MN Forward is focused on issues related to creating jobs and economic opportunity. That includes tax reform, spending reform, and ensuring our children receive a world-class education.
Minnesota faces some immediate challenges created by a global recession and rapidly growing government spending that, together, are creating a huge projected state budget deficit.
We also face long-term challenges – and opportunities – posed by an aging population, growing demands for a highly skilled workforce and the continuing evolution of the global economy.
To move Minnesota forward, we need to effectively address our budget challenges with tax policies that allow job providers to grow jobs, spending reforms that provide greater value and align expenditures with revenues, and education reforms that increase accountability and improve outcomes.
Minnesota has the third highest corporate tax rate in the United States, according to the non-partisan Tax Foundation.
Minnesota ranks 43rd (or eighth worst) for Business Tax Climate, according to the same group.
While taxes are just one factor in a business’ decision about where to locate or grow, taxes do play an important role in business decisions. In an era when businesses are more mobile than ever, Minnesota’s high taxes make it difficult for our state to keep and attract good jobs.
In addition, approximately 92 percent of Minnesota businesses are pass-through entities that pay their taxes through personal income taxes. Upper-level income tax increases may allegedly be aimed at wealthy individuals, but in practice they can have a devastating impact on our small businesses.
Minnesota’s tax policies should help keep our state a competitive place for job providers to create and retain jobs.
Meanwhile, the growth in the aging population, who typically utilize more government services, will skyrocket. By 2015, there will be just one Minnesotan in the workforce for every non-working age Minnesotan (children or retirees). By 2020, Minnesota’s workforce will be outnumbered by retirees and children (see chart at left).
Simply raising taxes on a smaller – and more mobile – workforce won’t work. State government spending cannot continue to grow at nearly 19 percent every two years, as it has since 1960 (PDF). Instead, Minnesota government will need to seek greater efficiencies and focus on priorities.
State government must prioritize spending and, like businesses and families, spend only what they have, not what they want.
In a rapidly changing world, how wisely we spend tax dollars to educate our children is just as important as how much we spend.
This past legislative session, despite broad, bipartisan support among business, community, education and foundation leaders, the Minnesota legislature failed to approve a package of common-sense education reforms that would have moved Minnesota in the right direction. This included:
- Bringing some of the best and brightest college graduates from the nation’s top universities to teach in some of Minnesota’s most challenging schools through programs like Teach For America.
- Recruiting, developing and rewarding effective teachers and principals – and enabling school districts to place them where their talents are most needed.
- Turning the vast amounts of data produced by our education system into useful information that would help educators and policymakers improve outcomes.
- Intervening in consistently low-performing schools with concrete plans for turning them around.
These are among the reforms Minnesota should put in place in order to improve the school experience for every child.