What’s interesting is that state government funding can grow by 9.8% to a total near $35 billion for all programs – this amounts to $3 billion in new funding – without having to raise taxes. Governor Pawlenty believes this is enough, and has promised to veto any proposals containing tax increases.

The reasoning is simple. This legislation targets the top 1 percent of wage earners, and they already pay 24.3 percent of all state income taxes. On average, these folks pay $87,552 per year for state and local taxes.

It’s also troublesome because the top wage earners create jobs. It will unfairly target many small business owners because these folks file their tax returns as individuals. According to non-partisan Minnesota House researchers, of the 28,500 returns that would be affected by the new tax bracket, 16,500 of them have business income reported on their individual returns. These people are estimated to pay about $109 million of the proposed $178 million tax increase – or about 60 percent of the total.

Common sense will tell you that many of the mom and pop store owners being targeted by this increase are not among the “rich.” If you take thousands of dollars of profit away from any businessman through tax hikes, he’s going to look for ways to cut those expenses. And the easiest way to do that is to eliminate jobs.

We all know the best way to stamp out homelessness is to have a job. And without a solid business climate, our state will lose employment opportunities. We saw this in 2001, when many businesses were fleeing the state because of our taxes. The Legislature cut business taxes, and eventually added more incentives to bring business here - like Job Opportunity Building Zones – and the job climate turned around. If we have the highest income tax in the nation, why would employers choose to do business here?