To help the neediest in these tough times, we may have to raise taxes on the wealthiest Minnesotans
Starting on Sept. 6, a 2.3% interest rate kicked in on federal unemployment loans.(Photo by Joe Raedle/Getty Images)
Mittens, hat, warm coat: check. Face mask: check. Ah yes, we’ve pulled out our cold weather gear, bundling up to walk the dog, get the mail or get the kids outside. Many of us are also gathering some extras for friends and family, ensuring they too are warm and safe. Minnesotans understand that we all need an extra hand at times: a push out of a snow bank, a home-cooked meal when we’re ill, or a box of warm clothes to get us through long winters.
The challenges before our friends and neighbors are growing; the resources they need to thrive are depleted. The pandemic and prolonged economic disruption have hurt all of us. And too many are still out of work, falling behind on rent, and living with the fear that comes with not being able to feed their families each day. Most critically, these dual crises have put into sharp relief long-standing structural racism that means our Black and brown neighbors are more likely to be exposed to the virus and its harsh economic impact.
In the coming legislative session, the number one priority for Minnesota policymakers must be to ensure all of us can be healthy and economically secure, and build an equitable and prosperous state. The recession is causing severe state revenue shortfalls, and those must be addressed, as well. But we have important lessons from our past, as well as the experiences of other states to guide us. We know that the path to a stronger, more equitable recovery is through greater investment in the health, well-being and economic stability of everyday Minnesotans.
We must draw on the resources needed to meet the challenge by maximizing federal assistance to the state, using our rainy day fund, and raising state revenues.
Minnesota is not unique; states across the nation are grappling with significant revenue losses. We are already seeing the damage done from a cuts-only approach to balancing the budget in other states. Cutting public services and laying off teachers and other public workers will only worsen hardship and slow the economic recovery.
Georgia has cut funding for schools and services for children and adults with developmental disabilities; Maryland is cutting funding for colleges and universities; and, Florida has cut funding for community colleges, behavioral health services and services for people experiencing homelessness.
The federal government must play a strong role in stimulating the economy, as it has earlier in this pandemic and in past recessions. States and local governments are put in a bind during economic downturns — they are required to balance their budgets even when their revenues plummet and their residents need some extra assistance to get by.
We’ve been fiercely advocating for additional robust federal funding to states and local and tribal governments, and extending critical economic support for workers and their families. It’s taking way longer than it should, but this is an essential step that federal policymakers must take.
And because of smart policy choices, Minnesota has a strong budget reserve to lessen the budget crisis. Built up when the economy was strong, our rainy day fund can protect public services that Minnesotans are counting on.
Finally, we must look to our own abundant resources here in Minnesota and raise additional revenues. It makes sense to turn to those still doing well — including the highest-income folks and profitable corporations — to contribute to getting us through this crisis.
State revenue shortfalls are largely a result of the economic downturn, and we are experiencing the most unequal recession in modern history. In April, 20.5 million jobs were lost across the country at the same time that the S&P 500 stock market index had its best month in 33 years. The highest income workers are largely back to work, while unemployment is still very high among low-wage workers, people of color and workers with lower levels of formal education. And we know that high-income individuals and profitable corporations continue to benefit the most from the federal tax cuts passed in 2017.
Minnesota policymakers would not be alone in raising taxes on those able to contribute more. New Jersey is a recent example: Policymakers there recently raised the income tax on high-income residents as part of a budget-balancing plan that also invested in health care and education.
We can rise to meet the immense challenges of our times by keeping our shared values in mind. We must remember our commitment to get through it together. Through thoughtful policies we can counter the threats to Minnesotans’ health and well-being, especially for those burdened by historical and current barriers based on the color of their skin or where they live. Only by acting boldly and justly can we ensure all of us have what we need to thrive.
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