The Death Of A Million Cuts

 When the DFL-controlled legislature started jacking up taxes, we tried to warn ’em.  “North Dakota’s gonna eat Northwest Minnesota’s lunch”. 

But did they listen?

Pffft.  They know what “A Better Minnesota” means, peasant!

Oh, the left trotted out its talking heads.  “It’s really fairly marginal”, said the heads, snug in their academic offices in the Twin Cities.

One of the Marginal Ones up in Moorhead has had enough:

When service station owner Brady Olson decided politicians weren’t listening to him, he took to the airwaves to protest higher taxes that he said were cutting into his profits.

 

“Hi, I’m Brady from Brady’s Service,” he said in a 30-second radio spot. “Minnesota has quietly been turning my business in to a tax collection business.”…Olson and other business owners in northwest Minnesota say those higher taxes make it difficult for them to compete with businesses in North Dakota, where the booming economy has allowed legislators to cut taxes.

To a talking head in the Twin Cities – who, likely, has never run a business or made a payroll – it’s just nickels here, dimes there. 

But nickels and dimes add up:

 With Minnesota legislators recently deciding to increase cigarette taxes by $1.60 a pack, Olson said, “Now they’re in the well again.”

 

Olson was particularly critical of the higher cigarette tax, which on July 1 will be $2.83 a pack. North Dakota’s cigarette tax is 44 cents a pack.

 

As a result, Olson expects to lose a few customers. He said people who buy cigarettes in Fargo will likely buy gas there.

And the bottom line?: 

Olson said every tax increase makes it tougher for his family-owned business to compete with convenience stores a mile or two away in Fargo. He pointed to gasoline as a key example of taxes that make his profit margin smaller than that of a North Dakota business.

I did mention the academics, didn’t I? 

As Minnesota lawmakers struggle to pay for essential services while allowing companies to remain competitive with those in nearby low-tax states, a big question is whether such tax disparities can kill a business.

 

There’s not much evidence to support that, said David Flynn, an economist at the University of North Dakota.

 

“When it makes a difference, they move or they change their business tactic,” said Flynn, who has studied the border business climate. “When it doesn’t make a difference they complain, but we don’t see a noticeable change, a business shuttering the windows or anything of that sort.”

 

Flynn said taxes are generally not the key factor in where business locates. As an example, he cited Minnesota’s lack of a sales tax on clothing. Although North Dakota taxes clothing purchases, there are more clothing stores on the North Dakota side of the border.

And there’s the point that everyone (on the left) misses, always.

There’s more of everything on the North Dakota side.  Moorhead, Breckenridge and East Grand Forks are pale, wan little bedroom towns across the river from Fargo, Wahpeton and Grand Forks (respectively) that are booming, and have always far outstripped their Minnesota neighbors in employment, in business growth, in everything. 

In short, the point isn’t that the border doesn’t reflect the disparities today over taxes discussed last month; it reflects decades of different approaches to taxes and regulation, which the current session will exacerbate.

Read the whole thing – it’s from MPR’s Moorhead correspondent, and it does a decent job of stringing together the story, including the non-sequiturs from the apologists for the Minnesota system.

5 thoughts on “The Death Of A Million Cuts

  1. I had often wondered that Fargo’s West Acres mall was in Fargo, and not Moorhead, given the no sales tax on clothes and, initially, the blue law Sunday closing. But you often forget the totality of the tax and regulation picture: property taxes, state corporate income taxes, state and local license fees, worker’s compensation structure, unemployment tax structure.

  2. It is as if a great number of liberal economists are unfamiliar with the principles of a balance sheet and uncertainty actually being important to business owners.

  3. This quote, in a nutshell, shows why you should be very careful about the opinions of economists (at least as they are reported by journalists)

    There’s not much evidence to support that, said David Flynn, an economist at the University of North Dakota.
    “When it makes a difference, they move or they change their business tactic,” said Flynn, who has studied the border business climate. “When it doesn’t make a difference they complain, but we don’t see a noticeable change, a business shuttering the windows or anything of that sort.”

    “not much evidence” does not mean “no evidence”. “When it makes a difference, they move or they change their business tactic”.
    “Changing a business tactic” has an economic effect. Perhaps Brady Olson will “change his business tactic” by increasing the price of goods in his store that cannot as conveniently be purchased in ND? And how is “they move” consistent with “. . . we don’t see a noticeable change, a business shuttering the windows or anything of that sort.”

  4. ND is second only to Texas in domestic oil output. The economic impact of ND’s oil industry has increased to $30.4b might play a “little” part of that states’ success and their ability to cut taxes.

    “The oil and gas industry generated $2.65 billion in [ND] government revenues” The ND governor’s budget plan includes: 171 new state employees, more law enforcement, court, health and regulatory workers to monitor the growing energy industry. It includes about $1 billion for road work in western North Dakota. http://www.ndoil.org/?id=274&nid=222

  5. I agree with Emery – NDs revenues certainly do not justify extra taxation.

    However, I think that a state’s tax policy is dictated as much by inclination as justification. If MN were to fall into a similar situation, I doubt that our taxation would be significantly changed.

    The MN mindset seems to be that all income is fair game, and as such should be harvested, regardless of need; trophy hunting vs. subsistence hunting.

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