Tuesday, February 14, 2006
Taxing our way to Prosperity
During the 2005 Minnesota legislative session there was a proposal to create a new, maximum 11% percent state income tax bracket (up from the current 8%) on the state's highest wage earners.
I was reminded of this mis-guided tax policy which was advocated by state Senator Larry Pogemiller (Democrat) this past weekend when I read the local Pioneer Press newspaper. Included in the business section was a graphic depicting the number of public companies based in Minnesota which ranged from:
YEAR NUMBER OF COMPANIES
SOURCE: Tom Smith for the Fact Book
That is a whopping loss of 128 companies over the last 8 years or 16 companies per year. Some potential reasons for this loss of course would be -- mergers and acquisitions by non-Minnesota companies, moving headquarters "off shore" to avoid corporate taxes, and economic failure/bankruptcy/liquidation however since the state's unemployment rate is very low this suggests other factors are at work.
Perhaps corporate leaders in Minnesota simply lost hope that the state would ever have tax reform that would remove us from the upper tier of highly taxed states and decided to move their companies to other states. Ask yourself this -- if you are the CEO of a company looking to expand or move your headquarters to a more business-friendly state would the fact that Minnesota has (could have had in 2005 to be exact) the highest personal income tax rate in the USA discourage you from considering Minnesota as an option?
Can any of our 201 Minnesota state legislators explain this loss of 128 companies over the last 8 years? Does Senator Pogemiller think that "taxing our way into prosperity" is a sound public policy solution? If that is the case why stop at only 11% of personal income -- let's take 50% so we will be even richer!!
Please send me food stamps,