By Dennis Schminke

GOP candidate for District 27B

Everybody — rich and not-so-rich — pays taxes. You see it each week on your pay-stub, on every cash register receipt, twice each year when you pay your property taxes, and annually when you update your car tags. Many more are hidden — in the rent you pay or the gasoline you buy, for example.

Minnesota is a high-tax state — sixth highest of all the states. This is before we had another $2.1 billion added to the load by the DFL-controlled legislature in the 2013 session. Also hidden from view are the consequences this will have on growth and employment in our state. People and companies do not move to Minnesota for the weather. When we allow our state to become increasingly non-competitive in cost-of-doing-business, it is destructive to the prosperity of Minnesota’s working families.

If you think this is a “stretch,” take a look at what is happening in California. The similarities to Minnesota are striking: Middle-class income tax rates in California are high at 9.3 percent; Minnesota is just slightly lower at 7.85 percent. California, like Minnesota has recently passed higher tax rates for high-income families—a top rate of a stunning 13.3 percent. Minnesota’s newly-passed top rate 9.85 percent — fourth highest in the nation. Both states also have high sales-taxes—from 7 percent to as much as 9 percent in some California cities. The current rate here in Austin is 7.375 percent. And it is no coincidence that like Minnesota, the California state government — governor and both houses of the legislature — have been 100-percent controlled by the Democratic Party for the past three and a half years. The question is: “Is this a good thing?”

Here is how it’s working out for California. Between 1960 and 1990, 4.2 million people moved to California for great weather and economic opportunity. Since 1990 that has reversed dramatically — with 3.4 million people leaving — mostly following jobs to lower-cost, lower-tax, and higher-growth states. Even the high-paying tech companies are going elsewhere. Apple, Facebook, and eBay may remain headquartered in places like Cupertino, San Jose, and Palo Alto, but their expansions are happening in places like Austin, Texas; Salt Lake City, Utah; and Council Bluffs and Des Moines, Iowa.

The same thing happening with California’s once-vibrant automobile industry. In a high-profile move, Toyota recently announced that it is moving its North American headquarters—along with 4,000 high-paying sales, marketing and management positions from Torrance, Calif., to Plano, Texas. In doing this, they follow Honda (2013—Marysville, Ohio), and Nissan (2006—Franklin, Tenn.).

Minnesota has its own list of migrations. Factories have closed (Ford). IBM—Rochester is a shadow of its former self. Many of our large companies have succumbed to acquisitions and mergers, with headquarters eventually moved elsewhere (International Multifoods, Wells Fargo, Northwest Airlines, Burlington Northern, and American Hoist are examples). Some companies continue to maintain headquarters operations in our state, but expand elsewhere. Jostens has moved jobs to Texas. The new 3M Innovation Center landed in Austin, Texas, rather than Austin, Minn. And closer to home, two recent Hormel Foods expansions have been handed to Dubuque, Iowa. In recent days, Medtronic and Advance Auto have both announced plans to move corporate headquarters elsewhere. There are many more examples.

The good news: Minnesotans are both innovative and resilient. Fortune 500 companies that are gone have been replaced by ones that are new—but operate in very different industries. Think in terms of Target, Best Buy, United Healthcare, Medtronic, Xcel Energy, and Ameriprise Financial.

These are good developments, and we should be thankful for them. But at the same time we should also consider this: These are not manufacturing companies with all the jobs manufacturing provides. Wouldn’t we be even better off if we had an economic environment that did both—retaining the good employers we have, while at the same time fostering the innovation that grows the next big opportunities?

Make no mistake — Minnesota’s 2013 tax increases have made an already bad situation even worse. We are becoming ever-more uncompetitive in our cost of doing business. If allowed to continue, the result will not good for Minnesota’s working families. High taxes, a heavy regulatory burden, and expensive energy policies are not working out well at all for California’s working families, and they will not end well for Minnesota, either. Minnesota voters should consider the consequences carefully, and return Minnesota state government to a more balanced status that is more employee and employer-friendly in November.