How the State of Minnesota
How the State of Minnesota manipulates

business activity with tax credits, loans and grants
to favored businesses

Minnesota statute authorizes the State to grant special and selective tax relief to some businesses. In 2014 the State of Minnesota “spent,” that is, forfeited in tax revenues, $647 million in tax credits, rebates and other exemptions for favored businesses. moneychanginghands

Minnesota also has dozens of distinct economic development and job creation programs. In 2014 the Department of Employment and Economic Development (DEED) delivered $100 million for 387 projects.

This preferential treatment for some means higher taxes for others, both individuals and businesses. In addition, tax credits, loans and grants to business compete for tax dollars that might be used for equally important and more enduring elements of a healthy economy such as education and infrastructure. 

Serious questions abound about the effectiveness of business incentives. These include the “but for”–would the project have occurred anyway without state aid? Does state aid give a business an advantage over a competitor in the state?  Do some of the benefits accrue to other states? How can we measure the results of these programs, given the many variables in a complex economy? And last, are these economic development efforts the best and proper way to meet the obligations of state government? 

A Minnesota House Research report states that “some tax expenditures reflect historical quirks or following federal or other state structures, rather than carefully considered decisions that use of the tax system is the optimal way to achieve specific nontax policy objectives.” Once enacted, tax credits can continue in perpetuity unless the legislature acts to repeal them. And they grow as the population and economy grow. 

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irrrb-logo-full-color_tcm1047-72590The Iron Range Resources and Rehabilitation Board (IRRRB) was created to divert taxes on taconite to a fund to diversify an economy dependent on mining and to encourage community and workforce development. It was called by one critic,  “The Iron Range Re-elect and Reward Board.”  Area senators, all Democrats, constitute the Board. IRRRB’s budget last year was $85 million, spent primarily on grants and loans to area businesses, cities and towns.

A recent auditor’s report criticized the Board for sloppy oversight. It found that IRRRB did not measure the impact of loans and that many loan recipients did not meet the stated objectives. Among notable failures is Giants Ridge, a resort owned by the Board, which has lost millions of dollars over the past decade.

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Could you pass a Minnesota citizenship test?
Take the quiz below and see what you know about our state!

 

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  1. What is our state motto?
  1. Who is our current governor?
  1. Which political party has the majority in the Minnesota House of Representatives? Which party has the majority in the Minnesota Senate?
  1. Roughly, how much is the state’s 2015-2016 general fund budget? Bonus: Roughly, how much will the State spend in the 2015-2016 “all-funds” budget?
  1. Which of these rights is guaranteed by the Minnesota Constitution but not by the U.S. Constitution? No debtor’s prison, private property can’t be taken for public use, no standing army in peacetime, no ex post facto law.
  1. What two Minnesotans served as U.S. Vice President?
  1. Name one of Minnesota’s 17 Fortune 500 companies.
  1. Who is Minnesota’s largest employer?
  1. Minnesota is the top producer of several commodities. Name one. Bonus: What percent of our population is employed in the business of farming?
  1. Who robbed the First National Bank of Northfield, Minnesota, on September 7, 1876?
  1. What caused hundreds of Minnesotans to starve from 1873-1877, an event made famous, in part, by Laura Ingalls Wilder?
  1. What famous actress was born Frances Gumm in Grand Rapids, Minnesota?

divideryellowbluedotsQuiz answers

  1. L’Etoile du Nord.
  2. Mark Dayton.
  3. Republican, Democrat.
  4. $40 billion. Bonus: $71 billion. https://www.mn.gov/mmb/budget/state-budget-overview/faq/
  5. All of them and more. https://storify.com/ThomasDonaghue/getting-started
  6. Hubert Humphrey and Walter Mondale.
  7. http://www.twincities.com/2015/06/04/17-minnesota-firms-make-fortune-500-with-more-to-come/
  8. Mayo Clinic. But if you count employees of the U of M, it’s the State of Minnesota by far, which otherwise ranks second with the federal government third. https://mn.gov/deed/business/locating-minnesota/companies-employers/top-employers.jsp
  9. Sweet corn, sugar beets, green peas, turkeys. http://www.onlyinyourstate.com/minnesota/mn-is-number-one/  Bonus: 1%
  10. Jesse James
  11. Grasshoppers. In On the Banks of Plum Creek.
  12. Judy Garland 

                                                                                                                                                                                             7/16

 

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