WASHINGTON -- Sure, the rich may be getting richer and the poor may be getting poorer, but it might not necessarily be a bad thing, according to a Minnesota Republican lawmaker.
On Wednesday, Minnesota's Legislative Commission on Planning and Fiscal Policy heard from University of Minnesota economists about income inequality in the state.
State Senate Minority Leader David Hann (R) acknowledged that there is income inequality, but he wasn't convinced that it was harmful. Instead, he worried that if the rich have less money, it will hurt the state, because they won't be paying as much in taxes:
It would be interesting to have a chart to show...who pays taxes and where the tax money comes from. It ... would probably look exactly the opposite, that the great proportion of the revenues government collects would come from this top end, with very little if any ... at the lower end. You talk about where the money goes, and to suggest it would be good to eliminate or somehow minimize the top end would be an advantage to the government, I'm not so sure that would make sense.
As a thought experiment, let's say we passed a policy in the state of Minnesota that said nobody could make more than $500,000 a year. I'm not suggesting we do that, but if we did that, it would certainly reduce the inequality gap, but all the people making over $500,000 a year would move out of state. And what would happen to the revenues to the state if we did that? I don't think that would be a positive thing to the state of Minnesota to have that kind of policy on any level.
Again, my larger question is, it's a great observation to point out there's inequalities. And you said that your point is not that they should be the same, but it's clearly the point that there's bad things about inequality, and yet, I'm not so sure, not persuaded by your data, that that is a bad thing.
University of Minnesota Associate Professor Jay Coggins actually did have a chart showing who paid state and local taxes. It showed that, in reality, the top 1 percent of earners paid the lowest tax rate.
"The claim that the top people in Minnesota are paying the top tax burden is just not true," he said. "If you're in the top 1 percent of the Minnesota income distribution, you're paying a much lower effective tax rate to all state and local tax bodies than people in the bottom fifth."
Hann, however, dismissed Coggin's data.
"That's not the answer to the question. You're talking about rates, I'm talking about dollars. This does not show where the bulk of the dollars come from."
Watch starting at 1:18:40:
Last week, the Associated Press surveyed more than three dozen economists about income inequality; a majority of them said the gap is hurting the economy.
"What you want is a broader spending base," Scott Brown, chief economist at financial advisory firm Raymond James, told the AP. "You want more people spending money."
Yale Professor Robert Shiller, who was one of the winners of the Nobel Prize for economics in 2013, also recently said income inequality is the "most important problem."
When asked for comment about his remarks on Wednesday, Hann told The Huffington Post in a statement, "The point of my comment was to focus on increasing the quality of life for those with the least; not on the gap. Everyone can agree that hardworking Minnesota families aren’t making enough money."
"In fact, according to the Minnesota Department of Employment and Economic Development, 49% of Minnesotans are either unemployed or underemployed," he added. "The honest answer to that problem is to grow jobs with higher income and increased purchasing power for families. Unfortunately, Democrats and Governor Dayton focus on wasteful and inefficient spending on a new $90 million office building, welfare for politician’s campaign accounts, and voting to raise their own pay.”