Pawlenty Lays Down a Marker with His Economic Plan

It's probably way too early for most people to start thinking about the next presidential election. But, of course, the race is already well under way, with a big focus on the contest for the Republican presidential nomination to see who will square off against President Barack Obama in November 2012.

At this very early stage, it appears from polling that Mitt Romney, former Massachusetts governor, is the GOP frontrunner. Among the declared candidates are Newt Gingrich, former Speaker of the House, Tim Pawlenty, former governor of Minnesota, Rick Santorum, former U.S. senator from Pennsylvania, Texas Congressman Ron Paul, business executive and activist Herman Cain, and Gary Johnson, former New Mexico governor. And others are considering a run as well.

On June 7, Pawlenty laid down a marker with his economic plan, with tax relief taking center stage.

Romney has yet to offer specifics on his economic agenda. As noted on June 8 in The Caucus, the politics and government blog of The New York Times, "But Mr. Romney has not yet offered many specifics about his plans for the economy. He promised to cap federal spending at 20 percent of the nation's gross domestic product. And he said that as president he would make taxes competitive, create jobs, modernize regulations and reduce bureaucracy. That vagueness has opened the door for Mr. Pawlenty, who vowed on Tuesday to keep federal spending at 18 percent of G.D.P. - lower than Mr. Romney promised - and proposed large and specific tax cuts that would slash business and individual rates to their lowest levels in decades."

The Pawlenty tax plan features the following...

Read the rest of this SBE Council Cybercolumn by chief economist Raymond J. Keating here.

Pawlenty Vetoes Income Tax Hike in Minnesota

Kudos to Minnesota Governor Tim Pawlenty for vetoing an increase in the state’s income tax.

As reported by KARE11.com on May 11:

Earlier in the afternoon Pawlenty, as promised, vetoed the Democratic budget-balancing bill that passed Monday. The bill would have raised the income tax rate on the highest earners in the state, those joint filers with adjusted gross taxable income of $200,000 and single filers who make more than $113,300.

The tax hikes would've applied to roughly 122,000 Minnesotans, who would've seen their rate rise from the current 7.85 percent to 9.15 percent. But Pawlenty, in his veto message, said those are the people most likely to use their extra income to create new jobs…

"It is nonsensical to increase taxes on job providers merely weeks after I signed a bill to provide tax incentives for Minnesota businesses to grow jobs," Pawlenty said in a letter to opposition leaders explaining his veto.

The KARE11.com report obviously was off base on its economics in declaring that the tax hike would have affected only 122,000. The impact of higher taxes spread throughout the economy, including, as the Governor noted, hiking taxes on job creators.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council