The following is an opinion piece and does not necessarily reflect the views of The Clarion, its staff or the institution. If you would like to submit a response or an opinion piece of your own, please contact Editor in Chief Abby Petersen at firstname.lastname@example.org.
If taxes aren’t fairly distributed to rural Minnesota towns, we might watch them disappear.
By Samuel Krueger
This summer I had the privilege of traveling all over greater Minnesota on a fact-finding mission. I spoke to mayors, workers, business owners and city council people alike. I heard the plight of the rural Minnesotan and the businesses that call those areas home.
As a suburbanite from White Bear Lake, I was caught completely off-guard by what I heard and saw. I did not realize how much I was taking for granted while living in the vast, highly taxed urban center of the Twin Cities.
As a Minnesotan, I am unfortunately used to tax hikes. These high taxes allow us to achieve mediocre progress amongst the 50 states in areas like education and production. Regardless of our shortcomings, we still continue to raise taxes in order to chuck money at our urban centers without any consideration of rural Minnesota. Even our campus in Arden Hills, a suburb of the Cities, can get stiffed when it comes to roads. Sometimes we think we have it rough, like when our E2 exit was closed, but a small city like Ada has to wait months if not years in order for a sewer line extension.
These towns can’t grow because developers won’t build in areas until the proper infrastructure is available, and the state won’t provide infrastructure until businesses develop these areas. It’s an endless cycle.
While the Metro area is home to businesses like 3M, Best Buy and Target, places like Thief River Falls and Warroad Minnesota are also home to multibillion dollar corporations such as Polaris, DigiKey and Marvin Windows. In some cases, these massive companies employ more people than are available in their home cities. For example, Marvin Windows makes up a large portion of the City of Warroad, which has a population of 1,794, but employs well over 2,500 people. This means that these towns are “single industry” towns. In other words, just about every business in the town depends on the existence of the main employer.
Many people, namely more liberal democrats, would hate the people who own these businesses. They think we need to tax business owners to offset their negative effect on the working class. However, in their home cities, like Bob Marvin of Marvin Windows, they are heroes.
These businesses keep thousands of people out of poverty. Many of these rural businesses maintain their home cities out of their own pocket because the government has not allocated the funds to do so. These wealthy business owners all have a sense of loyalty to the places they grew up and the people who live there.
Upon talking to citizens and business owners in these small cities, I learned the
consequences of Minnesota’s urban-focused tax hikes. When the governor threatened to raise the income tax, large companies were weighing the decision to leave Minnesota altogether and move to business-friendly states such as South Dakota. Thankfully, they stuck it out, but who knows how much more they can take and still stay competitive?
South Dakota has cheap, available land and a labor force – as well as no income tax. In some cases, these companies estimate that they could increase cost effectiveness by 20 percent or more by leaving the state. It is due to this unfavorable tax climate that Minnesota is losing a congressional district in 2020. People don’t want to stay here, and a cool train and a new stadium aren’t enough to make them want to.
Several large companies have either left Minnesota completely or moved their headquarters in the last few years. Two big examples are Lockheed Martin and Medtronic. Medtronic moved their headquarters to Ireland, and Lockheed closed their manufacturing plant in late 2010.
A proposed $15 minimum wage is also a part of our problem. These laws have a negligible effect on the large companies like the ones I toured. In fact, these companies are in fierce competition for the only finite resource in rural Minnesota: labor. This means that they already pay their workers a living wage.
These laws are only hurting the small, main street, mom and pop businesses that we all love. These laws are the reason that only one of the many cities I visited had over 75 percent of their main streets fully in use for businesses.
Our great state could be thriving like never before. These small towns have massive potential, but are bogged down by regulation and the governor refusing to fairly distribute tax money. As city dwellers, we must realize the effects of our lifestyle and the cost to the part of Minnesota we do not regularly see. For many single-industry towns across greater Minnesota, another tax hike, light-rail line or billion-dollar football stadium could mean mass unemployment, if not their disappearance altogether.