Minnesota — Does a higher Quality of life and better education justify higher taxes?

Street scene in downtown Minneapolis

Street scene in downtown Minneapolis

Imagine a state with exceptionally high taxes and almost no economic development strategy — that’s Minnesota.

But here is the kicker. Minnesota has been a favorite state for Fortune 500 companies.

“There’s a direct link between jobs and a good quality of life,” said Charlie Weaver, executive director of the Minnesota Business Partnership. “We want the best quality of life possible.”

Weaver spoke to a delegation of more than 100 Atlanta leaders visiting Minneapolis-St. Paul earlier this month to compare and contrast initiatives related to growth, development, transportation and quality of life.

Surprisingly, the Twin Cities areas has 19 Fortune 500 companies — including Target, United Health Group, Best Buy, Pepsi Americas, 3M, US Bancorp, General Mills, Land O’ Lakes, Hormel Foods, Ecolab and Amerprise Financial.

By comparison, in all of Georgia — considered a business friendly headquarters state — there are 14 Fortune 500 companies.

So what makes Minnesota, one of the coldest states in the nation, so attractive to companies?

The answer is multifold — good healthcare, a high quality of life, skilled jobs and great education.

Weaver said education is “by far” the reason companies come to state that’s so cold and the middle of the country. Minneapolis-St. Paul also have “a vibrant cultural” community, which contributes to the region’s quality of life.

“Our focus is on keeping businesses here,” Weaver said. “It’s all about keeping businesses and growing businesses. We are blessed here.”

Olens speaks to Atlanta's LINK delegation

Olens speaks to Atlanta's LINK delegation

Top CEOs of companies participate in numerous business and civic organizations, and the level of engagement in the community is among the highest in the nation, Weaver said. One example is the Itasca Project.

They focus on a variety of issues, from education to transportation to arts and culture to parks, to keep the Minneapolis-St. Paul area as strong as it can be, not for potential companies that could move in but for the people and companies already there.

But it’s not all hunky dory as businesses now are beginning to feel overtaxed and underappreciated.

“It is a hostile place to do business,” Weaver said. “From a tax regulatory perspective, this is a brutal place to do business. We have the third highest corporate income tax rate in the history of the world.”

But then, Weaver is quick to say that Minnesota ahs “the best education in the country” with top performing schools.

“Businesses continued to come here and stay here because of education and quality of life,” Weaver said. “Three months out of the year, it’s over 60 degrees.”

The state of Georgia has a host of economic development efforts — from every local chamber to the Metro Atlanta Chamber and the Georgia Chamber. There also are the economic development arms of Georgia Power, the Georgia Department of Economic Development plus local county governments.

Much of Georgia’s growth is due to companies moving and growing operations in the state.

As far as taxes go, Georgia government leaders boast that the state has the second lowest per-capita tax rate in the nation.

But Georgia also scores among the worst states in the nation when it comes to education, SATs, green space, arts and cultural spending as well as providing support for transit.

So isn’t there a correlation between higher taxes and a stronger education system and other quality of life indicators?

“You are not going to get a good education without taxes,” said Alex Cirillo, vice president for commuity affairs for 3M. “Our goal is not to be the lowest tax state in the country. That’s foolish. But where’s the tipping point?”

Top business leaders are concerned that MInnesota could end up losing several of its Fortune 500 headquarters if taxes continue to rise.

“There are companies here — General Mills, Target, Best Buy; there’s no reason for them to have their headquarters in Minnesota,” Cirillo said. “It’s a tenuous link that’s getting more tenuous.”

Upon hearing the business leaders from Minnesota, several Atlanta officials half-jokingly talked about putting a Georgia economic development office in Minneapolis. Could those 19 Fortune 500 companies be tempted to move their headquarters to Atlanta in search of lower taxes?

Already, Minneapolis lost the headquarters of Northwest Airlines when Delta Air Lines acquired the airline and located the headquarters in Atlanta. Although they didn’t want to talk much about that loss, business leaders admitted that headquarters are part of a city’s ego, but that what matters are the jobs. At least, Delta is keeping much of Northwest’s operation and employees in MInnesota.

The LINK trip did cause Atlantans to think about the relationship between taxes and quality of life. It’s not enough to be a state with low taxes if we’re not investing in transportation, education, parks and green space as well as other quality of life issues.

According to Jerry Griffin, executive director of the Association County Commissioners of Georgia, we’ve been asking the wrong question.

“We need to change the discussion focus,” Griffin said. “It shouldn’t be about taxes. It should be on what do you want your community to be.”

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

4 replies
  1. Matt W says:

    We’ll need the cooperation across the planning commissions, corporate leaders, general assembly, the governor’s office to set and agree to a vision – economy, community, cultural development, education. We’ve made good strides and Sam Olens gets it – we just need more. Not sure if we have enough folks on board – too busy with fulfilling their own personal agenda. What MN has that we don’t – lots of folks focusing on education at all levels, a real interest in community building and culture, leaders on the same page.Report

  2. MN2Stay says:

    Interesting read. We probably wouldn’t have the high quality of life and great education if the taxes were low. Hopefully we can keep our current Fortune 500 companies in Minnesota and gain even more. I tried living in the south to escape the cold and taxes, but eventually the came back to Minnesota for the much lower crime rate, higher pay, and overall higher quality of life.Report

  3. Stephanie says:

    I live in MN and I don’t mind paying higher taxes…it gets me a great healthcare system (the Mayo clinic is just a short bike ride from my home) good education, lots of green space and so on. And the business climate is considered pretty healthy in Rochester, despite our taxes.Report

  4. Will the last Democrat in Georgia please turn off the lights?.... says:

    Higher taxes may work for a Northern state like Minnesota with a smaller population surrounded by higher-tax and lower-populated snowbelt states, but for a Sunbelt state like Georgia that is home to a very large and vocal contingent of Conservatives and Libertarians with a deep mistrust of anything that is government and is surrounded by highly-competitive lower tax states with larger and relatively faster-growing populations like Florida and North Carolina with reputations for being ultra business-friendly, just the mere thought, much less the actual public suggestion of openly raising taxes of any kind is a big political no-no!

    Publicly suggest raising taxes in these parts, even to fund basic needs like public safety, education, transportation or trauma centers, and you’ll be called names that are worse than the devil, names like “liberal”, a name that around these parts is worse than being called the devil.Report


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