In selecting Governor Tim Walz (D-Minn.) to be her vice presidential nominee this November, Kamala Harris chose a running mate whose record on tax policy is more in line with her own than that of the other reported finalist, Governor Josh Shapiro (D-Penn.). Governor Walz, like Vice President Harris, has a well documented history of supporting tax hikes and progressive tax proposals.<\/p>\n
Shapiro, however, in arguing for an acceleration of the phased-in corporate rate reduction enacted by his predecessor, has made recent statements about the economic benefits of reducing corporate tax burdens and increasing competitiveness through lower rates. Those comments, had Shapiro been selected as Harris\u2019s running mate, could\u2019ve been employed against Kamala Harris and her proposal to raise the federal corporate tax rate to 35%.<\/p>\n
Governor Walz, meanwhile, has a tax policy record that, like Harris\u2019s, is geared toward the goals of the Democratic Party\u2019s progressive base. In 2023, for example, Governor Walz and the Democratic-controlled Minnesota Legislature spent an almost $18 billion surplus in a single year while enacting nearly $10 billion in higher taxes.<\/p>\n
\u201cWhile this year\u2019s tax hikes are bad, what\u2019s really going to shock Minnesotans is what happens in the next budget when we don\u2019t have a huge surplus to spend,\u201d Senator Steve Drazkowski (R-Mazeppa) said last year in response to the tax hikes pushed by Governor Walz and Democratic legislators. \u201cEvery Minnesotan will be hit by these tax increases, whether they are shopping in the metro, buying a new car, or updating their tabs,\u201d Senator Bill Weber (R-Luverne) added.<\/p>\n
During Tim Walz\u2019s tenure as Governor, Minnesota has been a national outlier, one of the few state where residents have not received state tax relief. \u201cMost states have cut taxes at least once since 2021, with a renewed emphasis on tax competition taking hold in red and blue states alike,\u201d writes Jared Walczak, vice president of state projects at the Tax Foundation. \u201cTwenty-eight states have cut individual income tax rates, fifteen states have cut corporate tax rates, and other states have cut sales tax rates or focused on relief. Under Gov. Tim Walz, Minnesota has been an outlier, one of the few states to raise taxes in recent years\u2014despite the state posting large surpluses.\u201d<\/p>\n
\u201cIn recent years, Minnesota has doubled down on its status as a high-tax state even as most states have moved in a different direction,\u201d Walczak added. \u201cThat may go some way toward explaining the state\u2019s lackluster economic performance of late: in the past year, employment only grew by 0.7% in Minnesota, ranking 42nd nationwide. Net outmigration to other states is sixth highest for households with $200,000 or more in income, and eighth highest in terms of net outflow of income from all households.\u201d<\/p>\n
Unlike Shapiro, it will be difficult to argue that Walz is a moderate. Governor Walz\u2019s first budget proposal was even criticized by the Minneapolis Star-Tribune<\/em> editorial board, no bastion of conservative thought, as too profligate. The Star-Tribune<\/em> described Governor Walz\u2019s first budget proposal as \u201ctoo big,\u201d noting that it would increase state spending \u201cby more than $2 billion and taxes by at least $1.2 billion, substantially more if the state extends a health care provider tax that sunsets at the end of 2019.\u201d<\/p>\n With Tim Walz, Kamala Harris has chosen a running mate who, like she, hails from a Democratic-controlled state that has been raising taxes and losing population. While population outmigration has been occurring in California for many years, it\u2019s a more recent phenomenon in Minnesota, one that coincides with Walz\u2019s tenure in office. \u201cUnder Governor Walz, Minnesota\u2019s population growth has cratered \u2014 as it has for the United States generally \u2014 but that cratering has been worse here,\u201d writes Josh Phelan, an economist at the Center for the American Experiment, a Minnesota-based think tank.
\n\u201cLooking at Census Bureau population data for 2010-2020 and 2020-2023, we see that Minnesota\u2019s population grew in the four years of Gov. Walz\u2019 administration (2019 to 2023) by 0.4%, fractionally below the growth rate for the United States overall of 0.5%,\u201d Phelan adds. \u201cBut if we look at the four preceding years (2015 to 2019), we see that Minnesota\u2019s population grew more quickly than that of the United States generally, by 2.8% compared to 2.4%.\u201d
\nMany pundits and political operatives are criticizing Kamala Harris\u2019s decision to choose Tim Walz as her running mate. Setting aside political calculations, many of which argue against picking the Minnesota governor, there is a case to be made that Walz is a better fit for Harris due to substantive policy considerations. When it comes to the direction in which Harris has said she wants to take federal tax policy, Governor Walz\u2019s record and public statements are more in-line with Harris\u2019s vision than are Shapiro\u2019s.
\n\u201cVice President and presumptive Democratic presidential nominee Kamala Harris has a record of favoring steeper tax hikes on businesses and people than President Biden,\u201d note Erica York and Garrett Watson, economists at the Tax Foundation. \u201cWhile both President Biden and Vice President Harris aim their proposed tax hikes on businesses and high earners, key differences between their tax ideas in the past reveal where Harris may take her tax policy platform in the 2024 campaign.\u201d
\n\u201cIn all, Tax Foundation estimates the major tax increase proposals in the Biden-Harris FY 2025 budget would reduce economic output by 1.6% and employment by 666,000 full-time jobs,\u201d York and Watson added. \u201cIf Harris took the tax increases further, as she has supported in the past, the economic losses would be even larger.\u201d
\nIf Governor Shapiro is disappointed he didn\u2019t get the nod to be Harris\u2019s running mate, he can take consolation in the fact that he won\u2019t have to spend the next three months explaining why he supports Kamala Harris\u2019s proposal to raise the federal corporate tax rate to 35% when, not that long ago, he told the Wall Street Journal<\/em> editorial board that raising the corporate tax rate would \u201cput U.S. companies in an uncompetitive situation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"