Last week, we took a look at the Strib op-ed by Roger Hale that supported Governor Dayton’s budget plan, whom the Strib felt it was important to remind you was a former CEO at Tennant Corporation…
…but not that he was a large-scale DFL donor who’d given $110,000 in the last gubernatorial race alone to Alliance for a Better Minnesota, the Dayton-family-supported attack-PAC that launched the most epic sleaze campaign in Minnesota history against Tom Emmer. That, apparently, the Strib didn’t believe was relevant.
“But what about what he said about business?”, some leftybloggers responded.
Doug Baker, CEO of St. Paul-based Ecolab, responded in the Strib over the weekend. (Full disclosure: I worked for Ecolab for four years. A good chunk of my retirement is still in Ecolab stock – and it’s performing better than most of my portfolio at the moment. Their IT department would give Scott Adams a year worth of material, but it’s a good company – as it happens, 20 times the size of Roger Hale’s Tennant).
And Baker is unimpressed by either Hale or Governor Dayton:
I have two reactions to [Hale’s piece]: First, many in the business community strongly disagree — and second, focusing on revenue generation misses the point and delays action on the more important issue — unsustainable increases in government spending.
It’s no secret that Minnesota always has been a high-tax state. An April 2010 report from the Itasca Project, which highlighted our region’s strengths and weaknesses, identified Minnesota’s uncompetitive tax structure as one of the main barriers to job creation.
The “progressives” never, never get that.
My experience, which is shared by the majority of my fellow business leaders in Minnesota, is that personal taxes do matter. It’s an issue that frequently comes up when recruiting people or transferring people to Minnesota.
And that’s when it comes to getting talent to come to Ecolab Tower in downtown Saint Paul, or the R&D center in Eagan. Like most big Minnesota companies, Ecolab has created no manufacturing, distribution or non-sales jobs in Minnesota in years.
Following Gov. Mark Dayton and enacting the second-highest tax rate in the nation would hurt our state.
This is especially true today when state and national borders no longer constrain the movement of labor, capital and intellectual property. In this digital age, people can and do work from anywhere — and they can and will choose to work where they can keep more of their income.
And that’s just speaking of people who work for major corporations.
Ecolab started in the 1920’s, back when the barriers to enter business were very, very low. The corporation was able to build its business during decades when Minnesota’s taxes were blissfully unintrusive.
How about people starting the next generation of businesses? The little S-corporations that are the big C-corporations of tomorrow?
They’re moving to Hudson, or Fargo, or Sioux Falls, or Dallas/Fort Worth.
Bring this up to a progressive. Note that North Dakota is lowering taxes as their revenues boom; they’ll respond “but how many Fortune 500 companies have?” The response is “that’s a function of population density, but nice try. Still – how many jobs are those Fortune 500 companies creating in MN?”
The answer: fewer:
There also have been recent headquarters moves that cost Minnesota thousands of jobs — MoneyGram comes to mind — which I strongly believe was motivated more by personal income tax rates than anything else (in my opinion).
But you don’t have to take my word for it. According to the U.S. Bureau of Labor statistics, Minnesota employment growth has lagged the U.S. rate for a decade. More than 1,200 small and medium-sized businesses left the state from 1997 to 2008.
Baker gets the real problem – the one Hale glossed right past:
More important than the tax issue, though, is Dayton’s proposed double-digit increase in state spending. The legislative majorities have offered a 6 percent increase in spending over last year’s budget — this includes a substantial increase in spending on both K-12 education and health care.
For any family or anyone who owns a business in this state, a 6 percent increase in revenue would be considered very good news and would be considered a budget they could live with. However, in government-speak, a 6 percent increase is considered a “cut” because it represents less than the government wanted to spend.
Baker notes the same thing I did in shredding Hale last week; back in the seventies, Japan and Germany were getting done with recovering from World War 2. China and India were mired in experiments with various degrees of extreme socialism, and starving and riven with political contortions and very much third world countries.
Back in the sixties and seventies – which is where Dayton’s entire strategy came from, and when Roger Hale was an active CEO – it was a very different world.
Baker gets this:
Raising taxes and double-digit increases in government spending may have been a manageable strategy in the 1980s and 1990s, when our competition for jobs came primarily from Wisconsin and Iowa.
But the reality our state faces today is a very different one.
Our global competitors and the majority of U.S. states — led by a number of prominent Democrat governors — are moving toward lowering taxes, prioritizing government spending and building a more supportive business environment in order to attract jobs.
Minnesota must do the same if we hope to grow jobs in the future and compete in the 21st century.
Baker’s piece utterly shreds Hale. You can tell it hurt the DFLers who were defending Hale last week. They’re responding.