A pair of Minnesota business icons recently announced moves that not only could result in lost jobs for the state, but should cause us to take a serious look at our business climate.
First, Northwest Airlines said it plans to move its headquarters to Atlanta through a merger with Delta. Then, 3M said it will phase out some production at its Hutchinson plant, shipping some of its operation to Singapore and reportedly costing us 86 local jobs.
The National Tax Foundation's 2008 State Business Tax Climate Index provides clues as to why companies are looking elsewhere. The report shows Minnesota is the eighth-worst state to grow jobs or start a business when you examine the bottom line and tax rates. Georgia – where Delta has its headquarters – ranks 22 states better than Minnesota and the gap may widen even further as our state continues to pass tax increases and other business-damaging legislation.
Furthermore, Minnesota is the 44th worst state in terms of corporate taxes at nearly 10 percent, while Georgia is sixth at 6 percent. From a sheerly bottom-line standpoint, it is apparent we need to do more to make Minnesota a better home for businesses.
Our state reportedly lost 4,100 non-farm jobs in February. Minnesota is reported to have lost 2,300 jobs in December and 10 times that number over the past six months. When you look at what neighboring states are doing, you can see we are behind the pace.
In North Dakota, expanding businesses can get up to a five-year exemption from state corporate income taxes. North Dakota also offers targeted sales and tax exemptions, property tax exemptions, and tax credits in seed capital investment, research expense, agriculture, renewable energy, wages and workforce recruitment.
Minnesota should add incentives like the ones North Dakota offers. If we ease the burden on our job creators, investment and jobs will flow back to Minnesota, our economy will be rejuvenated and state revenue will increase.
Wisconsin and Iowa also have tax credits for their dairy industry. I’ve worked hard on legislation to at least give Minnesota farmers a level business field compared with neighboring states.
What’s disappointing is that some legislators want to eliminate programs like the JOBZ package of tax incentives. Two Litchfield businesses recently received JOBZ approval and will combine to save more than $1.1 million in taxes. More than 220 jobs in Litchfield alone have been created and/or retained since JOBZ’s inception in 2004; 17,000 jobs statewide. JOBZ might need some fine-tuning to maximize its benefits, but it should not be repealed.
We can’t afford to put ourselves further behind in the business market. Even if it’s too late to prevent our Northwest and 3M losses, we should acknowledge there’s room for improvement in Minnesota’s business environment and must follow through with meaningful, bipartisan solutions.