Pawlenty Proposes Three-Tier Income Tax System

CHICAGO (AP) — Republican Tim Pawlenty was set to propose an economic policy Tuesday that would simplify individual tax rates to just three options and cut taxes on business by more than half as he offered himself as a replacement to Barack Obama in the Democratic president’s hometown.

The former Minnesota governor also was to propose that any services available privately, such as the postal services or mortgages, should not be something government handles. He said he would require a vote in Congress to extend any regulation or he would cancel it. And he said he would eliminate taxes on investments and inheritances.

“But our policies can’t just be about simply cutting rates. They must also promote freedom and free markets,” Pawlenty said in excerpts provided ahead of the morning speech at the University of Chicago.

Pawlenty’s speech, his first as a declared presidential candidate, also kept an eye on presidential politics and blamed Obama for an anemic economy. He said Americans are ready to innovate and create jobs, but “they have been discouraged and weighed down by President Obama’s big government and heavy-handed regulations.”

In a speech expected to be heavy on specifics, Pawlenty was ready to propose a three-tier income tax system:

— The estimated 45 percent of U.S. households that did not pay income taxes in 2010 would see no change in their tax rates.

— Individuals would pay 10 percent tax on the first $50,000 of income. Couples earning $100,000 would also pay that rate.

— “Everything above that would be taxed at 25 percent,” Pawlenty said.

He also wanted to cut business taxes, reducing the current rate from 35 percent to 15 percent.

Before the event, Pawlenty’s Democratic successor in the Minnesota governor’s office dismissed the proposals as the latest ploy from a politician who cares more about rhetoric than results.

“I think it’s ironic that he’s talking about a fiscal plan for the entire country when he left his state a mess,” Gov. Mark Dayton said in an interview. “He decided he was going to leave and left it to his successor. They knew they were going to kick this down the road.”

In speeches, including the one Tuesday at the university where Obama taught law, Pawlenty boasts that he balanced the Minnesota budget during his time in office although he fails to mention he left behind a projected $5 billion deficit.

Dayton said the cuts under consideration for the next two-year budget include cuts to special education programs, increases in college students’ tuition and limited availability of home health care for seniors to offset the deficits.

When he announced his 2012 White House bid, Pawlenty promised policy details but kept his focus on rhetoric. He went to Florida to promise an overhaul of Social Security and Medicare, programs sacrosanct to the state’s seniors. In New York, he told Wall Street a Pawlenty presidency would not bail out investors. And in Iowa he promised to phase out subsidies to corn-based ethanol, a deal breaker for many in a state that relies on those federal dollars for a way of life.

He pitched himself as a truth teller but was unwilling to offer specifics. Instead, he promised a series of policy announcements that would leave voters convinced he was a policy heavyweight.

Tuesday’s speech was a first step toward that effort. Appealing to small-government conservatives, he suggested what he called “The Google Test.”

“If you can find a good or service on the Internet, then the federal government probably doesn’t need to be doing it,” Pawlenty said. “The post office, the government printing office, Amtrak, Fannie (Mae) and Freddie (Mac) were all built for a time in our country when the private sector did not adequately provide those products. That’s no longer the case.”

And he proposed that taxes on investments, bank interest, stock dividends and inheritances should all be zero.

“Government has no moral or economic basis to claim a second share of the same income. When you deposit a dollar in your bank account, every penny should be forevermore yours and your children’s, not the federal government’s,” he said.

Pawlenty is the second would-be GOP challenger to lay out a policy speech in Obama’s hometown. Mississippi Gov. Haley Barbour also delivered a blistering economic speech here before he announced he would not join the Republican presidential field.

On Monday, former Sen. Rick Santorum of Pennsylvania declared he would seek the GOP presidential nomination. Last week, former Massachusetts Gov. Mitt Romney formally announced he would seek the White House for the second time. And before the end of the month, Rep. Michele Bachmann of Minnesota and former Utah Gov. Jon Huntsman were set to announce their next political moves.

A debate next week in early nominating New Hampshire stood to clarify the contest that is fast approaching its first test of organization: the straw poll in Ames, Iowa, set for August. Among the serious contenders, only Huntsman was expected to skip.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Steve

    He pitched himself as a truth teller but was unwilling to offer specifics. Instead, he promised a series of policy announcements that would leave voters convinced he was a policy heavyweight. From Pawlenty. I noticed that there aren’t any comments. But how can someone who says he won’t raise taxes and puts in place fee’s say he is a truth teller. He is a liar and a double talker. You were not a good Governor. What makes you think you would be a good President. We were not impressed with anything you did for this state. Just go away and don’t come back into any political arena. Your a joke and a wanna be nothing. And by the way. Don’t think I am a democrat who wants to complain. I was a Republican and am now a Independent Conservative.

  • jody

    Pawlenty isn’t any worse than Obama. Yes he left MN a mess but in this economy that shouldn’t be so surprising. We have illegal aliens flocking to our state because of all the free handouts they get, our taxes are too high so businesses are leaving. Maybe him and the idiot they elected in as the new governor should start putting some restrictions on who we are supporting and take care of the people who are paying for the services!!!!!!!!!!!!!!!!!!!!!

    • th

      The so called “idiot” that the people of Minnesota elected is the only one who is looking out for the people of Minnesota that need help. When taxes were highter the state of Minnesota was flourishing. What happened to Minnesota NICE?

    • Mike


      Workers from Mexico and South America come here to work because they have jobs that given to them by ILLEGAL EMPLOYERS! They do not receive FREE HANDOUTS!
      If you think taxes are high now, wait until PASS THE TAX AND FEE Pawlenty or some other Republican gets in office, reduces business tax to nothing and YOUR STUCK paying their share too! Taxes are not going away, they are being SHIFTED to the middle class and your the idiot VOTING FOR THEM!!!!!

    • Walker

      @jody. Pawlenty is worse than in Obama in that as someone who claims to want to shrink government he did nothing for his time in office. Name what he trimmed. Did the State government get leaner under him?

      • Claire


        Claiming Pawlenty is worse than Obama on shrinking the govt? The average number of Fed workers for the past 30 years has been in the 1.1 to 1.2 m illion range. Just in the past 2 years that has risen to 1.4 million and the number of salaries over $150,000 has doubled. City council members in California look like Saints compared to Obama!

        • Walker

          @ Claire
          Try finding more accurate statistics as in 2008 there were 2 million federal employees.

          If you cannot see that Pawlenty comes across as BS when he talks about shrinking government and did nothing. IMO ah hypocrite is a terrible thing. The pay for US judges went up over 150000 recently, a fact you could have easily discovered for yourself. That happened in the last year of the Bush administration and took effect the next year.

  • zeldria

    I am so tired of hearing Pawlenty’s name, he did nothing good in Minnesota and should crawl back under his rock. He’s a has been hack with nothing to offer, he’s a part of the conservative right wingers that is only interested in what he can get off the backs of the middle class and the poor. All this small government bull is just more lies so the right wingers can destroy this country. The republicans had there chance to fix the country and to do the right, fair and just things for this country but they didn’t because they were to busy trying to figure out how to squeeze blood out of the middle class and the poor. You reap what you sow people.

  • Bill

    When George W. Bush came into office, there was no deficit. When he left there was nearly a trillion dollar deficit. When Ronald Reagan came into office, there was no deficit, when he left there was an over 200 billion deficit. When George H. Bush came into office, there was not deficit, but when he left there was an over 250 billion dollar deficit. When Bill Clinton came into office, he was faced with the Bush’s father’s deficit, but when he left there was over a 200 billion dollar surplus. When Tim Pawlenty came into office, there was no great deficit. Now there is. Anyone who thinks they can ask for more: better schools, better roads, better police departments, better parks, etc., etc. and never have a raise in taxes has his head buried in the sand. The whole history of our economy tells us that ordinary Americans have actually faired much better in times of raised taxes. If George H. Bush hadn’t raised taxes in spite of his “read my lips” promise, there would have been a terrible recession. Funny thing is, actually not at all funny, those who complain the most about taxes have the most in America. Such patriotism!

    • Les Johnson

      Raising taxes is the answer? No.

      The usage of the taxes they do receive is catastrophically unchecked and mismanaged. We don’t need to give the government more of our money to take care of us, we need them to use the money we give them wisely.

    • dan

      And Obama has taken the deficit from 500 billion to over 1.4 Trillion in 2 years. What is your point Bill?

      • David

        Sure there has been a deficit after Obama took over from Bush/Cheney. If you take away the unfinanced cost of the Bush/Cheney wars and the Bush/Cheney TARP program that deficit would not exist. Bush/Cheney dug us into a huge hole over eight years and it will take some time for wiser minds to pull us out.

        • dan

          David, I hate to confuse you with facts but the CBO estimated Obama’s stimulus package at $814 Billion! Cant balme that on past administrations………………

          dug a hole? $500 Billion in 8 years VS $900 Billion in 2 years?

          • IWonderIF

            The issue at hand with Obama was he is fighting a war against recession.. If he had played the same hand that was played during the great recession we would be in a world of hurt. This is how it works. It is called Macroeconomics which is entirely different from microeconomics, micro meaning individual economics. You absolutely cannot apply 7th grade math to Macroeconomics as you probably can with Microeconomics. They are two sides for Maco and it Keynesian vs Neoclassical( based on Says Law)economics. You cannot be all on one side and ignore the other side. Its all based on timing and BALANCE . The economy is doing well , you apply neoclassical principals and vise versa.. Economy 101.. Education is good
            Stay angry Friends

            • Clark

              Either way the economy still stumbled as a direct result of Obamanomics. We are worse off now than we were when he took office.

              • IWonderIF

                what evidence can you supply to support this. Explain “Worse off”. Our gpd is still experiencing positive movement. Although it is not as strong as it was before but it is still positive. And also define “When he took office”. There isnt some magical date line that when a president takes office every thing the last president magically goes away. here is the facts. I believe that the federal Gov. fiscal year ends in Sept. This means we were still under the Bush budget for the first 8 months Obama took office. No Im not blaming any president as to why we are in the mess we are in because I personally think its stupid to do so. But these are the facts

                • IWonderIF

                  You may want to re visit and fact check your time line. At tne begingin of bushes term
                  GDP = + 2.5% give or take
                  At the end
                  GDP = -3% give or take

                  Bush budget
                  Tax break were un funded
                  Wars were unfunded
                  Stimulus – un funded

                  At the end of his term
                  we were losing 800K jobs a month!..hmm weird

                  Why is it that republicans always have an issue with Facts. This is history, not a made up story.

                • Clark

                  GDP had a steady rise of over 50% during the Bush years. Obama 0%

                  Fed Govt Deficit in 2008 was $500 Billion now we are over $1.5 Trillion

                  Fed Deficit as a % of GDP was 3% in 2008 now we are over 10%

                  Unemployment in 2008 was under 7.5% and are now over 9% after a promise that the stimulus was needed to keep unemployment under 8%. We passed that 2 years ago.

                • Clark


                  Keep wondering. Argueing with you is a waste of my time. You show no facts but ask me to cite my source.
                  I am moving on from this conversation. have a great day and look it up to enlighted your Leftish views of the world

                • IWonderIF

                  I rest my case. What we have here is another prime example of an awesome republican…
                  Keep on trolling and stay angry friend

              • @IWonderIF

                and what he have here is an example of a liberal college student with no actual real world experience.

                • Debbie

                  What is IWonderIF resting his case on? The fact that Clark can back up his facts and IWonderWhatTheRealWorldIsLike cant?

    • Tom

      @ Bill

      I have made the same argument and conservatives will say what you just said simply is not true. But in reality it is true!

  • GOP is a CULT

    Elect Tim Pawlenty then a bridge near you can fall down to

  • G Dog

    Pawlenty = Fool.

  • Peter

    The computer at the nut house must be back up and running.

    • haha

      the homepage is WCCO

  • Claire

    Whether you like Pawlenty or not it would be nice for someone to overhaul the tax system to simplify and make sure everyone is paying their fair share of taxes.

    • M B

      Fixing the tax system would be great. However, to do so, you need to remove all the loopholes that the rich can drive a train through. The chances of that actually happening when they have bought off congress are pretty darn low.

      • Les Johnson

        Very true.

        For example, Bruce Springsteen owns a huge chunk of undeveloped land.

        He claims it is a farm, and he is a farmer.

        He therefore receives federal subsidies for his farm, although he has no farm on the property.

        No livestock, no crops.

        He actually GETS money from the government, just to keep.

  • Max

    Pawlenty claiming to not have raised taxes in Minnesota and balanced the budget are completely disingenuous statements. Our property taxes have continued to rise as a direct result of his continued reduction of state aid to local governments. Who is he trying to kid??

    • Mick

      I agree basically with your statement however,you may want to look at your local government spending as they are the ones raising your taxes. What are they getting paid, pensions, healthcare, projects, etc.

      • th

        Mick you seem to blame unions for the mess the state is in. If it weren’t for the unions where do you think your wages would be right now? In the toilet.

        • Mick

          Duluth is broke because of benefits given to city workers. LIfetime pension equal to pay at retirement, lifetime healthcare for family, etc. The city has the right to give that to their employees but they don’t have the right to ask the state and the rest of the taxpayers to pay for it. That is what they are doing. They give the unions bennys and the union backs them in the election. The city is the number one employer in the Duluth.

      • M B

        Except that the reason they are raising taxes is because the support that has existed from the state up to this point has been greatly reduced. Part of Pawlenty’s Slash-and-Burn mentality.

        All he did was shift the burden off the state and to the local governments, all the while being able to claim “*I* didn’t raise taxes” No, of course not, everybody else raised taxes because of him.

        What this effect has is that it creates a disparity in the low income areas vs the high income areas. This means that disadvantaged neighborhoods/cities no longer get the funding to equalize education or any of the other basic services that they used to be able to.

        Net taxes-wise, mine have gone up repeatedly under Pawlenty’s regime despite his claim of “not raising taxes” , it just got shifted from state to local. I live in a middle income school district and the schools here (Centennial) no longer have money for summer school. So, they just keep passing students that are failing so that “No student is left behind”. The levels of stupidity in these type of policies (from Federal to local) are epic.

        • Les Johnson

          @ M B

          “I live in a middle income school district and the schools here (Centennial) no longer have money for summer school.”

          And you are attributing that to Tim Pawlenty, and blaming him for it?

          I think you better re-examine your school district’s spending habits as well as your city, if you think it’s Tim Pawlenty’s fault Centennial can’t afford to fund its Summer School program.

          • Reasonable

            So in the “state’s rights” argument you’re just reducing it further no? If the fed govt doesn’t give the states adequate funding and a state’s services begin to lack, then you can just move to another state! If your city is begining to lack services due to a lack of adequate funding, just move to another city or county right?
            Good luck finding a job, housing, selling your current house, etc… in this market.

            Here’s a funny idea, look at actual history and not a myopic think tank’s website. In lean times of the “private economy” the govt has to come in and prop things. This causes higher taxes and reduced spending to meet the defecit. Last time this happened was in the mid 90’s when we had surpluses. Imagine that, taxes were HIGHER than they are now and we had widespread prosperity. Who woulda thunk it eh? During boom times, the govt comes in, lowers taxes and ends up raising spending since there’s a surplus. The last time that happened was in the early 2000’s and you’re currently living the aftermath of such ingenious planning.
            This isn’t a liberal vs. conservative argument either. It’s just reality. If we went back to the tax tables of the 1980’s to the end of the 1990’s and reduced spending to creat more debt payment, want to take a guess at what would happen? Use real history, not wingnut theory on this one. You were probably alive in 1996, what happened then?

          • M B

            Yes, I am blaming him. He’s the one responsible for the repeated spending slashes for the state’s education program. Who else would I blame?

            In any situation you can only stretch resources so thin before things start breaking. Yes, the districts can try being more efficient, but there’s only so far you can go with this. The typical “Cut- cut- cut, be more efficient” only works so far until the machinery begins to break down. Pawlenty passed that point long ago.

  • regular guy

    This appears to be the same program that Huckabee proposed. He was forced to admitt that it did not cover all costs and that taxes would be much higher. Check the CBO estimates. Ths is just so much wishful thinking.

    • Claire

      Regular guy,
      Huckabee’s proposal was a consumption tax on everything you purchase, not a flat income tax.

  • Wow

    No way the Democrats would allow that big of a change to the tax code even if he did get in. I guess you can run based on any promise though.

    • Clark

      Why wouldnt the Democrats support a more balanced and fair tax code? Seems like everyone would pay their fair share. No more GE’s of the world avoiding taxes right?

      • Read the Story

        Clark You did not read the WHOLE story, He does not want to tax any investments.
        That just makes another hole in the snakes to crawl in.
        They should be taxed on that income also. Then it might be a fair tax. People only making
        $50,000 a year do not have enough left to invest.

        • Clark

          I didnt state that he wanted to tax investments. Read most post before making stupid comments

      • Diane

        Because the rich would get richer and you would still stick it to the poor. I hate Republicans!

        • Southern MN Mom


          Your simple two sentence response tells me a lot Diane. Your vision of America is called Socialism or Marxism. People who support this system want the government to take care of everyone and everything. Socialists want more government. Capitalists want less government. I want to take care of myself.


          • Diane

            Its nice you can stay home with your kids. I am a single mom trying to make it and if I need some govt help so be it. There are pleny of people who make enough money that can give a little more.

            • Southern MN Mom

              Wrong Diane-

              I am married with 3 grown kids and have my career and my own small business. I really do appreciate YOUR situation, but it is YOUR situation. I would assume that it bothers you to take government help and that you have a plan to improve YOUR situation. When people are down we need to help them up, but this financial help must have an expiration date on it, except for a select few.

              The problem is when people depend completely on the government to take care of them, like a parent taking care of children. It is not the role of government to take care of you and YOUR children for the rest of YOUR and their lives.


              • Mom's Fan

                Dear Mom,

                Of all the trolls and free loaders that typically spend their days venting on WCCO’s self help forum, today is that day that I am glad I perused though. I am in 100% agreement with your views! It’s comforting to see that I am not alone.

                Hey Diane, two words: Birth Control

                Two more words: Use it

                • Sick of it

                  It’s because of people like Diane that we are called the welfare state. No one asked you to have kids that you couldn’t take care of without suckling at the government trough.

            • get over it

              It’s nice you can steal money from others who have not made your poor life choices.

        • hate is a strong word

          So why don’t you do something to get yourself out of your “poor me” situation? Because I dare say you’re just the type who uses every excuse in the book of why you can’t.

  • Reasonable

    GE didn’t “avoid taxes”, how many millions did they pay in payroll and OSDIA for their employees? How much sales tax did their product line generate? How much gas tax did they pay moving their products around the world?
    The rumour that they paid no corporate income tax is based on accelerated depreciation and tax credits for new technology. Both of these items go as far back as Nixon so you can’t blame it on either recent administration.
    Lesson learned, if you don’t want to pay income taxes, learn to lower your taxable burden by donating to approved charities or by investing in new technologies.

    Good luck with all that.

    As far as Timmy’s Tax Plan is concerned. The shortsightedness and cognitive dissonance of the average American is once again on parade. History since the founding of this country has shown us that higher taxes and govt involvement during lean economic times leads to long term success. Then, after people complain about high taxes for long enough a politician will come in to lower taxes and usually not lower spending by an equal amount. This begins to increase the defecit on the govt side. Typically during this time there is also a “bubble” of some variety that increases the private economy by drastic amounts. That bubble bursts, as it needs to, and a section of the economy tanks. Meanwhile the shell game at the govt level makes it look like the lower taxes caused the increase in the economy when it was really just foolish investing. This in turn causes public outrage at the party in power and they get voted out. Because of that voting out, the long term application of their economic policy ends up a complete failure because some other clowns come in and change it all up.
    If you really want the govt to start making sense again, look no further than Clinton and Gingrich. Taxes were higher, spending was lower, personal prosperity was growing for all classes. This is a GOOD thing. Look at the last administration, taxes were lower and spending was higher. It doesn’t take a Rhodes Scholar to see that as a BAD thing. Democratic presidents with a Republican house tend to make the best govt. We get the higher taxes we need combined with the lower spending amounts that we need and it all washes out to budget surplusses that can be used to really move America forward with investments in education/infrastructure/new technology/exploration/medical R&D/etc…

    • Mr. M

      Will you please go work for the government? Finally, some intelligence. Fully agreed.

      • Reasonable

        Feel free to elect me if I ever run for anything. Of course, never expect to find me since I won’t play with either party since they’re equally full of good and stupid ideas. I’d rather have my own and stick to my convictions (and the will of my electorate) than play along with idealogues…

        Les – You’re right, income disparity is at an all time high and is a huge issue. There is only one way to solve that and that is to completely reverse the thinking of the American investor. Instead of investing for yourself, you invest for the country (such a filthy socialist I am…). You may not make 200% returns on investment, but you’ll know that people are still employed in this country and not at a foreign call center for 1/10th the pay. Funny thing is though, more emplyed Americans means more money here means more consumption (the driving factor in our economy) means better returns at the top. It’s the same trickle up economic theory that has been in effect since the 40’s but with an added dose of protectionism. A little bit will go a long way.

        Of course that means you have to take institutional and personal greed out of the equation as well. Auto Worker’s Unions needed to see that their model of bargaining was unsustainable, at the same time GE/Ford/etc… needed to realize that they could reduce production by 15-20% and still meet demand with a leaner process.

        See, it takes something from both sides of the argument to have a functional compromise. This is called civil discourse and it has been severely lacking in the last 15-20 years.

    • Les Johnson

      “GE didn’t “avoid taxes”, how many millions did they pay in payroll and OSDIA for their employees? How much sales tax did their product line generate? How much gas tax did they pay moving their products around the world?”

      How many billions of dollars did the CEO and upper management staff steal from the company? What is GE’s income ratio from CEO to lowest salaried FTE? That is the disparity that can sink the entire economy. It should be near 30:1 ratio. It’s closer to 3,000:1. Here lies the problem.

  • I don't get it

    It is amazing to me the progressive and liberal posters. Why not just wear a sign that says I am lazy, have made bad occupation choices and so I am poor therefore I hate anyone successful. My revenge will be to rail against producers and fight for higher taxes to be levied on producers. I just can’t seem to wrap my mind around the liberal mindset of shunning success. How do you all get up every day and continue with your routine? Maybe a year of it but just naturally wouldn’t you just want to start trying to be a success. It is there for everyone to take. Is it a lack or work ethic or what? I am truly at a loss. My only problem with the story is Pawlenty’s suggestion that the 50% of freeloaders are still allowed to freeload.

    • Reasonable

      When you’re retired and living off of your Social Security Income, then you’ll likely be one of those free loaders. You’re a scummy old person!

      I mean really, show of hands folks, who here HONESTLY believes that 50% of the US population that earns an income, pays no taxes in any way shape or form? No sales taxes, no property taxes, no license fees or anything like that. If you just raised your hand, do yourself a favor and smack your head with it. Just because your income taxes are below the federal income tax threshold does not mean by any stretch of the imagination that you don’t pay any taxes and are therefore a freeloader. Please be careful when you’re getting off a horse that high, you may break your ankle and need medical care!

  • IWonderIF

    Its funny that every Republican thinks that every well of person is also a Republican and every “freeloader” is a democrat. Take a look at the “Red” vs “Blue” states. You will clearly see that it is the Blue states that keep this country afloat.

    • dan

      Please enlighten us on one example of how 1 state “keeps us afloat” over another state? This should be good

  • bargoer

    Where were those democrats in 2002.

  • Sick of liberal talking points

    Us damn republicans. Always doing something wrong. It seems to me that whenever there was a republican president or republican governor the democrats were in control of the house and senate. The policies come from those sources. Not much really the president or governor does but signs the bills or veto’s them and then the house and senate override him. Now we have the republicans in control with a democratic president and a democratic governor and we still can’t get anything passed. Once again I will say this: Us damn republicans

    • Les Johnson

      Wrong pronoun. You should have used the word “we” there, not “us.”

  • Middle class tired of paying

    How much is a dollar worth today? How much will it be worth tomorrow? I don’t think fixing taxes to income ranges is a good idea.

  • markH

    Something is missing in either Pawlenty’s new tax plan, or those who wrote this story missed something. If 45% of taxpayers do not pay any tax currently, and the first tier tax (as proposed) is 10%, then those with incomes at or near poverty level would still be paying SOMETHING, not zero. If a bagger at a grocery story earns $14,000 annually and he did not incur a federal tax liability under the current system (given personal exemptions, etc) then Pawlenty’s proposal would tax his income at 10%, or $1,400. Far from not seeing “any change in their tax rates” these folks would actually see a dramatic (10% increase) change.

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