29 thoughts on “Dakota Rose

    1. Joe Loveland says:

      South Dakotans have a lot more than low taxes to offer the world, but their government’s one-dimensional ads do imply that is all they’ve got.

  1. Jim Leinfelder says:

    What I should’ve added is that I find it much odder that our Republican politicians extoll the virtues of South Dakota’s business climate over our own state’s, all evidence to the contrary.

    I get why South Dakota does it.

  2. Newt says:

    I think it makes total sense for Minnesota businesses to relocate commodity manufacturing and call-center operations to SD to escape onerous regulation and taxation. It is improbable that executives and corporate offices would leave the state.

    The formerly-controlled DFL legislature needs to understand that the world is truly flat (aka Friedman) and that plaintiffs’ attorneys are not what drives a growing economy.

    1. PM says:

      Newt makes an important point–certain types of businesses are more likely to listen to that siren call of low taxes than other types of businesses.

      I would ;point out one other thing–we are more likely to lose our headquarter companies to places like NYC, Chicago and San Francisco (can anyone say Wells Fargo?) than we are to South Dakota, and those are the corporate losses that would hurt us far more. None of them are famous for low taxes.

      We need to be worried far more about those types of losses and the steps we can take to minimize them.

      1. Joe Loveland says:

        Over the long-run, I’m not sure SD or any state can compete on a cost basis with developing countries for the kind of call center operations Newt references. The kinds of businesses that might flee MN for SD now, may well flee SD for India down the line, for similar reasons…lower costs.

        So, should you build your economy around those kinds of businesses, or around the kinds of businesses that are looking for something more than the lowest costs?

  3. leftymn says:

    there is a major change going on , that is major GDP growth and consumer viability in the BRIC nations and other emerging nations, and also a flat GDP growth likelihood for the USA and EU due to restructural reasons(30 years of business and personal overleveraging) and also demographics, also the US Dollar is going to weaken long term. This means corporations are starting to site overseas, but ultimately now to produce for the profits to be made there, not only to be made exporting here. Perfectly natural moves. As the dollar weakens and the USA does become more competitive we will actually manufacture more here, as freight is also becoming an issue in a world of $70-90+ per barrel oil.

    i agree with Forbes… and have had several conversation with conservative friends about this. I believe MN is 7th or 8th in the nation for Fortune 500 headquarters, and there is a critical mass of both employee creativity and richness here along with a sophisticated and affluent consumer base, not to mention everything else that goes along with being a regional manufacturing, distribution and medical/educational/governmental center…

    so putting a soft service or consumer oriented business or an office or medical tech or engineering related business here in MN makes sense, putting a widget finishing or sunflower milling plant in South Dakota also makes sense.

    And in the end its always the effective tax rate that matters, not the one that is on the books. That is why god created accountants.

  4. Joe Loveland says:

    …and then there is JOBZ, TPaw’s signature job creation idea. The adorably named JOBZ gave tax exemptions to MN businesses complaining about lower taxes in other states. But it sounds a whole lot better when TPaw explains it at presidential candidate forums in New Hampshire than it was in reality….

    Candidates for governor agree that ‘JOBZ’ didn’t work

    By NEAL ST. ANTHONY, Star Tribune

    Minnesota’s three contenders for governor don’t agree on very much, but at a debate centering on business issues Tuesday in Minneapolis, all three agreed that Gov. Tim Pawlenty’s “JOBZ” program was a dud.

    Independence Party candidate Tom Horner slammed Pawlenty’s centerpiece Job Opportunity Building Zones (JOBZ) program, which the legislative auditor has criticized as a scattershot approach that went largely to firms that would have expanded anyway in rural Minnesota without millions in tax subsidies.

    Republican Party candidate Tom Emmer said: “Pawlenty’s heart was in the right place” on JOBZ but that overlapping state government programs have stymied economic growth, frustrated Minnesota entrepreneurs and driven expansion of large companies such as 3M and Marvin Windows to other states.

    DFL candidate Mark Dayton said that JOBZ proved unfocused; it included retail stores, and it shuffled jobs within the state instead of adding new ones. He said he favors targeted incentives that would spur expansion of high-value manufacturing jobs in Minnesota.

  5. Mike Kennedy says:

    Don’t overlook keeping people here. Census figures show record numbers of Americans have been on the move in the past 10 years and it started even before the housing crisis.

    As Rich Karlgaard, publisher of Forbes said: “The most valuable natural resource in the 21st Century is brains. Smart people tend to be mobile. Watch where they go because where they go, economic growth and activity will follow.”

    1. Joe Loveland says:

      In your opinion, is promoting low taxes an effective way for South Dakota and other low tax/low service states to lure the coveted “smart people” Forbes is talking about?

      1. Mike Kennedy says:

        No what he is saying is that taxing the hell out of your most productive people will soon put you in the category of a California or New York, where people are leaving the states for greener pastures.

        It’s a fact that people do have choices when it comes to state taxes, unlike federal taxes. Some states have high, some low some no taxes.

        Of course, irresponsible spending doesn’t help the picture either, as CA and N.Y. are finding out.

  6. john sherman says:

    I’ve never understood why those Minnesota Republicans who want to make Minnesota more like South Dakota don’t save themselves the trouble and the rest of us the annoyance and simply move there–unless it’s the difficulty of finding a job that pays more than $8 an hour.

  7. Newt says:

    I am amazed at how world’s cognoscenti flock to the Bay Area despite run-away government.

    Although the moment of reckoning may be upon them with the utter collapse of California’s government and economy.

    South Dakota may have the last laugh.

    1. Jim Leinfelder says:

      Yes, I’m sure they share your zero-sum worldview, Newt, in which, to paraphrase Gore Vidal, it’s not enough that they succeed, others must fail.

  8. PM says:

    Well, there is the entire alternative view of Richard Florida, that smart people move to creative cultural ares because of the other smart and interesting people that are located there–and that taxes and the size of government have relatively little to do with it all.

    And, frankly, I do not see many of those really smart, creative types leaving NYC or the bay area–mostly it is the poor schmucks with new, underwater tract houses who live far out, not the ones with the really expensive brownstones who are making the big bucks.

  9. Joe Loveland says:

    The things that drive the location decisions of many smart, creative people — world class colleges and universities, schools, parks, trails, theaters, art galleries, museums, transit, stadia, arenas, concert halls, community centers, libraries, community festivals, public art, etc. — all require lots of public money.

    If you could have those things AND rock bottom taxes, everyone would do that. But there is a trade-off, and most get that. I’m just not sure that the quest for the lowest tax bill is the singular driving force that some presume it to be.

  10. Mike Kennedy says:

    No, not singular, but it plays a big role. Census figures show that wealthy peole have been leaving California.

    Nevada, Arizona and Texas have benefitted.

    As a study from the Atlanta Federal Reserve said:

    “Relative marginal tax rates have a statistically significant negative relationship with relative state growth.”

    It may be coincidence to some extent, but the states with the highest tax rates such as California and New York economically underperform states (in employment growth and population growth) states with no income tax like Texas and Florida.

    I’m not saying, nor did I say that taxes are the only consideration. They are a consideration and a significant one, however.

    1. john sherman says:

      Why isn’t South Dakota as crowded with millionaires as, for example, Connecticut? Actually, SD isn’t crowded with anything, except maybe prairie dogs.

      1. Joe Loveland says:

        Easy. Those are my homies.

        The U.S. Census explores “Why People Move.” While seeking lower taxes isn’t one of the 17 categories offered as options, the findings don’t lead you to think that’s a big driver (e.g. only 1% says “other reasons,” which would cover the search for lower taxation). For the highly educated, the Census finds that housing reasons are the top reason for moving (e.g. wanted new/better apartment or home, wanted to own..not rent).

  11. Joe Loveland says:

    The other thing I find curious, from a marketing standpoint:

    The economic development arm of SD government is effectively advertising a hard edged “you suck, Minnesota, so move here.”

    At the same time, the tourism arm of SD government is effectively advertising a cuddly “we love Minnesotans, so come visit us because we’re such doggnone hospitable folk.”

    The two sets of messages funded by SD taxpayers are a bit at odds with one another.

  12. PM says:

    I know someone (born and raised in Edina, lived here all his life) who bought a home in Watertown 4 or 5 years ago, and started spending as much time there as possible–driving there and back in one day just to buy gas and dinner, saving the receipts, building the case that he was a SD citizen, and no longer a MN citizen.

    You see, he had made a number of investments that he was counting on paying off big time for him in a few years, and he wanted to avoid the Mn personal income tax –8% at the time. as he figured it, 8% of $100,000,000.00 was also a pretty big number, well worth the $350000.00 he spent for the house (the nicest one there, he said).

    He is now going thru bankruptcy, and the house in Watertown is in foreclosure. Living with his parents in wayzata. Go figure.

    1. Joe Loveland says:

      Someone I know in SD talks about a couple of almost never occupied condos in her development. She assumes they’re owned by absentee seniors impersonating SD residents in order to dodge home state income taxes.

      So, they merrily use the assets of their home state, but won’t join their home state neighbors in paying to support their community. Those folks are a very small slice of the population, but in terms of citizenship they’re not the greatest of the Greatest Generation.

  13. Joe Loveland says:

    An Ernst and Young analysis looks at the total state and local taxes that businesses pay as a percentage of the size of the respective state’s economy (Gross State Product, GSP). With this measure (Table 6 at this link), MN businesses look to pay comparable or lower taxes than businesses in neighboring states ND, SD, WI, and IA.

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