Unquestionably, Minnesota is one of the highest-taxed states in the country for business, and that fact is being used by lawmakers who see cutting those taxes as the first step in creating and maintaining jobs.
Usually, anecdotal stories of companies folding up shop in the state are used to prove that taxes cause companies to leave Minnesota. But there have been few — if any — comprehensive (and objective) studies asking them why they left.
On Minnesota Public Radio’s Midmorning broadcast this morning, a caller asked why taxes couldn’t be raised to give Minnesotans a “21st century education” (whatever that is). That, the caller said, gives Minnesota an advantage over other states.
Rep. Marty Seifert, R-Marshall responded that politicians aren’t the ones to answer that question, but “it’s best to ask the people who create the jobs.”
“We lost the world headquarters of State Farm out of Woodbury. In my area, we’ve lost divisions of Schwann’s, Viessman Trucking, Anderson Trucking, Luverne Bumper Company, Luverne Fire Apparatus, Hill Stainless Steel, and the list goes on and on and on. Can can talk about Dayton Hudson and divisions of Honeywell. The reality is if you raise taxes and these folks leave, there’ll be no one to educate.”
Seifert is correct that State Farm moved out of Woodbury, fewer than seven years after building a huge campus in the city. Fifteen-hundred jobs were lost in the city; 350 of them moved to Mendota Heights. But he’s wrong that it was because of the state’s business climate. He’s also wrong that it was the world headquarters of State Farm, a company that calls Illinois home. The Woodbury office was a regional service headquarters for six states.
Before the company consolidated its operations in Lincoln, Nebraska, the company announced the two sites would combine, but at the time it didn’t say where. Area officials offered tax breaks to State Farm, but the company rejected negotiations, saying the decision wasn’t about taxes, it was about efficiency to save $26 million.
The theory that taxes prompted the move tends to ignore Nebraska’s business tax ranking at 33rd in the nation. That’s better than Minnesota’s, but not by a lot.
Dayton Hudson became Target, which is still headquartered in Minnesota. It sold its department store chain to May Department Stores, which eventually sold it to Macy’s, a company based in New York, another high-tax state.
This isn’t too suggest, of course, that taxes aren’t part of the mix. But to the original question of the caller, it’s unclear what the balance is between taxes and other factors.
Meanwhile, there were plenty of people e-mailing their commentaries during the show on the subject of the state budget Here’s a sample:
From Saginaw, Mn.
As a former employee of MSOP in Moose Lake, I here nothing of finding cuts within the state system. Currently in MSOP, consultants are utilized when there are qualified people within the state. Directors of a health facility, do not have any health care experience. They have been taken from the DOC system, where the emphasis is incarceration not patient wellness. It is a needed evil to have such a facility, however I think it could be managed more efficiently. Note the employee turnover in the last 4 years, also I think the taxpayers would like to know the amount of wages earned by the directors/consultants. How many state employees were laid off versus terminated in recent years? Look into cost overruns during the last construction phase, and see if the same expenditures are projected to the new construction phase. Thank You
Tax breaks might keep companies here, but how does cutting public services, education, health care impact the quality of living and the workforce? What happens when our most qualified and our best educated don’t want to live here because the standard of living decreases? People don’t come or stay in Minnesota just because of the jobs. They come and stay here because of the overall standard of living.
If lawmakers are so concerned about lower corporate tax rates why aren’t state tax laws conformed with federal depreciation tax deductions to give small business the same faster write-off for capital expenditures that they enjoy for federal tax purposes?