PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

STATE SPOTLIGHT: Time for Minnesotans to Stop Fooling Themselves

By at 26 September, 2019, 11:00 am

by Raymond J. Keating-

Small Business Policy Index 2019: Minnesota ranked 46th – fifth worst – among the 50 states.

 SBE Council’s “Small Business Policy Index 2019” ranks the 50 states according to 62 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2019: Minnesota ranked 47th – fourth worst – among the 50 states.

SBE Council’s “Small Business Tax Index 2019” is included in the Policy Index report, ranking the states according to a wide array of tax measures, including income, capital gains, property, death, unemployment, and various consumption-based taxes like state gas and diesel levies.

It’s that time of year for me and the state of Minnesota. No, I don’t live there, but it’s football season and my fandom does resides in the Gopher State as I’m a lifelong fan of the Minnesota Vikings.

Of course, it’s kind of weird being a Vikings fan. Since coming into the NFL way back in 1961, the Vikings have the fifth most wins in the league. Nice, right? But at the same time, not only have the Vikings never won a Super Bowl, they’ve lost four. So, in my more sober moments, I call this the fool-yourself time of year, where I allow myself to believe that perhaps this is the year that we finally win a Super Bowl.

But then again, the entire state of Minnesota plays this game with how it treats entrepreneurs and small businesses as well. I have no doubt that state elected officials talk up Minnesota as a great place to start up and run a small business. But, unfortunately, they are fooling themselves. Indeed, the very policies implemented and perpetuated by state officials signal that Minnesota is a hostile place for entrepreneurship. So much for “Minnesota nice.”

SBE Council’s “Small Business Policy Index 2019: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth” ranks the 50 states according to 62 different policy measures, including assorted tax, regulatory and government spending measures. Unfortunately, Minnesota ranked fifth worst among the 50 states. The state also earned the fourth worst spot on the “Small Business Tax Index 2019,” which is a subset of the larger Policy Index, whereby the states are ranked just on tax measures.

The negatives are considerable, including very high personal income, individual capital gains, corporate income, corporate capital gains and unemployment taxes; imposition of a death tax; and a high minimum wage mandate.

It’s not just the weather that pushes residents to move to places like Florida; it’s the tax burden as well. Indeed, Minnesota is a pretty reliable exporter of people to other states. For example, in terms of movement of people between the states (i.e., net domestic migration, which excludes births, deaths and international migration), from 2010 to 2018, Minnesota suffered a net loss of more than 26,000.

So, it’s time for Minnesotans – in particular, elected officials in the state – to stop fooling themselves about taxes, regulations and other governmental burdens. These factors do, indeed, matter to entrepreneurship, small businesses and the state’s overall economy, and reducing those burdens makes a heck of a lot of sense.

Meanwhile, go Vikes!

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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