Their population is now 161,000! Will it exceed St. Paul’s in the next decade? The day we were talking with them they had just picked off an impressive Minneapolis business. They really don’t want any publicity as it seems they view Minnesota as a great big Candy store with lots of business flavors.

Adding in the new Edina tax rate of 9.85% just exacerbates the situation. Our analysis and opinion “The Great Minnesota Tax Acts of 2013” (web site) gives a more thorough picture of the Minnesota tax climate vs. others. That study was cited in a new, best seller book which you have recently received (from others) through Barnes & Noble, An Inquiry into the Nature and Causes of the Wealth States  by Dr. Arthur B. Laffer and others. (Page 247 footnote 4 spelled out on page 290.)

Back to the estate tax, we would like to see it eliminated as the best choice. If that is not viewed as politically practical, we suggest that the 2015 legislature bring this into conformity with federal law. Otherwise, increase the exempt amount to $3M in 2015, $4M in 2016 and conformance to the federal in 2017 with COLA adjustments.  Currently $5.34M. Along with that the “claw-back” should be removed in 2015. It creates uncertainty and indefiniteness three years earlier or more than they may have been thinking of and encourages people to leave Minnesota.  It’s just a burr under the saddle.

Minnesota has been losing taxpaying population since the 1990’s. The IRS AGI data indicate as of the 2010 era that we were losing a net $350M per year in taxable income that’s an annual figure of those out-migrating. If we compound the likely number of years we have lost these taxpayers, the likely loss to the Minnesota economy of AGI may well exceed $1B. We are working on this now to develop a model without using a multiplier. That leads us to another aspect of this issue—Minnesota Revenue residency regulations and policies for ex-residents; the 182 days and the illogical 26 pointers.

A true and unequivocal “safe harbor” statute is needed. First, may we suggest a clear legal definition of a “day of residency.” Our thinking is that a day comprises physical presence in Minnesota for a 24 hour period from midnight to midnight anything less is not a day of residency. Next, we invest millions of taxpayers’ dollars in helping Minnesota become the world class medical destination; i.e. the Mayo Clinic and others. Then we punish former residents who have left for tax or other reasons, by counting their days of treatment here against residency days.

May we suggest in addition to a clear 24-hour definition of residency, that we exempt any time that people spend here visiting any licensed medical provider –therapists, chiropractors, dentists, doctors, surgery centers, hospitals, nursing homes and other licensed medical professionals—from counting as days of residency.

It would seem reasonable to us that if the definition, medical exemption and a few other changes were adopted—to make passage politically palatable—the residency days could be reduced from the 182 to 170 (a day a month). Why punish our economy? If ex-residents want to spend their money here, let them!
Their expenditures will help our workers, professions, businesses and state and local tax revenue streams. Abolishing the estate tax may keep more current residents here but tacking on a 25% Edina personal income tax rate increase is similar to using a cattle prod to encourage those hit hardest to move out of Minnesota.
Our 2015 legislative task:  1). Let’s phase out the estate tax. 2). Let’s put together and pass a sane “safe harbor” residency statute. Thank you.

Respectfully submitted,

Robert L. Smith, III

What a Great Evening with George Will...

I had such a great evening at The Center of the American Experiment, Annual Dinner. Great people, Great Friends and George Will. George was great as always, entertaining and informative... Thank you Mitch, Kim, Tom and the whole team for a very enjoyable evening! Bob Smith 3rd

http://www.americanexperiment.org

Untax the Rich? Dayton offers a different tone this year with gift, estate tax proposals

MINNPOST

By Doug Grow | 03/05/14

Gov. Mark Dayton, who used the theme “tax the rich’’ to win office, is expected to announce Wednesday a few ideas that sound like “untax the rich.’’ 

In his supplemental budget, the governor is expected to make significant changes in two taxes, a gift tax and an estate tax,  that are unpopular with the state’s wealthiest.

It appears that the governor is set to eliminate the gift tax, which he signed into law last spring, and align the state’s estate tax with federal estate tax law.

Of course, Dayton’s not alone in pushing tax cuts. House DFLers are racing to pass a broad-based bill that would cut personal and business taxes by $500 million. Senate DFLers, moving at a more modest pace, also are pushing cuts.

Republicans claim to be astonished as they see their DFL counterparts whack, hammer and cut taxes.

(more)

http://www.minnpost.com/politics-policy/2014/03/untax-rich-dayton-offers-different-tone-year-gift-estate-tax-proposals