Opinion editor’s note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. To contribute, click here. This article‘s author is Doug Loon, president and CEO of the Minnesota Chamber of Commerce.
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Minnesota’s economy is the bedrock of our shared success. A good economy builds from a foundation of innovation and hard work. A good economy makes Minnesota an attractive place to start a business or raise a family because it provides economic opportunity and quality of life for all Minnesotans.
But a good economy doesn’t just happen. It needs businesses to create jobs and it needs a long-term pipeline of talent. It relies on reasonable costs and rational regulations, and it needs elected officials who understand the impact of their actions on both employers and employees.
Last legislative session, lawmakers passed some of the most wide-sweeping and consequential policies in decades. They turned a near $18 billion surplus into a deficit in the next budget cycle. They increased taxes by $10 billion over a four-year period and increased spending by a whopping 36%. A commonly made argument in support of these policy changes was that they would improve the lives of Minnesotans.
Many of these new laws increased costs substantially on Main Street and headquartered Minnesota businesses, their employees and their customers. But costs also increased for every other employer in our state, too — schools, colleges, nonprofits, hospitals, churches, cities and counties. For some, the costs may be passed through to their customers. For others, these costs could mean increases in property taxes or legislative requests to fund their higher budget needs. The result is unsustainable growth in government spending and tax pressures in the long term.
It’s well-documented that Minnesota has high taxes. And the argument goes that with high taxes comes a high quality of life. But we don’t just have high taxes. We also have high child care, housing and college tuition costs. Minnesota is becoming an increasingly expensive place to live and grow a business.
When costs and regulatory burdens are high for businesses, investment moves elsewhere. Minnesota-based companies are expanding in other states at a higher rate than out-of-state companies are expanding and investing in Minnesota. Since 2020, there has been a net investment deficit of 54 projects, 2,500 jobs and $6.6 billion in capital expenditures. Our corporate tax rate is the highest in the country now. Our individual income tax rate is sixth highest — and most small Main Street businesses pay their taxes through their individual income taxes. When costs are high for the public sector, the public pays through higher fees and taxes.
