Minnesota outpaces other states in workforce development initiatives and education outcomes, but the state’s premier business advocacy group warned Thursday that a high cost of doing business threatens long-term success.
In its annual rundown of the state’s innovation, workforce and other economic indicators, the Minnesota Chamber of Commerce – alongside more than 30 local chambers – highlighted weak points in the state economy that mirror its priorities heading into the upcoming legislative session.
Atop the chamber’s legislative wish list is a scaled-down tax levy on commercial and industrial properties. Business owners say they’re paying more than their fair share into the state’s coffers, thanks in part to an automatic inflator that raises the general tax target each year.
The Minnesota Business Benchmarks report – based on state, federal and other data – put the state behind almost every state in business property taxes overall. A more specific breakdown ranked Minnesota 48th in the nation for taxes on small businesses and entrepreneurs, and on corporate income tax rates.
Minnesota chamber President Doug Loon pointed to the state’s anticipated $1.87 billion surplus in 2016. The chamber and other business advocates say the surplus primes Minnesota lawmakers, who return to St. Paul next month, to make significant business tax cuts and craft a comprehensive transportation funding package.
“The projected state surplus is an excellent opportunity to invest in our economic and physical infrastructure,” Loon said in a statement. “We are confident that Gov. Dayton and the Legislature can deliver meaningful, strategic business tax relief as well as sustained and strategic investments in roads, bridges and transit.”
Still, the tax-cut plan has its detractors. They say reduced business taxes would dry up a vital funding stream for state programs, and insist Minnesota’s overall business climate isn’t as tough as some data suggest.
Minnesota last year notched the top spot on a high-profile ranking of the best places to do business. But critics – including the chamber – said the calculus obscured high tax rates and labor costs. Still, business advocates concede that the state has notable bright spots.
A 70.4 percent labor participation rate leads the country and signals one of the best workforce’s in the nation, the chamber said. In addition, a 3.5 percent overall unemployment rate falls notably short of the 5 percent national rate, though distinct racial disparities continue to dog Minnesota’s labor market.
Achievement gaps in education also need attention, the chamber said, though overall performance is strong. Minnesota ranked second in the nation with 48 percent of its population earning a two-year degree or higher, and cracked the top 10 in eighth-grade reading scores.
The report “shows that while we lead in many areas, the challenge is charting how to continue our momentum and maintain our vibrant economy,” Loon said. “Minnesota must be ready for the future.”
Minnesota Business Benchmarks report
Surplus, competing priorities set up contentious tax relief debate
Chamber to push tax relief, workforce issues at Capitol
Some question MN’s ranking a best state for business
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