Thursday, March 20, 2008

Minnesota Mining and Manufacturing

No doubt my younger readers out there are wondering what I am talking about when I say - "Minnesota Mining and Manufacturing" (MMM) but if I mention "3M" and "Post-It Notes" then I would connect with you. MMM was the original company name that evolved with societal and economic change to become the industrial giant known as 3M today.

But given today's front page news in my local newspaper -- "3M sends troubling signal to Minnesota: Unit HQ move opens front of uncertainty for the state's economy" -- perhaps they should change their name again to "1M" . The days of 3M being a mining operation in northern Minnesota are essentially gone with them evolving into a supplier of mining supplies (a good economic move by the way to get out of the commodity business of mining into a high-value service industry like mining supplies). Now with today's news that 3M plans to move the leadership team of its optical systems division from Maplewood, Minnesota to Hong Kong sends another clear clue that we have heard here in Minnesota before -- 3M will probably cease being based in Minnesota within a few years given the changes in the global market.

I have no problem with 3M moving with the changing global marketplace knowing full well the state of Minnesota could be harmed in terms of jobs, prestige, etc. with such a loss. However, I do have a BIG problem with our current state corporate income tax which the Minnesota legislature has failed year after year to reduce -- better still, eliminate -- to make Minnesota a more competitive tax jurisdiction.

A perfect example is the article on the same front page today below the "3M Sends Troubling Signal........." which was entitled -- "State Budget Fixer Turns to Business Tax Reform." In this article we find that one of our state representatives has proposed a "business tax reform" that -- BIG SURPRISE HERE -- raises another $171 million for state government. This legislation would accomplish this theft by closing a tax loophole for "foreign operating companies" combined with a reduction in the state corporate tax rate from 9.8% to 8.8%. Wow, a full one percent, how generous the state can be with our tax money!!

Sadly most consumers would probably say the same old refrain of "yea, tax those corporate fat cats" without realizing -- due to the lack of school choice/competition in this country -- that CORPORATE INCOME TAXES ARE SIMPLY PASSED ON TO CONSUMERS AS HIGHER PRICES OR TO SHAREHOLDERS IN REDUCED DIVIDENDS.

The Minnesota Legislature could easily make national news simply by bringing our corporate income tax rate down from 9.8% to 0% with the net effect being increased economic growth in Minnesota. Yes -- 3M may still leave its original home in Minnesota to become a non-USA corporation but at least by eliminating this tax we will actually COMPETE to keep 3M here in the Land of 10,000 Lakes versus our current policy which encourages companies to leave our state borders.

Now this is a tax reform debate that should happen in St. Paul.

Time to dump more tea in the harbor,


1 comment:

Anonymous said...

Makes complete sense, but who (please insert your favorite government official here)wants to get flattened by stepping on the tracks in front of the already speeding gravy train? Our society is not set up to weather the "pain before gain", and the whining about what will be taken away would be deafening... No matter, please keep up the good work and find the angles to get there, Mr. Kruse. DJM