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Wed, Dec 03 2008 

Published August 28, 2008 03:35 pm - The poverty rate in Minnesota is rising; fewer have health coverage. These are more important measurements of our economic health than the tax rate.

Our View: Lower tax rates, worse economy


The Free Press

More poverty, fewer people with health insurance, lower incomes.

That, in a nutshell, is the diagnosis we can make on Minnesota’s economic health since about 2001, when the state was coming out of a recession. Short-term measures don’t seem much better.

The Census report released this week shows that the total number of people in poverty was up 60,000 in the state from 2006 to 2007 for a total of 482,000 people living in poverty. The poverty rate, still one of the lowest in the country, went from 8.2 percent to 9.3 percent. Families of four making less than $21,000 a year are considered to be in poverty.

Incomes are off a bit since 2001, but down more drastically since 2006. The median household income declined almost $2,000 from $59,583 in 2004-05 to $57,932 in 2006-07. Minnesota still has one of the lowest rates of people without health insurance, but the Census estimates there remain some 433,000 without it.

Such indicators used to be the measure state lawmakers would use to assess the effectiveness of government policies. Equating these statistics on a couple of policy fronts might leave us scratching our heads.

While income taxes remained low and the state dealt with huge budget deficits with spending cuts, the result in economic growth was almost non-existent. The belief that lower taxes alone would bring economic growth does not seem supported by the recent facts.

One could argue that had taxes been increased to support the spending, we would have only been worse off than we are now. That’s one line of thinking that seems, at best, calling the glass half full, when we’re extremely thirsty for a full glass.

Politicians of different persuasions can likely spin the numbers to say they told us so on the particular economic policies they favor. That wouldn’t be anything new. It seems hard to imagine a policy we can promote that we can positively attribute to the current economic health indicators.

One expert sees trouble ahead in one of the statistics: the number of children in poverty. That number has grown from 9 percent to 12 percent, bringing total children living in poverty to 143,000. Art Rolnick, director of research at the Minneapolis Federal Reserve, says studies show that children living in poverty get a slower start in school, something that has proven to be a huge economic cost in social services for these children down the line.

Tax rates and spending measures may not be as important as economic measurements than our investments in children, and their economic standing when they begin using those investments. That may be a better way to measure how successful we will be in the future.



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