The Real Minnesota Story

High praise for for a story destroying the claim by a Republican State Senate candidate that Minnesota is a low tax state.  Finally someone in the media is willing to check the facts on all the claims that low tax states have the best economies.

As they report, when they asked what state had lowered unemployment with lower taxes, the candidate, John Hune, answered Minnesota. First congratulations to the Daily Press and Argus for asking the question. By and large the media does not ask for evidence that low taxes lead to stronger economies. But to their credit they didn’t stop with reporting the answer, they checked how Minnesota’s taxes compared to Michigan.

Their conclusion: So just how attractive are Minnesota’s taxes? If he thinks Minnesota has the model tax structure, then Hune — who brands himself as the conservative anti-tax avenger — is actually favoring higher taxes. While it is true that Minnesota has a lower unemployment rate than does Michigan — at about 7 percent, it’s nearly half Michigan’s current rate — it hasn’t come about because of low taxes. By almost any measurement, Minnesota taxes its residents and its businesses at a higher rate than does Michigan.

We couldn’t have said it better. For years we have cited Minnesota as the Great Lakes state that Michigan should pattern itself after. Why? Not because of a predetermined set of “good” policies, but because they have the highest per capita income (our goal) by far of any Great Lakes state. They also have the lowest poverty rate, the lowest unemployment rate and the highest employment rate. They have the economic outcomes that all residents of Michigan want. They have achieved those outcomes with the highest taxes in the region.

Strong evidence that either state and local taxes are largely irrelevant to a state’s economic performance or that the public services paid for by those taxes are an asset to economic growth. Our best guess is it is a bit of both.

What Minnesota does have – that, by far, trumps a state’s level of taxes and spending – is the highest proportion of adults with a four-year degree in the region. That allows them to more concentrated in the knowledge-based sectors of the economy. The sector where both the highest wages are and most of the country’s job growth. How to increase the education attainment of Michiganians should be what candidates are debating. It is the path back to prosperity.

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