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Shocking study says Minnesota not really all that bad for business

Shocking study says Minnesota not really all that bad for business
By Eric Black

A new study by the crazy Bolsheviks at Ernst & Young and their fellow travelers at the Council On State Taxation finds, surprisingly, that Minnesota is in the top 10 (although barely) of states ranked for the “competitiveness” of their business tax climates.

If you live here and listen to the constant complaining about the tax climate for “job creators,” this should be surprising.

The factors and calculations in such a calculation are way over my head, but E&Y and COST said they designed the study specifically to hone in on the state tax policies and rates that are “designed to retain and expand employment and attract new investment.”

hat tip/Ken Wedding and Susan Schnur.

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Furthermore, “The analysis focuses on capital investments in industries that have location choices, such as factories or headquarters,” and “the results reflect the type of analysis that businesses use to evaluate decisions about where to locate new capital investments in plant and equipment.”

Anyway, the whole sordid, shocking study is available here.

Minnesota ranks 10th from the top. Overall, the top 10 and bottom 10 lists are counterintuitive, at least if your intuition is shaped by stereotypes of various states. The worst 10 list includes Alabama, Mississippi and several other states that populate the list of states that – at least in my biased and uninformed brain – pop to mind when I think of low-tax, small-government, anti-union states that would offer businesses anything to get them to build there. The most competitive list contains no entries from the South but is scattered across the north from the East Coast (Maine is #1) to Oregon (#2) and includes relatively rural and urban places.

Nor does either list seem to comport with any impression of which states have fared the best or worst in the horrible jobs environment of the recent recession. (For example, the very best state in the business tax climate ranking (like I said, it’s Maine) currently ranks 17thamong the states with a March  unemployment rate of 7.6 percent, which is better, but not all that much better than New Mexico, ranked as the worst of all states for its business tax climate but ranked 23rd among the states with an unemployment rate of 8.1 percent.

The states with the lowest (North Dakota) and highest (Nevada) current unemployment rates don’t show up on either the 10 best or the 10 worst states when ranked by E&Y for business tax policies designed to get comanies to build and hire.

Of course it just may be the case — Ernst and Young explicitly says that it is the case – that differences in tax rates are not the key factors that lead businesses to build and hire in one state over another.