Most mornings, I'm getting my news from various websites while the dulcet tones of Sponge Bob entertain my kids in the background. A few weeks ago, though, I had some tasks to finish. This gave me a chance to listen to the various radio morning shows. As I was flipping through the stations, I heard something jaw dropping, and it wasn't from any of the announcers. I heard an advertisement geared toward business owners, CEOs and corporate board members to abandon the business hellscape that is Minnesota and run for the great business culture and high quality of life that is Sioux Falls, S.D.
The basic sell of the ad was since we get taxed so much in Minnesota, most companies, and their upper management, could save tons of money in the no state corporate- or personal-income-tax haven that is Sioux Falls. This wasn't some feel-good, generic promotion of a community's business outlook (Duluth, looking towards the future!), nor was it a plea for companies looking to expand to consider a specific community for future growth.
This was a "your business is being killed by merely being in Minnesota" scare job, and the only hope of salvation is to relocate to southeastern South Dakota. I wondered if there is any other community outside of Minnesota that would allow a commercial like this to air, and how could any Minnesota radio station allow an advertiser to insult its community as much as this ad does? It was a mud-slinging political ad, trying to get you to vote for South Dakota.
I can understand that a company moving to Sioux Falls might eventually make more money, but unless it's a small payroll and the company's product is primarily delivered or created online, it would take years to recoup the costs of the move alone. If it's any kind of manufacturing company, floor layouts and transfer of machinery would cost you.
What about the employees?
Then comes the question of employees. Would a company spend the money to relocate their employees — or leave them behind in a cloud of dust, forcing the business to train new employees? Websites, letterhead, business cards and numerous other auxiliary expenses would add to the losses. Then there's the fact that you're in Sioux Falls. Your supplies will likely cost more to get there, and your shipping costs will likely grow too. In this economic climate, a reckless business decision like unnecessary relocation could bankrupt a company.
Then there was the claim that "life is better in Sioux Falls." Communities like Sioux Falls can be very nice, for a while. A community might have a few neat features, making the first six months fun, but it wouldn't be too long before many weekends are spent driving somewhere else. None of the mid-size towns in the upper Midwest has one-tenth the features of the Twin Cities.
In Sioux Falls, unless you're a fan of the community theater or local college team, enjoying a great drama or going to a pro game means having to pay the extra expenses of hotel and travel. Restaurants in these smaller towns can be great, but forget about variety, and just a warning: Most of your vegetables will be deep fried and served with ranch sauce. If you like pheasant hunting, they have us there, but communities should be evaluated on their own merits. To suggest life in Sioux Falls will somehow make all your employees forget about the quality of life and variety of options they were used to in the Twin Cities is a joke.
The real motivation
If this advertisement persuades a company to move, let's not disguise the real motivation of a company's owner, CEO and upper management; greed. These people would damage a community that's stood by them for many years and put an undue amount of strain on their employees just so they wouldn't have to pay income tax. These business leaders' reckless choices would not be admirable, but rather despicable.
There is also a real tragedy from the South Dakota side. As South Dakota does everything to turn its no taxes policy into a carrot guiding a mule, the state is woefully underfunded and ill prepared to deal with emergency situations, like the loss of power and water after an ice storm at the Cheyenne River Indian Reservation earlier this year. It took South Dakota a month to even get basic amenities fixed. A major national fundraiser was needed. I'd guess since relocated business owners and CEOs have all that extra cash, they could use it to make a fire if a similar crisis hits their neighborhood.
I would like to award Sioux Falls, S.D., and any business that has relocated because of the advertisement the Gordon Gekko Lifetime Achievement Award for Greed. If I find out that a Minnesota company took South Dakota up on this offer, I'll never use its product again. Instead I'll find a local company that is willing to put up with Minnesota taxes and reap the benefits those taxes create in the quality of life in Minnesota. And I'll know that my state will have the funds to help its citizens if there is ever a major crisis.
Matthew McNeil is the 6 p.m. weeknight host on AM 950, KTNF.
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Comments (12)
South Dakota aggressively marketing itself to Minnesota businesses is hardly a new phenomenon. In the 1980's, then-Governor Bill Janklow and the late Rudy Perpich had a running feud that, at times, got personal.
At that point in time, companies with products in highly competitive markets weighed the costs versus the benefits of relocating to South Dakota. Some did, many did not. Thirty years later, the competition isn't between South Dakota and Minnesota--it's between the U.S. and .
This ad ran quite often (and might still) on the radio station I used to listen to.
Based on the demographic of that station (as witnessed by some of the folks who called in), I often wondered if the people the ad was aimed at were even listening.
If there is anything good to be said about this ad, it's that if it's effective, contrary to common wisdom, radio is not dead and that makes this old dinosaur very happy.
How long has McNeil lived in Minnesota? Those ads have been on Twin Cities radio every day for many, many years. They must be effective.
What's the unemployment rates? Minnesota is doing "OK" with a rate of 7.4 percent in March. South Dakota was second-best in the country with 4.8 percent. Best? North Dakota at 4.0 percent.
Matt is certainly an improvement over some of the, erm, "voices" that have been broadcast on AirAmerica radio these past few years, but he's not much of a businessman.
For instance, he says: "I can understand that a company moving to Sioux Falls might eventually make more money, but unless it's a small payroll and the company's product is primarily delivered or created online, it would take years to recoup the costs of the move alone."
The fact is, for companies moving to S.D., the larger payroll they meet, the faster they will recoup the costs of moving.
We're talking taxation here...Democrat style taxation.
Lower income tax means more money in the pockets of employees, and less that needs to be made up by the company. Toss in the savings from "getting shut" of the ridiculously high workers compensation costs, the county and city fees too numerous to count, and you are talking real money. Oh, right...*then* there’s the absence of state corporate taxes.
Matt then further exhibits his ignorance by declaring "Your supplies will likely cost more to get there, and your shipping costs will likely grow too. In this economic climate, a reckless business decision like unnecessary relocation could bankrupt a company."
Yeah, well not so much. Matt might not realize that Sioux Falls happens to be on US 90...one of the biggest interstate highways in the country (ask the trucker that delivers parts from California how he got to Minneapolis). Matt is also evidently unaware that Sioux Falls boasts a huge rail yard...oh, by the way, which is currently undergoing a major technical upgrade.
It’s true that Sioux Falls probably lacks many of the pastimes that keep the scary smart, reality based community amused, but then, that in itself is quite attractive to many people that are not quite as "enlightened" as they. And it’s not like Minnesotan’s need feel homesick, 3M has moved thousands from here to their new homes in Aberdeen and Brookings to staff the expansion of their S.D. operations.
Look, I'm no cheerleader for S.D.; I just hate to see so much misinformed histrionics go uncorrected.
I know, I know, the scary smart, reality based community sees financial viability as greed, but profitability does benefit “real people”...just ask any GovernmentMotors employee.
Stick to radio, Matt.
Complimenting this article is an excellent op-ed in today's Strib by Wayne Cox noting that while the corporate tax RATE may be high in Minnesota, the actual corporate taxes PAID by Minnesota corporations is among the lowest 15 in the country.
Aside from amenities, companies need a variety of other resources for success; transportation, proximity to research and education facilities, and a skilled work force. That is how, in Minnesota, we grew 19 Fortune 500 companies. Wonder how may are in SD?
There is a certain type of person who seeks to build their own company, not because of their leadership abilities, nor their inventive abilities, nor because they are inspired to do things differently (and more effectively) than others, but because previous life experiences have left them unable to tolerate having anyone else give them direction.
Because taxes are a form of the state government telling them what to do, they bristle at having to pay them and would do so even if their taxes amounted to $5 dollars a year in total. They also bristle at any and all rules and regulations that their businesses must follow (and often seek to find ways around them), even when complying with them is likely to save them millions of dollars in the long run.
Many even bristle at the idea that they have to pay their employees or protect them in any way, since they see those employees not as the people who are making their enterprises successful, but as leeches who are stealing money out of the boss's pocket.
It is precisely these types of CEOs (and the boards of their companies, where applicable) who are attracted by these radio ads.
What Minnesota needs is to rebuild and expand the infrastructures that attract the types of high tech concerns that pay excellent wages and benefits (all of them seriously damaged after eight years of budget deficits engineered by King Timmy).
If South Dakota wants to steal away our dysfunctional CEO types (and King Timmy, too, for that matter) and draw them to a place where they can create, even more, a third world country in the middle of the North American continent, perhaps we should allow them to do so.
I once drove on a tour of TVA sites in Tennesee, and decided to go to Huntsville, Alabama to see the Space City. Driving in Tennesee, which apparently has some taxes, the Interstate was newly paved, and very smooth. That ended at the Alabama border, where the roads were crap, and the highway tourist stops shutdown at 2 PM. I stopped at a McDonald's and a truck driver says to me, "the ice machine is not working". I says "not much else around here is working either."
You get what you pay for.
IN Elizabethton, Kentucky, I stayed at the Holiday Inn, just off the main road. Walking to a local convenience store in the morning, I was shocked to almost fall in a storm drain WITHOUT a cover. All their side street storm drains have no covers; if your car falls in, too bad.
This is their definition of "limited government". Not exactly what Alexander Hamilton and George Washington had in mind.
The Tax Foundation (http://www.taxfoundation.org/taxdata/show/336.html) reports that 2008 state and local tax rates for Minnesota and South Dakota were 10.2% and 7.9% respectively. Per capita income for that period was $46,106 vs $39,103: almost 18% higher in Minnesota than South Dakota.
One source(http://www.top50states.com/cost-of-living-by-state.html) reports that the cost of living in Minnesota is 102.8% of the national average while South Dakota comes in at 91.3%.
Clearly, labor costs are going to be significantly higher in Minnesota, regardless of tax burdens. Now add such things as the labor pool, transportation, access to markets, and a few hundred other variables to your decision on where to locate your start up or expansion.
When you have a state population that is less than the sum of the population of Minneapolis, St. Paul, Rochester and Duluth, the amount of money that is expended by state government is going to be less.
James brings up some valid comparisons, but I would add that what they don't collect in state-level taxes are made up (in part) by local taxes and fees. Residential property taxes (expressed as a percent of the market value of the residential property itself) are much higher in South Dakota, compared to Minnesota.
Have you ever heard of personal property taxes? Sd has then, ND used to have them. Their effect?
Last Thursday we went on a four day road trip to the northwestern part of ND. We decided on a different route. We went out 212 into SD where we took I29 north. Try it sometime. Careful Observation of your surroundings may bring up some interesting questions.
If the DFL would quit trying to raise taxes at every turn on those who create jobs in Minnesota; or even (gasp!) cut the tax rate, you wouldn't have to worry about competition from South Dakota.
On the contrary, existing businesses would grow, new businesses would be attracted, and the employment rate would grow exponentially. This would widen the tax base, lessen the tax burden for all, and would increase, not decrease the state coffers.
Now if the DFL and Tarryl Clark would venture to unclench their fists on the business community in Minnesota, perahps the above scenario would become reality in short order.
But then again, I won't hold my breath for that to happen any time soon. At least not until after the elections in November.
Trying to start a business in South Dakota is a difficult task. Unless you are looking at starting a pheasant ranch.